Jeff Bezos is now the richest man in the world, thanks to the incredible success of his first startup, Amazon. Initially seeded with about $1 million from angel investors, the technology startup went on to raise an additional round of $8 million led by Kleiner Perkins before going public in 1997. 

Unless something changes, tomorrow's biggest game-changers like Amazon will most certainly not be led by a woman or someone of color but by a white or Asian man.

In 2015, less than .2% of venture capital funding went to startups founded by women of color. And when that pool is expanded to include all women, the amount of funding received is less than 5% - even when the metrics go beyond companies founded by women to also include companies with women on their executive teams.

In case you're already making the argument in your head that this statistic is probably due to the fact that more men launch startup companies and seek venture capital, that is also not true. Women-led businesses are the fastest growing group of entrepreneurs, and business owned by women of color are the fastest growing segment among women-owned businesses. 

The bias against women founders is deeper than gender, however; it also affects what types of businesses are funded. Venture capitalists that fund women-led businesses are still far more likely to gravitate towards business ideas which are perceived as feminine. 

But the real question, is why should we care if women have access to funding for their companies?

Women currently control the majority of all personal wealth in the U.S. and make the majority of purchasing decisions. Only two in ten women believe that most companies understand the needs of women, so the companies of tomorrow who get this right will have a significant advantage over companies who fail to assemble a leadership team which can effectively appeal to the purchasing power of female consumers.

Women are also better leaders. In a new Norwegian study of almost 3,000 managers, women out-performed men across all categories, from innovation to communication and collaboration. Women are also willing to take bigger risks that are typically taking more calculated and well thought out, and they are more willing to seek help to achieve their goals.

And because women tend to embrace more empathetic leadership styles, the work environments of companies led by women are far less likely to result in the sexist and even sexualized workplace environments which have plagued companies like Uber and Google.

While some women have achieved massive success by self-funding their product or service-based companies, including Spanx, S'well, and Orangetheory Fitness, most technology startups focused on global solutions require venture capital to succeed. In fact, Forbes' list of the startups most likely to become the next billion-dollar startups is based on three things: strategy, competitive challenges, and money - both current revenues and current funding. No matter how great the idea, strategy or competitive edge, if a startup cannot land enough consistent funding, their chances of penetrating the global market share of their industry remain low. 

Ironically, one factor hurting women-led startups from receiving the same size of large investments as their male counterparts is the misplaced protective goals of mainstream investors who are making the conscious decision to invest in more women - as well as the rise of more inclusion-focused angels and investment groups.

While this new breed of investor has been integral to bringing more awareness to the disparity of funding and are directly responsible for the survival of many of the startups they've funded, the reality is that most of these funds are far smaller than those raised by mainstream venture capital firms - meaning their individual investments into companies are also smaller.

Even among traditional investors who are managing larger funds, those who are seeking to even the playing field by investing in more women tend to focus on companies within more traditional feminine-focused verticals. The end result is that women-led startups with a game-changing technology or product with the potential of becoming the next billion-dollar startup are not likely to receive the large infusions of cash necessary to scale to that level.

As a female founder who has raised venture capital for a startup focused on helping cities use technology to improve their community, I am well aware of both the barriers to venture capital and the need for more venture-funded women founders within my field. Without more women and minority-led startups helping to develop and deploy the technology solutions which will shape our cities of tomorrow, we run the risk of building technology with inherent bias towards race and gender that will ignore or alienate more than half of our global population.

As adoption spreads for industries like machine learning, artificial intelligence, and autonomous vehicles, where our every move and interaction will be recorded, analyzed, and used to predict future behavior, I, for one, would welcome more women-led companies developing technologies within these fields.

While the gender and racial disparities within venture capital may seem like an isolated problem, it is not. It greatly determines the leaders of industry for our future, and that affects all of us.

Published on: Oct 31, 2017