Entrepreneurship: Unpacking the Landscape of Women-Led Startups
Women-led businesses are on the rise, but significant hurdles remain firmly in place
Decades ago, the idea of a female entrepreneur or business owner would have been met with scepticism or downright rejection. But the picture looks brighter today as we see a 114% rise in the amount of female business owners in just two decades.
With women-owned businesses making up nearly 42% of all businesses in the United States alone, it's clear that the tenacity and determination of women in business is paying off, paving the way for future generations of women to pursue their dreams and achieve their goals.
But what exactly does the landscape of women founded startups actually look like? And what are some of the obstacles women continue to face in the startup world? Here, we provide a deep dive into the startup landscape in order to paint the picture for you.
The benefits of women-led startups
Women-led startups contribute to the wider economy
In the US alone, women-led businesses contributed $3 trillion to the economy and provided jobs for 23 million people, showing that women contribute to the macroeconomic picture like never before.
Source: Gitnux market data
Women-led startups decrease unemployment
14% of women-led businesses employ between 11 and 50+ workers which in turn decreases employment. A huge win for society and equality!
Source: Gitnux market data
59% of women-led businesses in the US are profitable
The most recent statistics for women entrepreneurs show that in 2021, 14% of 595 unicorn startups had female founders or co-founders.
Source: Gitnux market data
Only 6.2% of the CEO positions in the S&P 500 are held by women
This harsh truth serves as a powerful reminder that with more and more women launching their businesses, we can establish more equality in the business world and change the course of history.
Source: Gitnux
Women-led startups: an overview
Women own 36% of small businesses worldwide
Although it’s not an even playing field, this shows the tenacity of women and the moves they’re making to establish their own financial freedom in the 21st century.
Source: Legaljobs
47% of women started a business in the last year, compared to 44% of men
With the desire to pursue their passions being the top motivator for starting their own business, it’s clear that women are taking control. More and more women recognize the importance of creating their own wealth and securing their financial future.
Source: Legaljobs
Women started 49% of all businesses in 2021
In the US alone, women launched nearly half of all businesses – a strong indicator that women are feeling more empowered to get their business ideas off the ground.
Source: World Economic Forum
Women founded 17,500 businesses in the UK in 2022 alone
16 to 25-year-old women founded nearly 17,500 businesses in 2022, a figure that's more than 22 times greater than in 2018.
Source: Natwest
Female-led unicorns are on the rise
Between 2020 and 2021 alone, there was a 400% increase in the number of female-led companies reaching unicorn status (companies that reach a valuation of $1 billion or more).
Source: Arabian Business
Developing countries are also seeing spikes in female entrepreneurship
Between 8 million and 10 million small and medium-sized enterprises across the developing world have at least one female owner.
Source: World Bank
Female startups perform better
In 2018, it was revealed that for every dollar of investment raised, startups with at least one female founder produced 78 cents in revenue, a sharp difference between male-led startups which only generated 31 cents.
Source: Boston Consulting Group
Startups with a female founder or co-founder perform 63% better for their VC investors
This data, which is pulled from 10 years of data from 300 companies, is a powerful testament to the unique perspectives and skills that women bring to the table, since 3 of their top 10 investments went to startups with at least one female founder.
Source: Firstround
Funding
Only 3% of VC funding goes to women
Women continue to be underrepresented in the VC world, proving the obstacles women continue to face when raising capital for their business. Despite the macroeconomic picture effects all startups (both male and female-led), it’s female-founded startups who are bearing the disproportionate brunt of it.
Source: Harvard Business Review
Men receive 6 x more funding than women
In 2023, men are receiving 6.2 x more funding than women, just slightly less more funding than they did in 2022 (7 x), revealing that gender disparities in funding continue to be a cause of concern.
Source: Startups 100 Index
Every 15p of equity investment in the UK goes to businesses with one female founder
This statistic proves as further evidence that women continue to bear the brunt of underfunding within the startup world.
Source: Beauhurst
The success rate of crowdfunding for women stands at 69.5%, and for men at 61.4%
Despite having difficulty raising VC funding, women have a higher success rate when it comes to crowdfunding – the process by which a large number of people each contribute relatively small sums of money, typically via the internet.
Source: 500 startups
30% of female-founded startups only have enough funding for 4 to 6 months
A runway is a timeline founders have to fund their business. In 2020, 30% of female-founded startups had just 4 to 6 months of runway. 25% had 1 to 3 months and just 8% had more than 1 year of the runway.
Source: 500 startups
Trends of women-led startups
Health and consumer products are main sectors female-founded startups focus on
In 2021, VC-funded female founders are predominantly found in the industries of healthcare (47.3%) consumer products and services (30.3%).
Source: Forbes
More than 70% of FemTech companies are founded by women
Women are revolutionising Femtech – the creation of tools, products, services, wearables and software that use technology to address women's health issues, from fertility tracking apps to financial education.
Source: McKinsey
Women make up just 4% of UK tech startup founders
Since tech is a booming industry and where the majority of investors are directing their capital, it’s a shame to find that women are underrepresented in the tech sector. With investors clambering over one another to get a piece of the hot trend of tech, women won’t benefit unless we get more women launching businesses within the industry.
Source: Information age
The world is waking up to women in business
Startup funding shows that men are receiving the biggest chunk (97%). So you’re right to think that women face some sticking points when it comes to launching their own business. But the good news is that there is a growing movement of tenacious women, pouring their passions and hard-earned cash into startup businesses. But when female businesses are statistically proven to outperform mens, there’s no reason for other women to follow suit. Of course, the success of these businesses relies on VC funding, which continues to be dominated by men. But if research is to be believed, the market is beginning to wake up to the power of women in business.
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