Why Male Investors Should ‘Get’ Women-Led Companies

With more female entrepreneurs reporting strong numbers, VCs and angels would be wise to back their startups.

Colleen DeBaise By Colleen DeBaise

Melissa Kieling, CEO of Packit.

There’s been a smattering of news lately about how women-owned businesses continue to have trouble finding investors. The world of angels and VCs is still a boy’s club, and men apparently tend to invest in other men — something investor Adam Quinton of Lucas Point Ventures  (who actually does invest in women-led companies) calls “unconscious bias.”

So it’s no wonder more organizations — from Astia Angels to Golden Seeds to Women2.0 — are cropping up to help women get the funding they need. Women are making strides on DIY crowdfunding sites like Kickstarter and Indiegogo, beating out men in terms of meeting campaign targets. But the real money — the sophisticated money — comes from angel networks and deep-pocketed venture-capital funds. In that arena, women are still falling short: Less than 7% of privately held venture-backed companies have a female CEO, according to a 2012 report from Dow Jones VentureSource. No one thinks it’s a coincidence that the vast majority of venture capitalists — nearly 96%, according to Fortune — are men.

The irony, of course, is that recent research is showing that women — surprise! — are rather good at running companies. Fortune 500 companies with at least three women on their boards had better returns on sales, equity and invested capital compared with companies with all-male boards, according to a Catalyst study. And Inc. just released its list of Top 10 Fastest-Growing Women-Led Companies. Each company on the list reported a 3-year growth rate of at least 2,400%. The No. 1 company, Packit, a maker of personal coolers founded by Melissa Kieling, reported a cool 3-year growth rate of 7,877.95% and annual revenue of about $12 million. No wonder Kieling is smiling in this photo.

So the real question: When are male investors going to “get” women-led companies? Lucas Point’s Quinton, who’s often a rare male investor at networking events for female entrepreneurs, told CBS: “I invest in women-led companies for one simple reason, which is I think I’m going to make more money.”

Sounds like a smart guy to us.

 UPDATE: After we posted this article, we heard from another smart guy — Charles Brofman of ECAP Capital LLC — who in fact is one of the early investors in Packit. (And his team consists of three other men.) “Frankly we invest based upon the value of the product and the person, regardless of gender, race, religion, ethnicity or who they may love,” Bronfman told us. “Good business ideas are good business ideas regardless of who they come from.” We couldn’t agree more.  

 

 

Posted: August 20, 2014

Colleen DeBaiseWhy Male Investors Should ‘Get’ Women-Led Companies