Why Female Founder CEOs are the Future Face of Business

Articles
Written By Jennifer Clamp

Being a female founder has its unique challenges. But the world is changing. The qualities female founders bring to a business are gaining value. There is an emerging sub-ecosystem of support for female founders fuelled by women and male allies, which I reference in this article. In addition to advice for investors and service providers wanting to support female founders.

Last updated: June 2023

A Golden Era

“We are moving into a golden era for female founders and a feminine style of leadership.”

- Deborah Meaden -

As society struggles with economic and climate poverty and the planet suffers from climate change, the business world is moving towards the strengths women bring to business.

The feminine qualities of caring and drive to make a difference are becoming increasingly important to consumers. Their good judgment in generating commercial returns whilst running businesses organically and compassionately is attractive to employees who crave these qualities in their places of work. And attuned investors are taking note.

Female founders are bold in putting their values upfront and prioritising them in decision-making. But they aren’t compromising on business results. Instead, they collaborate, partner, and support one another, using alternative business structures like community interest companies (CICs) and cooperatives and working through alternative business networks.

It’s not surprising that women are at the heart of new economies such as web 3.0, the circular economy, and barter-based economies. 

The bottom line is, leaning into our differences and embracing the qualities of female leadership results in highly profitable businesses that sustain themselves.

The one piece of advice successful female entrepreneurs consistently share is that they were successful because they didn’t dampen themselves down. They let their feminine qualities shine through in all their glory because ‘women are more successful when they can be themselves.’

Women and a feminine style of leadership are fundamental to a sustainable business future. The landscape is changing, and our time is now!


My observations as a woman in business

When I started Aata, I made a conscious decision to invest my career in supporting female founders to go further and thrive. What prompted this decision? Lived experience of the challenges we face.

In my corporate career, all my leaders were men. My peers were men. At the leadership table, I sat with men.

“At that point, I saw myself as an equal and that any failings or limitations were my own. Not the system I was in.”

It wasn’t until I walked into a Women’s Collective event, a bustling room of over 50 businesswomen, for the first time and saw them so expressive, engaged, and comfortable that I realised this isn’t how I saw women in the workplace and wasn’t how I was at work.

I started to notice differences in how women were treated. I became frustrated with those who tried to claim credit for my work and deeply grateful to allies who publicly recognised me by name for my successes.

I started to actively seek out other women to create spaces where we could be our bold, confident selves and be recognised.

I found the start-up world to be a great deal more inclusive than the corporate world on the surface. 

But when it comes to fundraising, it is predominantly white and male with a masculine approach to building businesses, which is to move fast and break things, no matter the cost. 

This approach to building hi-growth businesses doesn’t work for founders with a feminine leadership style.

The Female founders I work with often feel they must compromise their values and who they are to raise investment. To secure a term sheet and VC investment, many female founders conclude that they will be:

  • Pushed to commit to an aggressive ‘better case' business model that they aren’t confident in or comfortable with. 

  • Held accountable for financial returns even if at the expense of the stakeholders their businesses serve, and

  • At risk of burning out once funding is secured by working themselves into the ground to deliver on these promises. 

Is it any surprise that female founders are more cautious about taking on Venture Capital investment?


What are the challenges for female founders?

Whilst the business world aligns with more feminine values, the system hasn’t changed for female founders. Women face three unique challenges that men don’t.

#1 Conversations around money

Women tend to see money as risky. From what I’ve observed, we aren’t having enough conversations about money, in enough detail; why we want it, how to get it and how to make it work for us.

Women business owners needing finance don’t apply for it because they think it will take too long or be too much of a hassle. Women entrepreneurs share with me that they believe they’ll have to compromise their vision or their values, have to commit to projections that will require them to work themselves into the ground to deliver. Those who have had investment have agreed to terms that don’t serve them or their businesses.

All these situations suggest to me that we (women entrepreneurs) aren’t comparing notes on how we are accessing and negotiating funding.

Taken from the Small Business Financial Markets 2022/23 report Chapter 2.3 page 78

#2 The incumbents are men / a lack of visible female role models

Gender discrepancies show up most visibly when female founders attempt to raise growth capital.

According to the Harvard Business Review in 2020 (highlighted by Ashley Bittner and Brigette Lau), women-led start-ups received only 2.3% of VC funding.

Start-ups are risky businesses. Rapid growth and extreme uncertainty are the norms. To minimise risk, VCs and other funding bodies invest in what they know – in people like them. 

In an ecosystem that’s predominantly white, well-educated, and male, the less risky investment is in founders, sectors, and business models that are ‘familiar’.

Bias becomes an unconscious form of risk management. That sense of familiarity gives an investor confidence and the investee’s cause credibility.

There are various ways people will relate to (and decide whether to invest their time and money into) your business. If they can’t relate, they won’t invest.

Their ability to relate will be limited by what they know and have experienced of:

  • The problem you’re solving 

  • Your professional background 

  • Your education and qualifications 

  • Your network and professional circles, and

  • Successful people ‘like you’.

As a woman in a male-dominated environment, you can see how this doesn’t bode well! Especially for women solving problems and building products for women. 

 

The research #1 - why female founders aren't getting investment

Spice Start-ups conducted an analysis of the companies in their network to understand why female founders aren’t getting investment. They analysed 450 UK start-ups and concluded that funding wasn’t forthcoming because:

- Women start B2C ‘problem-solving’ businesses created around issues they’ve experienced - usually improving home life and consumer experience, health and wellbeing, home management, shopping small, creating communities, connecting people, and efficient caregiving.

- VCs invest in what they understand. In most cases, male VCs didn’t understand the problems faced and the market opportunities the products presented.

- VCs instead chose products and businesses they related to more easily.

 

The research #2 - shifting categories of women-led businesses

BBG Ventures, a US-based fund, reject the ‘consumer-facing’ business argument, stating instead that female founders are solving real-world problems that impact millions of users at scale - increasingly through tech.

After analysing more than 5000 female-founded companies that raised capital, were acquired for more than $100 million, or achieved unicorn status between 2014 and 2022, the data showed that:

- Female founders build highly profitable companies in response to opportunities.

- In 2014, the top five categories for female-founded companies that raised funds were commerce and shopping (13%), advertising (8%), commerce and lifestyle (8%), consumer goods (8%), and biotechnology (7%).

- In 2022: The top five categories shifted significantly alongside VC trends to biotechnology (13%), software (11%), artificial intelligence (10%), healthcare (9%), and financial services (7%).

Irrespective of the kinds of businesses women create, the issue here is with perception. Female founders’ successes simply aren’t visible enough yet. 

Creating role models through better showcasing of women's achievements and exits can shift perception. 

Every female founder’s visible success paves the way for the next woman entrepreneur by evidencing what women can achieve and debunking gender stereotypes of entrepreneurship.

Additionally, as more women achieve successful exits and invest in other women-owned businesses either as angels or in VC, they will build the ecosystem around them until a tipping point is reached, and equality of investment opportunity becomes the norm.

#3 The direction of conversation

Most investors won’t dismiss a business purely because it’s run by a female founder or a novel product or industry. They are looking for ‘disruptive’ businesses, after all. 

However, if she’s invited to pitch, unconscious bias continues to play out when a female founder gets into the room with an investor.

Dana Kanze showed that the questions asked of female founders in investment conversations differ greatly from their male counterparts, which is highly problematic from an impartiality and process standpoint.

 

The research #3 - women founders are asked different questions

A hugely valuable and well-cited piece of research initiated by co-founders, one male and one female, with the same qualifications found that investors were constantly asking them different types of questions.

The man was asked to expand on the business’s potential – selling the vision. The woman was asked about the business’s potential failure – justifying the risks.

Unsurprisingly, the impact of these different lines of questioning was:

- Male founder: Secured VC investment

- Female founder: Received unsolicited advice and/or offers of mentorship.

These varying lines of questioning imply a belief that a woman won’t be able to handle their growing businesses, whereas men are encouraged to be more ambitious.

An intention to invest in more female-founded businesses isn’t enough to address bias in the investment decision-making processes. 

Forward-thinking VCs (Ada Ventures, Astia, Diversity VC, Kindred Capital, and Playfair Capital) share my view, having invested heavily in their application and selection processes to minimise the possibility of bias and ensure diversity of investment across their portfolio.

#4 Questioning her commitment

Let’s address the elephant in the room: Motherhood. 

Women face the professional consequences of being child bearers, whether they do or don’t decide to have children, in a way men don’t.

A woman’s commitment to their company over family will be questioned – whether face-to-face or behind closed doors. To the extent that women have gone to great lengths to hide a pregnancy when fundraising.

There is pressure on women to make a decision to dedicate themselves to their work or to dedicate themselves to their family, and assumptions are made about what they want or are capable of and what ‘dedicated to their work’ looks like.

Women shoulder the lion's share of caring responsibilities in their lives, whether that’s children or elderly parents, and are achieving success as entrepreneurs with little to no ‘enabling’ environment—meaning policies supporting childcare and other services that help women entrepreneurs. 

The scope of what most female founders are juggling is immense, but instead of applauding her, it is used to evidence a lack of commitment. 

“...There are cultural and social biases against women…It’s obvious there are role models. But somehow, we do a bad job of showcasing these role models and breaking down the perception that somehow women will not be as committed or successful. Perception is reality.”

Aileen Ionescu-Somers, Exec. Dir. of GEM

Perceptions that somehow women will not be as committed opens the door to all sorts of bad behaviour and taking advantage by investors, co-founders, and employees of female founders carefully balancing the work-life juggle.

What comes from women having to manage conflicting commitments is tenacity, pragmatism, and a clear focus on what’s important. That, coupled with her nurturing nature and deep caring are what makes female founders excellent business leaders.

The Business Benefits of Feminine Leadership

After spending a decade submerged in the start-up ecosystem and now working exclusively with female founders, I can say with certainty that women do things differently. We build balanced businesses that scale sustainably. We create compassionate, inclusive cultures that stand the test of time, and we raise each other up rather than bring each other down.

I’ve observed five leadership qualities common to the women leaders I work with. They are:

  1. Impact driven 

  2. Building a legacy business

  3. Realistic in their projections

  4. Values-driven

  5. Humble  

From working with several impact and sustainability accelerators and incubators, I’ve noticed that predominantly women apply, wanting to solve a gritty problem and build a business that will sustain beyond their involvement. They want to leave a legacy.

“Contrary to the stereotypes, female founders are driving outsized returns in technology and health focused companies.” BBG Ventures

Female founders recognise the system in which they operate and naturally consider the impact of their decisions on all stakeholders. Creating value for all stakeholders and not exploiting them is good for the bottom line and for the long-term, sustainable success of your businesses.

Female founders have strong values that guide them in their business decisions. This values-led approach comes through in the business structures, business models, and ways women grow their businesses. It drives innovation in finding ways to deliver profit and impact in lockstep.  

Women tend to grow businesses through collaborating, partnering, and supporting one another. Working through alternative business structures such as community interest companies (CICs) and cooperatives. Women are at the heart of new economies such as web3, the circular economy, and barter-based economies.

Female founders are grounded. When asked, they’re clear about business risks and tend to only make promises they feel confident they can keep without exploiting or burning resources or undermining the integrity of the business. This is a strength but has, by some investors, been perceived as a lack of ambition. 

Having become accustomed to the over-inflated, unrealistic projections in the start-up space, I find realistic promises a welcome contrast – self-sustaining without requiring round after round of investor cash.

Female founders are humble, often sharing in our sessions that they feel like imposters, about to be ‘found out’ as unworthy of their public success. Whilst this can feel challenging, her humility is part of what makes women great leaders. They don’t believe they have all the answers and seek out external expertise and alternative perspectives, which both enables them to keep evolving as leaders, enables innovation and robust decision-making. 

This humility, deep caring, and pragmatism mean that when women build businesses in a way that has integrity for them, they are well designed and well managed, which results in greater, sustained profitability.

“Businesses founded by women ultimately deliver more than twice as much per dollar invested than those founded by men”. 

The facts are that women build businesses that perform better – delivering higher revenue of more than twice as much per dollar invested – as evidenced by The Boston Consulting Group. Whilst returning greater profits, women also incur fewer fines for social and environmental harms, choosing instead to build sustainable solutions from the outset.

The Landscape is changing for female founders

Despite the painfully low percentage of investments made into female-led companies, slowly but surely, the start-up space is waking up to the benefits of female leadership. 

There is a growing focus on supporting female founders, underpinned by annual reports such as The Rose Review in the UK and the Global Entrepreneurship Monitor. 

More professionals, like me, are choosing to invest their careers in championing women leaders and feminine leadership and advocating for the change that’s happening all around us.

There is advice, guidance, and support for female founders out there. The trick is getting yourself plugged into communities of successful women and their allies, like those listed below.

Support that’s needed for female founders

I see three key areas of support required for female founders. They are:

A network of trusted peers

“When we’re together, women do things differently.”

Greater support is required for women beyond the early stages and the superficial. We need more allied investors and influencers within the ecosystem.

Big networks are great for asking for referrals, posting a job, or signposting support, but few founders want to be vulnerable about their deepest, darkest struggles in an open forum. 

Further, female founders are unlikely to share their insecurities around fundraising while pregnant or navigating maternity leave with a mixed group of male and female founders. 

Through our research, my colleague Ranti Williams and I have found that founders outgrow their support networks when they start to scale. They need a new peer group with whom they have deep, confidential relationships, who are at a similar stage in their journey, and who share their challenges. 

Without this network, they often become overly reliant on investors for guidance and support, which both parties recognise is a recipe for conflict.

Female founder-only groups where trust can be built over time, such as peer group coaching programmes, have a role to play in facilitating those relationships in a focused and productive way.

A new approach to investing

As more investors want to invest in female-founded businesses, they need to get better at supporting female founders and be willing to:

  • Have their investment partners be available to female founders

  • Open doors and make introductions for female founders

  • Advocate for those female founders they invest in

  • Be the lead investor (financially or through advocacy), and

  • Work with their peers to find co-investors and close rounds.

I would go further to suggest that traditional approaches to investing and term sheets need to change if women are to be fully empowered to deliver on their business potential. [More to come on this, sign up to my newsletter to hear more.]

Support for women from women

I’m hearing female founders say they want a coach who ‘gets it’. A coach who’s also a woman and understands the challenges and trade-offs they face. They’re looking for someone who not only understands what is required to scale a business but also has:

  • Lived experience of the challenges women face. 

  • Been the only woman leader around the table.

  • Held their ground when others attempted to claim their successes. 

  • Juggled pregnancy and maternity leave whilst keeping a business going. 

  • Navigated the unbearable tension of wanting to give 100% to your business and your family and feeling like you’re failing at both. 

  • Carried the mental load women carry in their personal and business lives, and

  • Been intentional in defining their role within their business, balancing all of the above.

It, therefore, makes sense to have more women who have had these experiences in investment and support roles for female founders

What would an ecosystem built for female founders look like?

Whilst we tweak the current system, I do wonder what a start-up space built from scratch for female founders would look like.

I’d love to explore this with a group of individuals with different perspectives who can challenge one another’s assumptions and design it from a first principles basis – and then identify what could be done today to bring that vision to life. I suspect that Coralus is part of the way there!

Until that happens, I’ll continue the good fight, supporting my female founder clients through coaching and speaking up about the challenges faced by female entrepreneurs and ways we can address them at every chance I get - with other coaches, angel groups, and VCs. 

Please don’t hesitate to reach out to continue the conversation.

(The end.)

Available support for female founders > a consolidated list for your convenience

This final section consolidates support that’s already available. This is a ‘live’ list, so please let me know of other resources and initiatives as you become aware of them.

Investment Partners

If you’re looking to raise capital, you can better your odds by carefully choosing the investors you approach. Values-led VCs are on the rise. I’ve profiled 15 VC investors who champion diversity in their founding teams.

Here are some other sources of female founder friendly investors -
Diversity VC  has launched its industry-standard – assessing VC’s recruitment practices, culture, deal flow, and portfolio guidance policies against diversity, equality, and inclusion best practices. Investors who partner with Diversity VC are a good starting point.

Landscape VC, the Glassdoor of investment, has compiled founder feedback on VC firms across the industry – portfolio diversity and inclusion being core criteria.

There’s the Investing in Women Code, a commitment by financial service firms to improve female entrepreneurs’ access to tools, resources, and finance - complete with a full signatory list.

Sifted regularly publish lists of female angel investors, VCs, and investment options.

Angel groups investing exclusively in Female Founders are Impact Ventures and Alma Angels.

Considered capital regularly publishes a list of alternative funding options such as zero equity grants.

Organisations investing in the issues women care about

  • Such as Femtech Lab, a community centred around womens’ health and wellbeing and

  • Common Magic who invest in businesses with community at their core.

Hands on support

If you’re looking for more hands-on support, here’s a growing number of female founder focussed accelerators and incubators which have their own communities and standalone networks, including:

Advice

Publications & Referenced Research

Jennifer Clamp
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