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WOMEN IN BUSINESS

Women Executives: Key to Start-up Success?

New research shows that start-ups with female executives are more likely to succeed than those with all-male leadership teams.

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If you want your start-up to be successful, you need a great idea, a gargantuan appetite for work, and the money and management know-how to scale. Oh, and having one or more female executives wouldn't hurt your chances either.

That's according to the findings of a new study from Dow Jones, at least. The research crunched a massive amount of data, looking at outcomes from 20,194 venture-capital-backed American companies and the 167,556 executives who led them (11,193 of which were female).

If a start-up went public, consistently operated at a profit, or was sold for more money than it raised, it was deemed successful for the purposes of the research.

So what relationship did the study find behind a fledgling firm having a female founder, board member, or C-level executive and the business coming to a happy ending? In short: Start-ups with women leaders are more likely to be successful. Though only 1.3% of all privately held companies have a female founder, 6.5% have a female CEO, and 20% have one or more female C-level executives, these high-ranking women of the start-up world weren't evenly distributed, according to the report:

The overall median proportion of female executives is 7.1% at successful companies and 3.1% at unsuccessful companies, demonstrating the value that having more females can potentially bring to a management team.

And apparently, if one woman in the C suite is good, more is even better:

We see that a company’s odds for success (versus unsuccess) increase with more female executives at the VP and director levels. For start-ups with five or more females, 61% were successful and only 39% failed.

Download the complete report for more details on the prevalence of women in executive start-up roles over time and in which industries and roles they can be found (plus, lots and lots of charts).

For VCs, the message is clear--keep more of an eye out for female founders--but there is also obvious wisdom here for entrepreneurs. If you're founding a company and looking for collaborators, paying special attention to involving women may pay hefty dividends.

The report doesn't weigh in on why female executives raise the chance of start-up success. Why do you think women at the top improves a company's chances? 

 

IMAGE: modenadude via Flickr
Last updated: Oct 10, 2012

JESSICA STILLMAN is a freelance writer based in London with interests in unconventional career paths, generational differences, and the future of work. She has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist.
@EntryLevelRebel




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