A reporter recently inquired about the gender mix on our online investment platform, CircleUp. It's a question being increasingly asked of early-stage private investors. And for good reason. The lion's share of private capital today--across both angel and venture capital markets--is going to men.
In the first half of 2013 only 13% of total venture capital dollars went to women-founded startups according to Pitchbook. Fortunately, this number is on the rise--increasing every year for the past 10 years, up from a meager 4% in 2004.
What's behind this upward trend? Certainly not chance. It's being driven by a massive, deliberate and concerted movement by individuals and organizations across the funding ecosystem to build new infrastructure that inspires, educates, supports and funds female entrepreneurs. Here are just a few examples.
- Accelerators Springboard Enterprises has accelerated 500 female entrepreneurs;
- Angel Groups Golden Seeds has invested more than $60M in start-up businesses;
- Venture Capital Funds Women-led Illuminate Ventures closed its $20M early-stage fund late last year.
While CircleUp is young, we're excited to support this movement. And so far, the numbers on our platform--where we connect investors with consumer product and retail entrepreneurs--are immensely promising. Here are some numbers.
Since launching our marketplace in 2012 we've reviewed more than 4,500 companies, of which we've approved less than 5% to list on our platform.
- 39% of the companies raising capital on CircleUp currently (7/28/2014) are women-led;
- Historically, women-led companies have made up 42% of our successful raises. (versus 13% of VC backed deals);
- Historically, the success rate of women-led companies has been 78%, versus 58% for non-women led companies. Meaning 78% of the women-led companies that launch on our site are successful at raising money.
It's great to see gender-neutrality in our marketplace. And what really excites us is the third statistic: the success rate of women-led companies (78%) has not only been on par with male-led companies, it's meaningfully higher. This number will shift over time, of course, but we can safely conclude that our investors are not exhibiting the same gender bias found elsewhere.
Professors from Harvard, MIT and University of Pennsylvania shared their findings on this gender bias in their recently published report, Investors prefer entrepreneurial ventures pitched by attractive men. They found that "investors prefer entrepreneurial pitches presented by male entrepreneurs compared with pitches presented by womenentrepreneurs, even when the content of the pitch is the same." Researchers tested this bias across a number of scenarios--audio-only pitches, video-pitches, and actual recordings of past pitches--and found that male entrepreneurs were 60--70% more likely to get funding, all else equal, in all cases.
We're thrilled that our marketplace doesn't exhibit this same gender-bias. The question is... why? It's less about us, we feel, and more about the medium through which we operate--which is online. Operating online has enabled us to create an incredibly diverse network of investors--across gender, geography, age and experience. It's this diversity, we believe, brought together in a more objective medium, that diffuses harmful groupthink and gender-bias. It's not that our individual investors have fewer biases, conscious or unconscious--it's that our network, now 10,000 strong, collectively does.
And we're not alone--other online funding platforms have found similar evidence. Researchers Dan Marom, Alicia Robb, and Orly Sade analyzed more than 20,000 crowdfunding projects on Kickstarter, a rewards-based platform, and found that the success rate of women was actually higher than men--69% versus 61%.
As early stage capital markets continue their shift from offline to on, we're thrilled by the opportunity to realize fundamentally new and less biased marketplaces. Marketplaces where merit speaks loudest--regardless who you know, where you live or what gender you are.