According to TechCrunch, only three per cent of tech CEOs are women, only 15 percent of startup founders are women, and only four per cent of venture capital partners are women. Further data from the US Center for Venture Research shows that approximately one in five angel investors is female. The lack of female representation in business leadership roles is no new news, and as of late, there’s a growing awareness of the lack of female investors.
The lack of female investors and the lack of female CEOs and founders go hand in hand. As the same above-mentioned TechCrunch articles puts it, “Women investors are important because they signal to women You belong here.” When a female founder is looking to raise funds, or a woman is considering becoming a founder and has the support of female peers in mentorship, leadership and investing roles, she’s less likely to question herself in her own role as founder/CEO/investor. Female presence is validation that the industry doesn’t have to be one that’s male-dominated.
Female representation is also imperative for diversity of opinion. With half the population being female, it stands to reason that support and weigh-in from both genders would be useful to the majority of businesses as they build out their product or service.
So why are so few investors female? There are many explanations and theories, but one that’s often cited in business and news articles is that women tend to be more risk averse than men. In addition, BetaKit explains that there’s often a misconception among women about what it takes to become an investor. There’s a notion that the barrier to become an investor is so high, that many women just dismiss the possibility. This may again come down to the current lack of female presence—women don’t see other women well represented among investors and may therefore dismiss the possibility of becoming investors themselves.
At FrontFundr, we’re focused on empowering investor diversity and broad representation, including female investors. With investor diversity comes a range of perspectives, which are needed to improve the diversity of businesses. From the types of companies formed to the diversity of founders, having diversity at the investment level and at the business level go hand in hand.
FrontFundr lowers the barrier to invest and offers everyone the opportunity to become an investor, with some deals offering minimum investments as low as $250. Those who have invested through FrontFundr include women who are hair stylists, entrepreneurs, full time mothers, professors, lawyers and more. We work together with investors to answer questions, provide resources, and assist them with the necessary paperwork to become investors in early-stage companies in the hope of breaking the misconception that investing is reserved only for a small sub-set of individuals.
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