Female-Founded Start-ups Outperform All-Male Ones

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Photo: Thomas M. Barwick

Some good news out of the tech industry for once? A data set published by venture capital firm First Round Capital, which looked at 300 companies and nearly 600 founders, found that female-founded start-ups outperformed start-ups with all-male teams. 

The study, which was broken down in the Harvard Business Review this week, looked at everything from age to gender to race to education to previous experience in the start-up world to determine what made the surest and best investments for companies looking to invest in start-ups. The most revealing detail? That companies with at least one female founder outperformed all-male teams, by 63 percent. “Three of First Round’s top 10 investments of all time, based on value created for investors, had at least one female founder, far higher than the percentage of female tech founders in the data set,” HBR writes.

There were other surprising factors that contributed to a successful investment, the analysis found. Though the current average age of entrepreneurs is 40, the report found that younger start-up founders outperformed start-ups with older founders. Companies run by founders under 25 performed nearly 30 percent above average. Start-ups also benefited when teams had at least one founder from an “elite school,” which the report defined as the Ivy League, Stanford, or MIT. So Silicon Valley isn’t exactly a perfect democracy yet, but it’s getting better. And the most successful start-ups don’t necessarily come from the Valley at all: Companies founded outside of tech hubs like New York and San Francisco performed just as well.

At the least, it seems like the tech industry is catching on to their need to diversify: Recent reports have pointed to more start-ups hiring women and initiating retention programs to keep them around. But getting more women into the industry only works if the culture itself is designed to support them. So maybe no more all-male gender-diversity panels?