Has their time finally come?

Written by John Mullins Associate Professor of Management Practice in Marketing and Entrepreneurship, London Business School

What if a university simply excluded half of its potential selection population? What if a company in need of top talent limited its hiring to half of the available candidates? Or, more pertinent to my message here, why do investors in promising early-stage ventures write checks almost exclusively to startups whose founding teams are all or mostly male? Of course, it’s all patently absurd.

According to an analysis by Boston Consulting Group (BCG), if women and men around the world participated equally as entrepreneurs, global GDP would ultimately increase by about 3% to 6%, increasing the global economy by $2.5 trillion. It could boost it by $5 trillion.

According to the Alan Turing Institute report “Recalibrating Innovation: Women, AI and Venture Capital in the UK” (October 4, 2023), women-founded companies are increasing the number of venture capital (VC) companies involved in AI startups. It was found that the proportion of financing transactions was less than 3%.

From 2012 to 2022, 80% of the total capital invested in AI by VCs was raised by all-male teams. In contrast, all-female teams attracted only 0.3%. When AI startups founded by women secure funding, they receive, on average, six times less capital per startup than startups founded by male entrepreneurs. All-male teams raised an average of £8.6m, while all-female teams raised £1.3m per event.

bigger question

It begs the larger question of why the business world is failing to educate, encourage, train, and support women in their entrepreneurial endeavors. Of course, academic institutions like my own London Business School and the Institute of Entrepreneurship and Private Capital (IEPC) are doing a lot to turn this challenge into an opportunity.

Case in point: In the coming weeks, I will be working with colleagues at LBS to run three one-day workshops to an incredibly diverse group of over 200 female founders from across the UK. intend to do something. As part of the Female Founders Rise (FFR) initiative, the workshops we offer aim to get more British women into entrepreneurship and help them succeed. FFR founder Emmy Faust (who is a formidable entrepreneur in her own right) says: Building relationships and finding other founders at similar stages of growth are also important to achieving success. These workshops allow members to deepen their direct connections. ”

Community support and the value of doing the right thing

Being an entrepreneur can be a lonely world for anyone, and studies and reports from the likes of the Adam Turing Institute and BCG show that that risk, or rather the fear of taking it, is what drives some women to start businesses. It is clear that this is a contributing factor to keeping it from becoming a home. . But for those brave enough to take the plunge, I offer the following advice to all students and instructors:

Find the right community and the right mentor. If you don’t have friends or family to support you, support groups like Women Founders Rise are important. But even better, those with solid business experience, especially those who have run their own companies, are often welcome to be asked for advice and support. As the saying goes, they pay it forward. So find someone who can advise you as you get your business off the ground.

Research, research, research! Understanding how markets, industries, and different business ecosystems operate is essential for anyone considering becoming an entrepreneur. It’s not something you can just jump into without any planning or preparation. You’ll also need to spend time learning about your target market and industry, and may also need to acquire at least some basic skills in things like accounting, marketing, and product development.

Get ready to work hard: This is not to scare aspiring entrepreneurs, but you will be losing sleep and working long hours. Your passion for your business will reward you. And to get to the finish line, you need to consider your financial and emotional reserves.

Be patient (or at least learn to pace yourself): Success doesn’t happen overnight. You need to hone your skills through experimentation, trial and error, and failure is part of the entrepreneurial landscape. That’s the most intuitive way for us entrepreneurs to learn. As the Silicon Valley saying goes, “Failure is an education paid for with someone else’s money.”

Essential challenges for women entrepreneurs

Women often feel out of place in the entrepreneurial world, whether it’s facing funding issues or competition within or from male-dominated businesses. This is deplorable but not surprising when you look at the broader situation of women in the workforce. Women grappling with pay disparities in male-dominated industries are increasing their earning potential by founding their own ventures, according to my colleague Dr. Dana Kanze, associate professor of organizational behavior at London Business School. , but face similar disadvantages in that regard. In the same way. Research by Dr. Kanze et al. shows that when working in male-dominated industries, female founding CEOs raise significantly lower valuations, raise significantly less capital, and hold significantly less capital than comparable male CEOs. It is shown. To help explain this disparity, the researchers uncovered a misconception among investors that if a female founder-CEO caters to a male-dominated industry, it indicates that she is not a good fit for their business. However, similar misconceptions were not found when male founder-CEOs were dealing with female-dominated industries. Fortunately, they found a silver lining in the sophistication of investors that could close this gender gap, increasing financial decision literacy among those involved in early-stage venture financing. He pointed out the need to improve.

path forward

Many factors contribute to the widespread failure to develop more entrepreneurial opportunities for women, too many to list here. However, one thing is certain. It’s past time to take small steps. The scale of the loss, and the scale of the opportunity that comes from having more women as entrepreneurs, is too great. We cannot ignore what half of the population has to offer. So how can we change the narrative?

In my latest book, Break the rules!6 unconventional ideas for entrepreneurs that can help anyone change the world, I explore the thinking behind entrepreneurial success and how today’s best entrepreneurs are able to challenge assumptions, overcome obstacles, reduce risk, and sometimes change the world. I will explore. It is they who make the seemingly impossible possible. I encourage aspiring female founders to master one or more of these and make them their own.

So, let’s make 2024 a breakthrough year for female founders. Their time has come!

John Mullins He is a best-selling author, thought leader and piper for entrepreneurs around the world looking to grow their businesses, and Associate Professor of Management Practice at London Business School. Check out his latest TED Talk. go.ted.com/John Mullins.