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Has Their Time Finally Come?

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By John Mullins, Associate Professor of Management Practice in Marketing and Entrepreneurship at London Business School

What if universities simply excluded half the population from which they might draw? What if companies in need of top talent restricted their hiring to half of the available candidates? Or more pertinently to my message here, why do investors in promising early-stage ventures write cheques almost exclusively to startups whose founding teams are entirely or predominantly male? All patently absurd, of course.

Analysis by the Boston Consulting Group (BCG) reveals that if women and men around the world participated equally as entrepreneurs, global GDP could ultimately rise by approximately three per cent to six per cent, boosting the global economy by $2.5trn to $5trn.

A report by the Alan Turing Institute, Rebalancing Innovation: Women, AI and Venture Capital in the UK (October 4, 2023), found that female-founded companies account for under three per cent of venture capital (VC) funding deals involving AI startups.

Between 2012 and 2022, 80 per cent of total capital invested by VCs in AI was raised by all-male teams. In contrast, all-female teams raised a mere 0.3 per cent. When female-founded AI start-ups secured funding, they received on average six times less capital per deal than start-ups founded by male entrepreneurs. All-female teams raised £1.3m per deal compared with an average of £8.6m raised by all-male teams.

The larger question

Which begs the larger question, why is the business world failing women in educating, encouraging, training and supporting them in their entrepreneurial endeavours? Of course, there are academic institutions such as my own London Business School and the Institute of Entrepreneurship and Private Capital (IEPC) which do a considerable amount to turn this difficulty into an opportunity.

A case in point: In the coming weeks I will be working with LBS colleagues to deliver three one-day workshops for an incredibly diverse lot of more than 200 female founders from across the UK. Part of the Female Founders Rise (FFR) initiative, the workshops we offer will seek to bring more UK women into entrepreneurship and help them succeed in doing so. As FFR’s founder Emmie Faust (a formidable entrepreneur in her own right) puts it, “Bringing high-quality entrepreneurial learning to female founders is vitally important. Building relationships and finding other founders at a similar stage of growth is also critical to achieving success. These workshops will enable our members to foster deeper connections in person”.

The value of community support and doing the right things

Being an entrepreneur is a lonely world for anyone and it is clear from studies and reports such as those from the Adam Turing Institute and BCG, that risk, or rather a fear of risk taking, plays a part in keeping some women away from becoming entrepreneurs. For those having the courage to take the plunge, however, I offer the following advice that I give to all my students and mentees:

Find the right community and the right mentor: Support groups such as Female Founders Rise are important if there is an absence of friends or family to support you. But, even better, people with solid business experience, particularly experience of running their own company, often welcome being approached for advice and support. They pay it forward, as the saying goes. So, find someone who can advise you as you get your business off the ground.

Research, research, research! Understanding of the way markets, industries and different business ecosystems operate is essential to anyone contemplating becoming an entrepreneur. It is not something you can just jump into without any planning or preparation. And while you need to take the time to learn about your target market and industry, you may also need to gain at the very least basic proficiencies in accounting, marketing, product development, and so on.

Be prepared to work hard: This is not meant to frighten would-be entrepreneurs, but you will lose sleep and you will work long hours. The passion you have for your business will be the reward! And you will need to allow for the financial and emotional bandwidth to reach the finish line.

Be patient (or at the very least learn to pace yourself): There is no such thing as an overnight success! You need to hone your skills through experimentation, through trial and error, and failure is part of the entrepreneur’s landscape. That’s how we entrepreneurs learn best and most viscerally. As they like to say in Silicon Valley, “Failure is an education paid for with someone else’s dollar.”

Inherent challenges for female entrepreneurs

From facing funding challenges, to competing in and against male-dominated businesses, women are often made to feel out of place in the world of entrepreneurship. This is lamentably unsurprising if one looks at the wider situation for women in the workforce. According to my London Business School colleague Dr. Dana Kanze, Assistant Professor of Organizational Behavior, women grappling with wage disparities in male-dominated industries try to take control of their earnings potential by founding their own ventures, but they face similar disadvantages in that capacity as well. Dr. Kanze and her colleagues’ research indicates female founding CEOs raise significantly less funding at significantly lower valuations for significantly less retained equity than their comparable male counterparts when catering to male-dominated industries. Helping to explain this disparity, the researchers uncovered a misperception among investors that female founding CEOs represent a lack of fit with their ventures when catering to male-dominated industries, without a comparable misperception for male founding CEOs catering to female-dominated industries. Fortunately, they did find a silver lining lies in the sophistication of investors that can tighten these gender gaps, pointing to the need for greater financial decision-making literacy among those involved in early-stage venture funding.

A way forward

A number of factors have contributed to a widespread failure to develop more opportunities for women in entrepreneurship, too many to list here. One thing is certain though. The time for small steps has gone – the scale of the loss, and the scale of the opportunities presented by having more women as entrepreneurs is far too great. We simply cannot ignore what half our population has to offer. So, how might we change the narrative?

In my newest book, Break the Rules! The Six Counter Conventional Mindsets of Entrepreneurs That Can Help Anyone Change the World, I explore the mindsets behind entrepreneurial success and how today’s very best entrepreneurs are able to challenge assumptions, overcome obstacles, mitigate risk, and – sometimes – change the world. It is they who make the seemingly impossible possible. I invite aspiring female founders to master one or more of them and make them their own.

Let’s therefore make 2024 the year of the giant leap forward for female founders. Their time has come!

John Mullins is a best-selling author, a thought leader and Pied Piper for entrepreneurs worldwide who want to grow their businesses, and an Associate Professor of Management Practice at London Business School. View his latest TED talk at go.ted.com/johnmullins.

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