Thursday, October 11, 2012

Female Executives at Startups

Dow Jones recently published a paper called “Women at the Wheel: Do Female Executives Drive Start-up Success?” which has some great statistics about the success rates for VC-backed companies with and without female executives, board members and founders. 

The study analyzed over 20,000 companies that received equity financing between 1997 and 2011 and the sample size consisted of 167,556 executives (11,193 were female). Key facts that summarize the paper are listed below:
·         1.3% of the private companies have a female founder, 6.5% have a female CEO and 20%+ have a female executive (C-level)
·         Median percentage of female executives at successful companies (defined as completing an exit in the form of M&A or IPO or consistently profitable) is 7.1% vs. 3.1% at unsuccessful companies (went bankrupt, no longer exist, or currently stalled)
o   One point to note here is that it seems startups tend to hire more females as they advance further along, so I believe this is part of the reason you see that more successful companies have more than double the proportion of women than unsuccessful startups (i.e. 83% of startups have no females but 60% of companies have females on the team by the time they reach product development stage)

·         The most common positions for female executives were in Sales & Marketing and Finance and the industries with the most female executives are consumer and healthcare


I found this study very relevant with all the press about women in startups and tech. Just last week Bloomberg TV also aired a new segment called “Women to Watchwhere they interviewed four women (a startup founder, a venture capitalist, a VP of Engineering, and CMO of Facebook) who were all helping change the culture of tech and startups in Silicon Valley. Many of the points they mentioned to help increase the number of women at VC-backed companies included getting younger women interested in tech and programming at a younger age, but also creating a strong support and mentorship network that help open up new opportunities for young women looking to enter these industries. I also think that as female executives are getting more attention in the media (i.e. Marissa Mayer and Sheryl Sandberg), it will help inspire other women to take more risks and have the courage to step up to more senior positions within startups and the tech industry.