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Why Investing in Female Founders Matters Now More Than Ever

Diversity not only fosters an equitable environment and sparks innovation, but it’s good for business. Data show that diverse teams produce higher returns than homogeneous ones.

2020.04.28

Christine Tsai

Christine Tsai

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Long before diversity and inclusion became buzzwords, we decided to make venture capital inclusive from day one at 500 Startups. They became our guiding principles, because we know that great talent exists in all forms, no matter your gender, race, nationality, age, or background.

Since 2010, we have expressed our commitment to those values in multiple ways. 500 actively invested in founders who were diverse or were building for diverse customers; we shunned manels by making sure to feature female speakers at our events, so that it wasn’t predominantly men doing the talking. 

This extended to policies 500 implemented. We offer 12 weeks of fully paid leave for all parents in the U.S., which, sadly, puts us in the minority of private companies providing such benefits. To support female founders and staff who had recently given birth, we also set up a mother’s room at our office where they could pump milk in a quiet, clean environment or nurse their baby. 

The makeup of our executive team reflects 500 values as well: three out of the seven members are women.

Why is all this important?

Diversity not only fosters an equitable environment and sparks innovation, but it’s good for business. Data show that diverse teams produce higher returns than homogeneous ones.

Unfortunately, we may be in danger of losing the little progress we’ve accomplished on diversity and the small gains female-led startups have made over the last three years in raising money. The economic fallout of COVID-19 could prove harder on women than men, especially if investors retreat into what they might perceive as safer and more familiar investments. 

How 500 compares

25.5% of our portfolio companies have one or more female founders, compared to 20% for all VC-backed companies. When it comes to capital, 23.7% of our investment dollars have gone into startups with a female founder, compared to 18% for the industry. 

But that’s not enough. We need to do more. 

Here’s our commitment:

  • Increase our global outreach to find the best female-led companies.

  • Offer a flexible and tailored accelerator program to meet the needs of female founders regardless of location.
  • Continue to offer bias awareness training to make sure our investment team is not unwittingly discriminating against women and minorities. 
  • Provide resources for female founders that are designed to help them scale, grow, and connect with investors globally.

  • Measure the number of female founders in our portfolio who have received funding as part of our contribution to UN Sustainable Development Goal 5: Achieve gender equality and empower all women and girls.

I invite all of you who champion female entrepreneurs to join us in this endeavor by adding your support here. Now is the time more than ever to renew our commitment.

 

 

Legal Disclaimers

This post is intended solely for general informational or educational purposes only. 500 Startups Management Company, L.L.C. and its affiliates (collectively “500 Startups”) makes no representation as to the accuracy or information in this post and while reasonable steps have been taken to ensure that the information herein is accurate and up-to-date, no liability can be accepted for any error or omissions. All third party links in this post have not been independently verified by 500 Startups and the inclusion of such links should not be interpreted as an endorsement or confirmation of the content within. Under no circumstances should any content in this post be construed as investment, legal, tax or accounting advice by 500 Startups, or an offer to sell or solicitation of interest to purchase any securities advised by 500 Startups. Prospective investors considering an investment into any 500 Startups fund should not consider or construe this content as fund marketing material. The views expressed herein are as at the date of this post and are subject to change without notice.  Unless otherwise indicated, figures are approximated based on internal estimates as of 4/27/20 and have not been independently verified. Nothing herein constitutes any guarantee of admission to a 500 Startups accelerator program, investment by 500 Startups or investment support. 500 Startups’ accelerator application review and selection processes shall continue to apply.  

 

 

 

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