Why it Makes Sense to Support Women-Led Businesses

In mid-January, Kamala Harris was sworn in as the first female, Black and South Asian vice president in United States history. The mega milestone came after a record-setting six women announced their candidacy for U.S. president in 2019, a year when venture capital funding for female business owners hit a decade peak of $950 million, according to Pitchbook Data. 

By 2020, women continued to break barriers in every industry, with 79% of U.S. women entrepreneurs feeling more empowered than they did five years ago, according to Visa’s State of Female Entrepreneurship report. With all the momentum and International Women’s Day approaching, it’s hard not to wonder if 2021 could finally be the year of the woman. 

As promising as these reports are, they also have a striking downside. In October 2020, Pitchbook showed investments in women-led companies were on pace to be the worst since 2017. Visa also reported similar sentiment, with 66% of U.S. female entrepreneurs saying they experience difficulty obtaining the funding they need.

Capital has been a persistent issue facing female entrepreneurs for decades. A recent Crunchbase report revealed the proportion of venture dollars for women-led companies has remained stagnant at just under 3% for eight of the last 10 years. 

This year’s campaign theme for International Women’s Day is #ChooseToChallenge, which means not only celebrating the achievements of women but also bringing attention to gender bias and inequity.

What does this all mean? It means there’s still a lot of progress to be made. The good news though, is that companies can choose to be a part of making 2021 the year of the woman by supporting women-led businesses. Even better, there are plenty of excellent reasons why it makes sense to invest. 

Greater Return On Investment

Whether you’re looking to develop a corporate blogging strategy or rework your digital advertising budget, there’s likely a women-led company you can turn to. 

According to the American Express 2019 State of Women-Owned Businesses Report, there are nearly 13 million women-led businesses in the United States. 

Women-owned businesses are not only growing, they’re also finding ways to maximize budgets and deliver more for the clients they serve. In a Mass Challenge and BCG study featured in Forbes, businesses founded by women reported more than two times as much per dollar invested than companies founded by men. 

Big Opportunity in Social Capital 

Given that women-led businesses already show greater promise for return on investment, shouldn’t more access to financial capital be enough to balance the gender gap? If you’re serious about supporting women-led businesses, consider investing in both financial and social capital. 

Harvard Business Review found that large companies can play a big role in cultivating networks for female founders, which ultimately work to narrow gender gaps in business sustainability and open pathways for funding.

More Diversity Equals Greater Innovation

BCG commissioned a survey of more than 1,700 companies of all sizes and industries in eight countries across the world to do two things: examine perceptions of diversity among management teams and a company’s level of innovation. 

Long before conducting the survey, all signs pointed to purely anecdotal evidence that businesses with greater diversity in their leadership teams performed better financially with greater levels of innovation. 

The results from the survey were clear — companies with diverse leadership teams do perform better. What does “better” mean? According to BCG, businesses with diversity among management teams in areas like age, gender, career path and education, are more equipped to find unconventional solutions to problems and generate more ideas. 

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