FINAL WORD
There ’ s a saying in start-up investment circles that goes : ‘ Back the jockey , not the horse ’. The idea is that a great entrepreneur can take a moderately good idea and ride it to outstanding success . While this attitude is a little more tempered in the private equity space , where we ’ re sometimes looking to turn struggling businesses around , the point still stands . If a business is to be successful , it needs to have a solid leadership team .
This is true for general investment success but is especially so when it comes to reversing some of the major disparities faced by female-founded and run businesses . By focusing on leadership , investors can find promising businesses that others have turned down and potentially reap serious rewards as a result .
A bad state of affairs
Before digging into how investors can best go about identifying great leadership , it ’ s worth looking at the current state of affairs .
Globally , less than 5 % of venture capital went to female-led start-ups in 2019 . That wouldn ’ t be a problem if only 5 % of businesses were founded and run by women , but that ’ s simply not the case . In the UK , for example , nearly a third of businesses are run by women . It ’ s also simply not true that all 95 %+ of start-ups that are maleowned are more deserving of funding .
Additionally , investors are missing out on a major opportunity . According to a study by the Boston Consulting Group , if women participated equally as entrepreneurs , the rise in GDP across the world could be between 3 % to 6 %, adding up to a US $ 5 trillion injection for the global economy . Other research has also shown that start-ups with at least one female founder raise , over time , 21 % more VC funding than companies headed by all-male teams .
The link between racial and cultural diversity and start-up success is similarly well established . A study by the Kauffman Fellows Research Centre found that start-ups with diverse founders outperform others by 30 % when they go public or are acquired , providing improved returns for investors . female-founded businesses for the sake of doing so will only take you so far .
Finding great leadership
While setting targets for investing in female-founded and run companies can help clear some of the gender bias that investors have , it doesn ’ t guarantee success . Instead , investors need to focus on identifying and nurturing great female leadership .
The first is relatively easy to identify , provided investors are willing to overcome the subconscious bias they might have towards male founders ( even if they happen to be women themselves ).
One of the most obvious qualities to look for in any leader is self-belief . It ’ s important to note , however , that I ’ m not talking about unfounded confidence . Real self-belief comes from having done your homework and stress-tested your concept , product or business plan . Ultimately , having the courage to back yourself is important . Even more important is being able to back up your belief with evidence . Leaders who understand that and can demonstrate why their business works are more likely to succeed in the long run .
It ’ s also important , however , to look for leaders who can take ( and give ) candid feedback . People tend to hold back on giving candid feedback to women . When it comes to leadership , that sometimes means missing out on aspects of the business that could be improved upon .
Leadership that can give and take this kind of feedback is capable of looking beyond the merits of their business and recognising that there are flaws that need to be worked on . It ’ s also capable of standing up for itself when needs be and ensuring that the business gets everything it should out of any received investment .
RunwaySale stands tall
REAL SELF-BELIEF COMES FROM HAVING DONE YOUR HOMEWORK AND STRESS-TESTED YOUR CONCEPT , PRODUCT OR BUSINESS PLAN .
Bryan Turner , Partner , SPEAR Capital
While there is naturally a lot of attention paid to start-ups , the same trends are true across business maturity levels . Just 5 % of FTSE 100 companies , for example , have female CEOs . It ’ s also clear , however , that simply investing in
A great example of this kind of leadership from within our own portfolio is RunwaySale . Led by Co-Founder and COO , Elmien Hammerschmidt , the Cape Town-based e-commerce retailer employs nearly 150 people , 77 % of whom are women .
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