Where are all the female founders at technology startups today?

Less than 2% of enterprise software startups in the U.S. have at least one female founder, reveals Work-Bench’s Womenterprise Report: The State of The Enterprise Software Founder Gender Gap. This figure is based on 354 female co-founded enterprise software startups in the U.S., of which 154 received funding In 2021. 

According to the report, “While software is the dominating category for female founders, female co-founded enterprise software startups represent just 1.91% of all enterprise software startups vs. 25.3% of broader (non-enterprise specific) female co-founded startups.” 

Experts believe female founders have a tougher time getting initial funding. This is despite the fact that female-led tech companies are more capital-efficient, attaining a 35% higher return on investment, and those that are venture-backed generate 12% higher revenue compared to male-owned tech firms, according to a study by Rock Center Fellow Vivek Wadhwa. Yet, the gap persists.

The Wall Street Journal’s analysis of the issue reveals, “A combination of implicit biases, discrepancies in networking connections and a cycle that leaves women largely outside the venture-capital sphere makes it harder for female-led companies to get off the ground — perpetuating a stubborn gender gap in one of the country’s most male-dominated industries.”

Idit Levine, the founder and chief executive of Solo.io, told the WSJ about being a woman in the enterprise software space. In the half-year period in which she sought seed funding, it became apparent that while male founders were able to forge bonds with male investors, “obviously I could not as a woman,” she said.

Dana Kanze, assistant professor of organizational behavior at London Business School, said part of the reason is that venture capitalists are often former entrepreneurs, so the fewer successful female founders there are, the fewer female venture capitalists there are. 

Kanze added, “It has to do with these misperceptions that female founding CEOs are a ‘lack of fit’ with their ventures when they happen to cater to male-dominated, as opposed to female-dominated industries.”

Since the very beginning, women have been underrepresented in the technology side of the software industry. U.S. Department of Labor data from 2019 shows that 18.1% of all software developers in the U.S. are women, and those women on average earn 88.7% of what their male counterparts earn.

Additionally, research from Statista shows female employees comprise between 29% (Microsoft) and 45% (Amazon) of the total workforce at the U.S.’ two largest tech companies. But in terms of actual tech positions, this percentage falls even lower. Women occupy less than 25% of tech roles at every business that reports such data (Amazon is among those that don’t).

The Work-Bench report also revealed that, among female-founded enterprise tech startups, San Francisco has the highest concentration with 48.3%, followed by New York with 26.8%. Human resources and the future of work is the leading sector for these startups with 35.1%, followed by data, artificial intelligence and machine learning account for 19.8%.

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