Why Women Entrepreneurs Outperform Men

In recent years, businesses founded or co-founded by women have been consistently outperforming those started by men, even in a male-dominated venture capital (VC) landscape. Despite facing a significant funding disadvantage, female founders are showing that they have the grit, innovation, and leadership skills necessary to build high-performing businesses. This trend is backed by compelling data and analysis, challenging long-held assumptions about gender and entrepreneurship.

Women-led Businesses: Performance and Growth

Companies founded or co-founded by women consistently outshine male-founded businesses across multiple dimensions. Research from BCG highlights that women-led businesses generate more revenue despite receiving less capital. In fact, for every dollar of investment, women-owned businesses generate 78 cents, compared to just 31 cents by their male counterparts. Furthermore, women-founded firms deliver twice the return on investment compared to those founded by men.

Even though women face hurdles in accessing venture capital, their businesses often see higher levels of job creation and sustainable growth. According to the World Bank, women-owned businesses are growing at more than twice the rate of all other firms, contributing nearly $3 trillion to the U.S. economy alone and £3.51 billion to the UK economy.

Barriers to Fundraising for Female Entrepreneurs

Despite their impressive track record, women continue to face systemic barriers in raising capital. Male entrepreneurs enjoy a clear advantage when it comes to funding, with 95% of VC partners being men and 90% of VC investments going to male-founded businesses. This funding gap can largely be attributed to gender bias, where male investors may gravitate towards businesses led by those who look and sound like them.

In some cases, venture capitalists even exhibit a bias towards charismatic or "good-looking" male founders, further compounding the problem. As a result, many female entrepreneurs must prove themselves to a greater extent before receiving funding, which paradoxically leads them to create stronger businesses with greater potential for success.

Why Women Excel as Entrepreneurs

Women entrepreneurs excel for a variety of reasons, many of which are rooted in behavioral and psychological differences from their male counterparts.

1. Higher Standards for Funding: Since female founders often face a tougher time securing investment, their businesses are held to a higher standard from the outset. This ensures that the ideas, teams, and business models of women-led firms are often more robust and capable of withstanding scrutiny.

2. Efficiency and Focus: Women generally raise less capital than men, which forces them to focus on unit economics and operational efficiency. This often makes them better managers of resources, ensuring that every dollar counts.

3. Collaboration and Openness: Women score higher than men in communal tendencies, such as openness and collaboration—key traits for building strong, cohesive teams and thriving businesses. These qualities enable women to foster relationships, build networks, and create partnerships that drive long-term success.

4. Risk Management and Loss Aversion: While male and female entrepreneurs are equally willing to take risks, women tend to be more loss-averse. This higher sensitivity to potential losses makes them more thoughtful and strategic when taking risks, resulting in better long-term risk management and decision-making.

5. Intrinsic Motivation: Female entrepreneurs are often driven by intrinsic factors such as autonomy, purpose, and the desire to make a meaningful impact on society. Unlike many male founders, who may prioritize external rewards like financial gain, women tend to be motivated by the opportunity to create value and contribute to the community. This focus on purpose can lead to more innovative and impactful business models.

   
   

Misconceptions About Female Entrepreneurs

One common misconception is that women succeed in entrepreneurship because they "work harder" than men. While some research suggests that women may be more productive in the workplace, there is no evidence to suggest that female founders simply outwork their male counterparts. Both male and female entrepreneurs face the same challenges in building successful companies, but the unique strengths and approaches of women often give them a competitive edge.

The Path Forward for Investors

The continued success of women entrepreneurs should encourage venture capitalists to reexamine their investment strategies. With female-led companies consistently delivering higher returns, investors who overlook these founders due to bias are missing out on significant opportunities. The message for investors is clear: if you want to optimise your portfolio, don’t let gender biases cloud your judgment.

In a landscape where 95% of venture capitalists are men and 90% of their investments go to male founders, there is a clear need for greater diversity in both investment decision-making and the companies being funded. Supporting female entrepreneurs is not just the right thing to do—it’s also a smart business decision.

The Future for Women Entrepreneurs

For women who are considering entrepreneurship, the data is promising. Women founders are demonstrating that they have the skills, vision, and resilience to outperform their male counterparts, even in the face of systemic challenges. If you have a passion for making a difference and the drive to build a successful company, the odds may be more in your favor than you think.

To aspiring female entrepreneurs: take the leap, embrace the challenge, and know that your chances of success are significant. And to investors: it’s time to look beyond outdated biases and recognise the incredible potential of women-led businesses.

The future of entrepreneurship is female, and the results speak for themselves.