Experienced CEO and founder of How women leadventure capitalist and popular speaker on female entrepreneurship.
Despite the ongoing battle for shares, there are significant number of women who have attained the highest ranks of executive leadership, resulting in considerable power, influence and wealth. Data shows that we are better educated, more experienced and more entrepreneurial than ever before. The average age of a female entrepreneur in the US is 42, and 42% of US businesses are owned by women. Now that we are in our mid-40s, many of us are beginning to think about our leadership in new ways; how can we raise the bar and exert more influence? We actively seek board seats and advise startups. Yet there is a huge opportunity for women to expand and use our hard-earned power, influence and wealth by becoming investors in venture capital.
Why is venture capital the next step for leading women?
First and foremost, it is a power play. It makes us more visible and the experience often opens the door to other opportunities, such as corporate boards. Second, there is a huge upside for wealth generation. Everyone invests in the stock market and mutual funds, but investing in a company is a diversification strategy and, if done right, can make three to five times your money in a relatively short period of time. Why is there too little investment in companies? For many of us, it’s because it feels like a foreign language and concept. And despite having the money to invest, we are not often asked to participate, a sign of the inherent bias that plagues the venture capital system.
It’s time for women to pursue venture investing so we can use our power to drive change in the industry. At my venture firm, 85% of our investors are first-time venturers, and 30% report investing in other venture firms within just a year of that first investment. I find that a low starting point for investment, combined with a trusted, extensive network available for support and guidance, makes first time investing more attractive. Finding that starting point to do business and keep investing is what makes women change makers – for other women in the industry and also for the industry itself.
Despite women’s growing wealth and operational leadership experience, we remain deeply underrepresented in VC. According to the 2020 Women in VC Report, only 4.9% of partners in venture capital firms are women, with only 0.2% female Hispanic partners and 0.2% black female partners. We need more women and women of color who invest and lead in businesses.
Women who were once part of the venture capital community have the opportunity to demand responsibility.
The key questions female investors should ask venture capital funds are:
• How many female CEOs are there in your portfolio?
• How many female-led companies have you listed on an IPO?
• What are you doing to reduce bias in your evaluation process?
By asking these difficult questions from a position of power, venture companies are pressured to develop action plans to make progress where they have fallen short. This is the kind of responsibility that will move the needle to get female founders more of the venture capital funding they deserve, while also bringing more executive women into the world of VC.
Take a moment to think about whether your company is making an effort to involve more women. Researching your business practices is a good place to start.
Venture investing is the next logical step for women leaders with the experience and resources to make an impact. In addition to the financial advantage, there are other advantages. It takes our leadership heritage to the next level and opens doors that might otherwise have remained closed. It allows us to partner with pioneering innovators to contribute to the subsequent success of their businesses. Importantly, it gives women the voice they desperately need in the venture industry. A voice that stands up for female founders and gives their innovative businesses a fair chance they deserve to start, grow and thrive.
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Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.