2020 was a record year for initial public offerings in the US, with 442 logged as of December 14. Yet only a handful of those were companies founded and led by women, according to research by Business Insider and information provided by Nasdaq.
Historically, only about 20 women seem to have founded and led a company through to an IPO, based on data from companies that are currently publicly traded.
There are a few more examples of companies that are no longer publicly traded that were founded and led by women at the time of IPO, including iVillage in 1999 and ASK in 1981. Some companies have also gone public with female CEOs who were not their founders, but that number is small compared to the majority (at this writing, only nine companies have fit that description this year).
The jarring discrepancy was pointed out by Julie Wainwright, the founder of the luxury consignment shop The Real Real. In May 2019, Wainwright became the 15th woman to found and take a current publicly-traded company public.
To achieve gender equality, the fastest way forward is to close the entrepreneurial gap and support more women founding Fortune 500s. That’s because women aren’t reaching powerful positions often enough when they go the traditional corporate route.
Also, we need more women to try and become insanely rich.
Money equals power, and the only way to generate enough wealth to become one of the world’s most powerful people is to start a company.
Corporate America is broken for women. They need to blow it up and rebuild it if they want more leadership positions.
We know women fall behind men from the very first promotion.
A 2019 Lean In study called this the “broken rung” in the corporate ladder. The workforce won’t improve for women anytime soon.
- At the current rate, it will take until 2059 for women to achieve pay parity.
- Women who do reach the top still hit a ceiling. They get stuck as COOs — the No. 2’s.
- Only 7% of Fortune 500 CEOs are women.
The best way to fix this isn’t to blame or exclude men, who are in charge and can be powerful allies. But we also can’t expect them to change all their unconscious biases, which can be blind spots.
Instead, corporate America needs to be blown up and rebuilt, with diversity as a pillar from inception, led by more women and BIPOC founders.
If women want to become as powerful as men, they need to create rivaling fortunes. The only way to do that is to start the next Fortune 500s.
Warren Buffett. Jeff Bezos. Bill Gates. The richest people in the world all started their own companies — or inherited their fortunes from someone who did.
That’s because founders tend to own large chunks of their companies when they exit, far larger portions than employees working for them ever could.
If women want to become as powerful as men, they need to start the next Fortune 500s and create rivaling fortunes.
But in the 204-year history of the New York Stock Exchange and Nasdaq — where hundreds of companies go public each year — only a few dozen have been founded and led by women. Seventeen of those IPOs were in just the past seven years.
IPO companies founded and led by women
|SIEB||Siebert Financial||Muriel Siebert||Jan. 1972|
|UONE||Urban One||Cathy Hughes||May 5, 1999|
|VMWARE||VMWare||Diane Greene**||Aug. 14, 2007|
|MBII||Marrone Bio Innovation||Pamela Marrone||Aug. 2, 2013|
|VCYT||Veracyte||Bonnie Anderson*||Oct. 30, 2013|
|GLYC||GlycoMimetics||Rachel King*||Jan. 10, 2014|
|CRCM||Care.com||Sheila Lirio Marcelo*||Jan. 24, 2014|
|JAGX||Jaguar Animal Health||Lisa Conte||May 13, 2015|
|RUN||Sunrun||Lynn Jurich*||Aug. 5, 2015|
|EDIT||Editas Medicine||Jennifer Doudna*||Feb. 2, 2016|
|CATB||Catabasis Pharmaceuticals||Jill Milne*||Jun. 29, 2016|
|BL||BlackLine||Therese Tucker||Oct. 27, 2016|
|SFIX||StitchFix||Katrina Lake||Nov. 17, 2017|
|EB||Eventbrite||Julia Hartz*||Sept. 30, 2018|
|TWST||Twist Bioscience||Emily Leproust*||Oct. 30, 2018|
|REAL||The RealReal||Julie Wainwright||May 31, 2019|
|ANVS||Annovis Bio Inc||Maria L. MacCecchini||Jan. 29, 2020|
|AYLA||Ayala Pharmaceuticals||Roni Mamluk||May 8, 2020|
|ATHA||Athira Pharma||Leen Kawas||Sept. 18, 2020|
|AMST||Amesite||Ann Marie Sastry||Sept 25, 2020|
Note: *Went public after being acquired by EMC in 2003 // **Co-founder
When women do try to start companies, numerous pitfalls prevent them from scaling their ventures.
Only 13% of all venture-capitalist decision-makers are women, according to an AllRaise.org follow-up to its 2019 report. Pitchbook reported that in 2019 2.7% of VC capital went to companies founded only by women, while companies cofounded by both men and women garnered 14%.
For women of color, the investment gap is even wider.
DigitalUndivided is a nonprofit social startup focused on programs and training that foster economic growth in Black and Latinx communities. In 2016 it launched ProjectDiane, a biennial research study that tracks investment in companies founded by Black and Latinx women. Its latest report, released this month, showed some progress for these communities. But not enough.
Total funds raised by Black and Latinx women in 2019 grew to $3.1 billion, ProjectDiane data shows. The number of Black women founders reported to hit the “million-dollar club” in investment rose to 93, compared to 34 in 2018, while 90 Latinx women hit that milestone.
But the report points out glaring gaps. The median seed funding for startups overall is $2.1 million, but for Black and Latinx women founders the median is $475,000. For those raising less than $1 million, the median seed funding drops to $125,000 for Black women and $200,000 for Latinx women.
Since 2018, Black and Latinx women have received only .64% of VC funding.
Since 2018, Black and Latinx women have received only .64% of VC funding.
“Our mission is to create a world where all women own their work, where women have wealth,” Lauren Maillian, the CEO of Digital Undivided, said. “It is only through our jobs, our careers, and our work, that is the path to wealth creation. Not just for women, for all people, but women of color get left behind that.”
“We upskill and re-skill and equip women of color to compete in these spaces and places that are not designed for them to succeed,” Maillian said.
When female founders do get funded, expectations are different
Rent the Runway CEO Jennifer Hyman is one of the most successful female founders. She has been outspoken about the different challenges men and women founders face, from investors and the press.
“I haven’t been given the permission or privilege to lose a billion every quarter,” Hyman said on CNBC, shortly after profitless Uber went public and cash-burning WeWork filed its now rescinded S-1.
Julie Wainwright, the founder and CEO of The Real Real, said she sees three main barriers to entry for women in entrepreneurship. One of them is the expectations women set for themselves.
- Women aren’t thinking about starting businesses or planning for outsized success early enough. And when they do, they aren’t dreaming big enough. One survey of 57 women CEOs found that only 12% of them planned to be CEO someday. The rest had to be told it was something they should consider.
- There aren’t enough women in venture capital with big funds behind them who can lead large investments and write follow-on checks. “When you raise capital, if you’re running something big, it will require more money, and that person who initially funded you will go back to their fund to lead the next round,” Wainwright says. “And they have to have enough capacity to keep funding you so you’re not left in the cold. . . . You need people with billions behind you.”
- There’s no “PayPal mafia” for women who can support female founders, rally behind them, and push through their success. The PayPal mafia refers to the early PayPal employees, including Max Levchin, Joe Lonsdale, and Peter Thiel, who’ve all gone on to be successful entrepreneurs, aided partly by their friendship during PayPal’s startup days. “Those guys have a tremendous network where they’re supporting each other,” Wainwright says. “It’s not a formal thing. But when people come up with ideas, they push them to think bigger. They’ve got the support of the mob once they go. And the mob isn’t there to make sure they’re successful. So because there are not enough women in startups, there are not enough mobs.”
Despite the barriers, it’s time for more women to try. To stop thinking What if it fails? and instead think What if it works?
For an extra nudge, Wainwright knows a widely kept secret: Most successful startup founders aren’t anything special. The difference is they tried, and you didn’t.
“To be honest, half the people that I meet are not a Bill Gates, Steve Jobs, or even an Elon Musk,” she said.
“What they are is they’re determined. They have a goal and they have a big vision and they don’t give up, and they did it. They didn’t think about everything that would possibly go wrong. They thought, I am going to do this, I can make this happen.“
Women starting businesses is great for the economy
Gender equality in business isn’t only a moral imperative. When it’s achieved, it improves a company’s bottom line and boosts the global economy.
A recent McKinsey study found that gender equality could unlock up to $28 trillion in global GDP.
Companies also perform better when more women are in power. A Bank of America paper found that S&P 500 companies with more diverse boards and a higher percentage of women in leadership positions delivered higher returns on equity.
Fortune 1000 companies with female CEOs have been found to perform three times as well as those led by men.
“Understanding the link between women’s empowerment and the wealth and health of societies is crucial for humanity,” Melinda Gates wrote in “The Moment of Lift.”
“If you want to lift up humanity, empower women, she said. “It is the most comprehensive, pervasive, high-leverage investment you can make in human beings.”
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