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The Summerhill Group is a top London consulting firm. We are a market research agency and management consulting company.

THE SUMMERHILL GROUP INSIGHTS:

Female founders = better investor ROI

December 20, 2018

It’s a well known fact that female entrepreneurs receive a smaller percentage of Venture Capital funding vs. their male counterparts: 2.2% in 2017 in the US and 9.8% in the UK.

 

This is in part because many companies started by women are simply unable to raise the same level of money.

 

PRIVATE EQUITY AND VENTURE CAPITAL: NUMBER OF UK DEALS, 2017

Source: Beauhurst and The Entrepreneurs Network, 2017

 

A study released by Boston Consulting Group, found that of the companies examined, the average woman-founded startup received less than half of the awarded amount on average compared to their male-founded startups.

 

One of the most shocking statistics is that only 5.5% of all PE/VC cash went to companies with a female founder. (Female founders in yellow in the chart below, versus male founders in grey):

 

THE VC/PE CASH GAP IN THE UK:

Source: Beauhurst and The Entrepreneurs Network, 2017

 

The one good takeaway in the data is that on both sides of the Atlantic female-founded start-ups outperformed their male counterparts’ in terms of revenue and valuations. UK established companies founded by women were valued on average 6% higher (£3m). That’s despite female founders often receiving less investment. 

 

Why is this the case?

 

The BCG study in America found some of the key differences may be because:
 

  1. Women are more likely to receive pushback during their pitch presentations, and often investors assume they don’t have technical knowledge.
     

  2. Women are also more conservative in their projections and may ask for less, meanwhile, “men often over pitch and oversell.” 
     

  3. Investors, who are primarily men, may suffer from “affinity bias.” 
     

The BCG study in the US alone calculated that VCs could have made an additional $85 million over five years if they’d invested equally in both the female - and male- founded startups. If expanded to the UK this figure would be significantly higher.

 

When I co-founded The Summerhill Group one of my objectives was to try to reverse this trend and help more female founded companies both raise capital and scale. 

 

Commercially the statistics speak for themselves. Female founded companies are a better bet with higher revenue at lower levels of investment.

 

If you’re a female entrepreneur either at early stage or scale up, get in contact with me and see how we can help you grow your business and reverse this investment trend for 2019.

 

ABOUT THE AUTHOR:

Victoria Arkus is co-founder and Managing Director of The Summerhill Group, as well as a Parter at Rosedale Capital.

 

She is an advisor and on the board of a collection of start-ups and early stage companies and has worked with over 200 early stage and growth companies.

 

 

 

 

SOURCES:

Beauhurst and The Entrepreneurs Network, 2017 https://about.beauhurst.com/blog/female-founders-data-women-business

 

Boston Consulting Group 2018 https://www.bcg.com/publications/2018/why-women-owned-startups-are-better-bet.aspx

 

Fortune 2018 http://fortune.com/2018/06/07/female-founded-startups-revenue-funding/

 

 

 

 

 

 

 

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