Why it’s incredibly rare for women-led companies to IPO


Earlier this yr, Whitney Wolfe Herd made historical past when she turned the youngest feminine founder to take her firm public. She rang the Nasdaq bell wearing a shiny yellow energy go well with, a hat tip to Bumble’s signature shade—whereas holding her toddler son, a hat tip to the hundreds of thousands of girls who’ve been working from dwelling with youngsters crawling throughout them through the pandemic. Ladies like me.

This picture stands out not simply due to the brilliant yellow go well with and the child in hand, but additionally due to how extraordinarily rare somebody like Wolfe Herd is. Greater than 2,000 companies went public within the U.S. between 2013 and 2020. However only 18 of them have been led by a feminine founder and CEO.

This stark statistic is itself a consequence of who will get funded. Enterprise capital gives the {dollars} that gas companies from two guys (sure, guys) in a basement to ringing the inventory alternate opening bell. And whereas billions of {dollars} are invested within the house yearly, simply over 2% of those go to female-founded companies.


This stunning quantity can be a consequence of who does the funding. In accordance to information from Ladies in VC, solely 4.9% of U.S.-based VC companions are ladies, and fewer than half (2.4% of the whole) are founding companions who management an outsize proportion of a agency’s funding choices. The Securities and Trade Fee not too long ago reported that throughout all asset lessons lower than 1% of $70 trillion in global financial assets are managed by minority-owned or women-owned companies.

So if lower than 0.01% of all U.S. IPOs are led by feminine founders, and that is partly as a result of solely 2.3% of VC {dollars} go to feminine founders, which itself is partly as a result of solely 2.4% of VC founding companions are ladies, it begs the query:

Why aren’t extra ladies beginning VC funds?

If you happen to go by what you learn, by and enormous they’re. Lots of of latest microfunds, a lot of them led by ladies and underrepresented traders, are popping up and making waves. However the noise will not be but the sign: The Ladies in VC report from 2020 discovered that solely 5.6% of U.S. enterprise funds had a minimum of one feminine founding associate. Jessica Peltz-Zatulove, cofounder of Ladies in VC, estimates that there are fewer than 1,000 ladies in all the world who’re founding VC companions. That’s half as a lot because the quantity of people that get killed by lightning on the planet yearly.

Elevating a VC fund is difficult for most individuals. You want grit, enterprise and monetary acumen, specialised information of the house, entry to “dealflow,” wonderful storytelling expertise, and the power to negotiate and shut offers over time with out pissing folks off. Most vital, elevating a VC fund requires cash and entry.

“The standard route to beginning a enterprise fund requires a sure stage of economic independence and an intensive community of potential traders,” says Martina Welkhoff, managing associate at WXR Fund.


Mainstream VC funds are funded by restricted companions (LPs), usually massive establishments and ultrahigh web value people, every of whom invests up to tons of of hundreds of thousands of {dollars} at a time. However these establishments need to see a fund’s trajectory earlier than they make investments, so the majority of those {dollars} should not out there to new fund managers. What’s extra, these traders should not simply discoverable. You’ve got to have an “in.”

“We’ve been associates with just a few unbelievable ladies rising managers who had spectacular returns, a number of exits, and a few high Silicon Valley founders of their portfolios—and nonetheless have been going through challenges whereas pitching to LPs,” says Sophia Platt, founding associate at the Bridge, a convention that connects rising managers with potential traders. “A few of these ladies take 60-plus conferences every week however nonetheless battle to shut small proof-of-concept funds.”

Rising funds are extra possible raised from particular person traders every contributing a comparatively small quantity. You want dozens, if not tons of, of rich people prepared to take an opportunity on you when no one else is. For people who find themselves not already nicely linked and rich, this train is daunting.

“For underrepresented funders, it’s the convergence of unconscious/acutely aware bias and a perceived lack of related expertise which makes breaking into VC and elevating a fund from the bottom up tough,” says Cat Hernandez, associate at the Venture Collective (TVC) and normal associate at TVC Momentum Fund. “The most important problem, by far, is deeply integrating your self into networks of excessive web value people and household workplaces.”

Numerous initiatives have sprung up to handle this hole. For example, tech government and Community Fund normal associate Lolita Taub launched a matchmaking tool to assist different rising managers join with like-minded LPs. “If GPs meet with the right-fit LPs, magical issues can occur like launching a fund,” she says.

Platt and her cofounder, Emna Ghariani, are trying to join the dots at scale via the Bridge. “Our mission is to create the world’s largest ecosystem for ladies fund managers and potential traders of their funds,” says Ghariani. The 2 Bridge conferences to this point have resulted in additional than 400 fund-investor matches and 9 profitable investments. The cofounders are aiming to double these numbers with the subsequent Bridge convention this summer season.

“The aim is to get these ladies funded—to put them in entrance of potential traders who they might by no means entry in any other case,” Platt says. “We give alternative to anyone who has the ambition, the talent, and the observe report to increase a VC fund.”

Leslie Feinzaig is the founder and CEO of the Feminine Founders Alliance.