It appears as though venture capitalists have a clear preference towards men when it comes to finding new avenues to invest their money in. A recent study shows that just 3% of the total funds that are invested by venture capitalists are given to start-ups that are launched by women. This is not a very positive sign for the economy, in general, since it demotivates women from entering the business realm.
Venture capital study points out the imbalance
This was the finding of the study published in the Venture Capital journal. The study took into account the funding given by venture capitalists between the years 2011 and 2013 and concluded that women who lead start-ups received just $1.5 billion out of the total of $51 billion that was invested by venture capitalists over this same period. The figures also indicate another alarming bit of news. This is a historic low in terms of funding available for women. An earlier study has revealed that, while it did not exceed this limit, the capital invested at least inched closer to 4% at some points during the period from the early 1950s until the start of this century.
A clear bias towards female dominated start-ups
The study reveals that there is a clear bias towards female dominated start-ups. In fact, the bias extends not just to the person at the helm of the company but also the teams that power it. It is seen that when a startup has an all-male team asking for funding, it is far more likely, four times, at least, to get it than if the team has even a single female member. Experts, reacting to these findings, say that it appears as though the venture capitalists screen women entrepreneurs far more strictly than they do their male counterparts.
The surprising fact that the research has also shown is that performance wise, there is no difference in how companies led by women perform when compared with those led by men. Given this, it is strange that venture capitalists have hesitations about investing in women-centric teams that lead businesses. The difficulty in finding funding may not be a worldwide phenomenon though, as the number of start-ups launched by women is about equal to the number launched by men when we look at the Global Entrepreneurship Monitor's report for 2013. This might not be possible if the funding is a huge challenge across the world when the CEO is a woman.