Women entrepreneurship has become a mainstream topic as women in leadership positions are succeeding across business, finance, and politics. In the US alone, Women started 49% of total new businesses in 2021, up from 28% in 2019, according to the Davos Economic Forum. The Covid 19 crises seems to have helped women make bolder decisions and launch their business through digital and technology means. The Covid crises has also helped showcase women leadership in politics.
According to the World Bank, there are between 8 million and 10 million Small and Medium Enterprises (SME) across the developing world that have at least one female founder and leader. According to the same source, Togo in West Africa has the highest number of women executives, at 70.1%, while in Belarus in Eastern Europe, 70% of women are in professional roles. While accessing reliable data is challenging, the trend is clearly showing women leaders are effective in executive roles across the board.
What are the barriers and the trend?
While all this sounds promising, the barrier to entry for women leaders are still significant particularly in business. As of 2020, over 60 per cent of female entrepreneurs, funded their ventures on their own as capital raise for them appeared more challenging. According to Harvard data, only 3 percent of female founders received venture funds backing in 2020 in the United States. This represents a considerable downward trend compared to the 10 percent venture funding that female-backed ventures received before the Covid 19 pandemic.
Similarly, women experienced double the level of layoffs compared to men during the pandemic. Further demonstrating that women have higher challenges than men in terms of employability as they are still considered the preferred choice in terms of caregiving and baby-sitting.
On the flip side, and if we analyze the market trends further, we find that women are more effective than men at converting challenges into opportunities. They tend to be more resilient and more resourceful in terms of job creation and ventures launched. For instance, we find that women continue to rely on their own strength to fund their ventures resulting in greater focus on family and friends and other nontraditional sources of funding. Another market trend that is the result of lower access to capital, is that many women start building their own investment funds. Between 2017 and 20220 women leaders established 140 investment funds according to Deutsche VC study. These funds are twice more likely to invest in women backed companies encouraging new women CEO to take risks and start their ventures. In terms of the sector focus, most women business leaders in 2021 worked in Retail followed by Health, Beauty, Fitness and Food & Beverage.
A different type of leadership
Women in leadership positions seem to have greater emotional intelligence aiming to inspire, engage and partner with their team and with consumers at large. They also seem to be more motivated by long-lasting impact than profit, and are more focused on inclusiveness, sustainability, and equity. They do this as it is better for business not just because of their higher ethics.
In our experience promoting women entrepreneurs since 2015, women seem more effective than men at inspiring and motivating others. They are extraordinary at creating collaborative business environmental and lasting relationships both with their teams and with markets. They are also highly flexible and pivot quickly during times of crisis. They are not afraid of market changes and look at market difficulties as a moment of new learning. Overall, based on our data women leaders seem to be better listeners resulting in higher empowerment results for all. They are also very agile at multitasking compared to men in business.
While many believe that women were more effective than men at managing the 2020-2021 Covid 19 crises, we believe that women are better at managing crises in general and deliver greater results in business. Investing in female led or inclusive companies is good for shareholders and for stakeholders. Time for investors to take notice as they may be missing big profit opportunities due to their gender prejudice.
The information provided by Empower Capital is for general information purposes to foster the dialogue and the discussed topics. All the information on these articles are provided in good faith. However we make no representation or warranty of any kind, expressed or implied regarding the validity, adequacy, accuracy, completeness, and reliability of any information provided.