Entrepreneurial women’s lack of access to venture capital (VC) is one of the oldest stories in the world. How do we change herstory and empower women entrepreneurs and founders? Applying a “gender lens” can illuminate themes across access to capital, workplace equity, product and service offerings, and asset classes.1 I believe we must address gender-parity issues, not only because it is the right thing to do, but because it can create greater outcomes and returns for us all.
- Despite owning 38% of US businesses, female founders received about 2% of all VC funding.2 Women in prominent economic roles, as entrepreneurs and investment decisionmakers, are fundamental towards gender parity and a more sustainable world.
- Female founders do not receive significant capital to scale, equal representation, and prominent seats at VC tables. Reasons for rejection include: lack of product insight, gender-biased questions, and discounting metrics, likely by-products of all-male decision-making which can lead to missed benefits and returns.3
- According to some studies estimates, if females participated equally as entrepreneurs, global gross domestic product (GDP) could rise 6%, boosting the global economy by US$5 trillion annually.4 If females occupied identical roles in labor markets, global GDP could rise 26% by 2025.5
- Diverse environments foster positive effects, including better financial outcomes and employee engagement.6 Companies with female founders and executives have been shown to increase returns on investment of 66%, on equity of 53%, and on sales of 42%.7 Companies with greater gender parity outperformed those with less by as much as 30%.8
- Unconscious behavioral biases and social networks influence everything from where people live to how they invest. Recognition of these biases and semi-closed circles can drive the creation of new, gender-parity-based VC funding processes and outcomes.9
We can have a meaningful impact by managing gender biases, wealth, and social networks to be an ally for gender parity in business and capital decision-making. Read more in “Women Entrepreneurs and the Benefits of Equal Access to Capital” by Jenny Johnson, CEO of Franklin Templeton, Sara Araghi, Director of Franklin Venture Partners, Regina Curry, Chief Diversity Officer of Franklin Templeton, and Shelly Kapoor Collins, General Partner, Shatter.
Important Legal Information
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.
The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as of publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.
Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.
Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own investment professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.
Issued in the U.S. by Franklin Templeton Distributors, Inc., One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com—Franklin Templeton Distributors, Inc. is the principal distributor of Franklin Templeton’s U.S. registered products, which are not FDIC insured; may lose value; and are not bank guaranteed and are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable laws and regulation.
This information is intended for US residents only.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
What Are the Risks?
All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Smaller and newer companies can be particularly sensitive to changing economic conditions. Their growth prospects are less certain than those of larger, more established companies, and they can be volatile. Past performance does not guarantee future results.
1. Source: Fiduciary Trust International, “Gender Inclusive Investing Strategies,” January 15, 2018.
2. Source: Forbes, “Why Do Female Entrepreneurs Receive Less Than 3% Of All Venture Capital Funding?” December 1, 2017.
3. Source: Harvard Business Review, “Male and Female Entrepreneurs Get Asked Different Questions by VCs — and It Affects How Much Funding They Get,” January 27, 2017.
4. Source: Boston Consulting Group, Want to Boost the Economy by $5 Trillion? Support Women as Entrepreneurs, July 30, 2019.
5. Source: McKinsey Global Institute, “How Advancing Women’s Equality Can Add $12 Trillion to Global Growth,” September 1, 2015.
6. Source: Fiduciary Trust International, “Beyond Conversation: Gender Inclusion Now,” August 15, 2019.
7. Source: The New Economy, “Anita Borg report makes strong case for investing in women,” April 9, 2014.
8. Sources: Forbes, “Diversity As $uperpower: The (Well-Known) Data Against Homogeneous Teams in Venture Capital,” September 22, 2020 and Padnos. C., High Performance Entrepreneurs: Women in High-Tech, Illuminate Ventures, 2010.
9. Source: Athena Capital Advisors, “Investing in Gender Equity,” January 2018.