Investing in Women: The Advantages of Supporting Female Entrepreneurs

In today’s rapidly evolving business landscape, investing in women isn't just a moral imperative; it's also a smart economic decision. In my upcoming book: Embracing Setbacks: A Founder's Guide Through Failure and Growth, I've dedicated a chapter to how female entrepreneurs bring unique perspectives, innovative ideas, and resilience to the table. Let’s explore in this article the chapter in question so that on this International Women's Day, we will all get to understand why supporting women-led businesses is crucial and the advantages it offers.

1. Growing Ownership and Entrepreneurial Growth

According to the World Bank, globally, one in three businesses has a woman among its principal owners, with this figure varying across income levels. In middle- and high-income countries, female entrepreneurship participation stands between 36% and 37%, respectively.

Notably, in the United States, a remarkable 42% of all businesses are owned by women, highlighting the significant presence and influence of female entrepreneurs in the country's business landscape. This growth trajectory highlights the increasing influence and contribution of women to the entrepreneurial landscape, evident in the surge of women-owned businesses in recent years.

2. Diverse Financing Mix

Despite their growing presence, startups with all-women teams received only 1.9% of venture capital funding. This disparity underscores the importance of bridging the investment gap to unleash the full potential of female-led ventures.

While male entrepreneurs often gravitate toward traditional funding sources, such as venture capital, women entrepreneurs explore a substantially different financing mix, exploring alternative financing options such as bootstrapping, crowdfunding, and community-based financing. By diversifying the financing landscape, women contribute to a more resilient and adaptable economy.

3. Profitability and Financial Performance

Businesses with gender-diverse executive teams are 25% more likely to achieve above-average profitability. Additionally, nearly 60% of female-led businesses achieve medium to high Environmental, Social, and Governance (ESG) scores, reflecting their commitment to ethical practices and sustainability. Despite facing challenges in accessing capital, female-founded companies deliver impressive financial returns. Research indicates that they generate twice as much revenue per dollar invested, underscoring their resourcefulness and financial acumen.

4. Innovation and Problem-Solving

Women are natural problem-solvers, approaching challenges with creativity and empathy. Female entrepreneurs often innovate to address social needs, creating solutions that resonate with diverse communities. By investing in their ventures, we encourage groundbreaking ideas and disruptive technologies.

The significance of female founders is evident in the highest echelons of business success, with 19 out of 124 unicorns that went public in 2021 having at least one female co-founder or CEO. In the same year, 83 out of the total unicorns that were added to the list had at least one female founder. This statistic underscores the significant contribution of female entrepreneurs to the highest echelons of business success.

5. Environmental, Social, and Governance (ESG) Impact

Women-led businesses often prioritize values-based decision-making and social responsibility. Their emphasis on ethical practices and community involvement not only fosters trust between stakeholders but also contributes to the company's sustainable growth.

It's no surprise that 90% of companies run by women, according to the European Investment Bank, achieve average or high ESG ratings. Investing in these companies indirectly supports positive environmental and social outcomes, as they are more likely to adopt green practices, promote diversity and engage in community development.

6. Upskilling, Employee Development, and Job Creation

Women entrepreneurs invest heavily in employee training and development, fostering a culture of continuous learning that benefits both employees and the organization. According to the European Investment Bank, 45% of employees in women-led businesses benefit from extra training that encourages knowledge acquisition, personal development and empowerment.

Supporting women entrepreneurs therefore contributes directly to economic growth, job creation and innovation. When women create and develop businesses, they create jobs, boost local economies and stimulate innovation, unleashing their potential as job creators and catalysts for positive change.

7. Gender Equality and Social Impact

Women-led firms strive for gender equality within their organizations, offering more job opportunities for women and bridging the gender gap in employment. When women succeed as entrepreneurs, they become role models, inspiring other women to pursue their entrepreneurial dreams, thus contributing to broader social change and a more inclusive society.

Conclusion

Those are the 7 advantages of supporting female entrepreneurs. Now, we understand that investing in women isn’t just about empowering individuals; it's about harnessing the full potential of half the population to drive economic growth, innovation, and social impact. By supporting female entrepreneurs, we not only advance gender equality but also unlock new opportunities for sustainable development and shared prosperity. As we navigate the evolving business landscape, let’s recognize the invaluable contributions of women in driving positive change and building a more inclusive and prosperous future for all.

Remember, supporting women isn’t just good for business—it’s essential for our collective well-being. So, start today by supporting Futa, a woman-led startup on the mission to redefine access to basic financial services for African consumers and businesses. You can also follow us on social media and subscribe to our newsletter for more insights like these. See you in the next issue!

References:

1. Nganakala, G. J. (2024). Embracing Setbacks: A Founder's Guide Through Failure and Growth (Chapter 9: Building a Startup as a Female Entrepreneur, pp. 47-50)
2. Luisa Zhou. Women in Business Statistics: The Ultimate List of 2024 Trends. Accessed January 21, 2024.