Why Startups With A Female Founder Grow Faster And See Greater Return On Investment

By Adela Belin

In the 2017 annual startup report by TINYpulse, it was found that the fastest-growing organizations are 75% more likely to have a female founder. The New York Times report also revealed that the presence of women in the workplace was directly related to an increase in profitability. Female founded startups are growing at a fast rate. Although the same TINYpulse report stated that women-led startups receive fewer investment dollars than male-led ones at different stages of the funding process, the venture capitalists and investors are considering investing more money in great ideas put forth by women.

This prospect makes sense because the presence of women in successful companies resulted in an average of 10.1% Return on Investment(ROI) as compared to 7.4% for those firms with fewer female members. Today, more than 250,000 women in the U.S. own and lead multi-million dollar enterprises. The data received from these reports suggests that women have the vision and capacity to lead successful businesses. Although, in these reports there is no evidence that states why startups with female founders grow faster, there are many psychological and emotional reasons(that make good business sense) helping the ‘woman’ factor excel in this arena.

Diversity  

Diversity is essential in making better and far-reaching decisions, especially for startups where decision-making is critical to survive in a highly competitive market. Female founders and leaders help in maintaining the diversity, cutting off the male-female disparity. A varied culture in the workplace is seen as an important factor in creating a decent work environment. According to the TINYpulse research, 86% of leaders at smaller startups, and 71% in bigger ones, rate the importance of culture a “10 out of 10”. Racial and demographical diversity, mixed with a good male-female proportion helps in building a congenial environment at the workplace.

Better Communication

Women tend to be better at communicating with their workforce than men, which helps in better team building and a higher sense of job satisfaction for the employees. According to Dr. Susan Sherwood, this happens because women are more discussion oriented than men who are generally action oriented. Research from Gallup stated that females are 1.7 times more likely than males to give due recognition or praise to their employees and encourage development.

Psychologists also believe that women are more open and compassionate towards their workforce. This may be because of their innate motherly instincts, which means women are more likely to be supportive of individuals regardless of rank or profile. This leads to more engagement and a higher productivity. An engaged and productive workforce is at the core of successful companies.

Perseverance

For the longest time, the gender divide in institutions around the world has been a demerit for women. The same disadvantage gives birth to the quality of perseverance. Female leaders have a lot to prove to lessen the existing gender disparity. They tend to work much harder and more effectively than their male counterparts. It is also a scientific fact that women are the stronger sex- both emotionally and physically, which results in high energies during work and the ability to take big financial risks. All of these factors result in stronger business ethics and a more balanced approach towards personal and professional life.

Summing up

With the investors now realizing the potential of female-led startups and profound statistical evidence available for the same, one can make a good case about the role of women in successful business ventures. Many psychological and emotional characteristics which are exclusive to females have given them an edge over their male counterparts, thereby succeeding at a far better rate.

Adela Belin is a private educator and a writer at Writers Per Hour. She shares her teaching experience with colleagues, students, and writers. You can contact Adela on G+.