Gender investment gap: Women-led start-ups raise less funds, reveals report

Start-ups founded or co-founded by women garner less in investments than men, but generate more revenue as compared to their male counterparts, says a BCG report.

According to the research, when women business owners pitch their ideas to investors for early stage capital, they receive significantly less funding. "The investment gap is real and larger than we thought," the report noted.

Investments in start-ups led by women averaged $935,000, which is less than half of the average $2.1 million invested in companies founded by male entrepreneurs, it said.

Despite the disparity in funding, start-ups founded or co-founded by women generate 10 per cent more in cumulative revenue over a five-year period.

 

According to the report, for every dollar of funding, women-led start-ups generated 78 cents, while male-founded start-ups generated less than half of that - just 31 cents.

"Businesses founded by women ultimately deliver higher revenue - more than twice as much per dollar invested - than those founded by men, making women-owned companies better investments for financial markets," the report said.

"...the disparity in funding is not due to qualitative differences in pitches or underlying businesses. Our results strongly suggest that gender plays a significant role," it added.

To determine the funding gap, BCG partnered MassChallenge, a US-based global network that offers startup businesses access to mentors, industry experts and other resources and analysed five years of investment and revenue data.