Women-led venture-backed companies more successful, study says
The presence of female executives in a start-up may influence its financial success, according to a new study.
Venture-backed companies with more females on their executive teams are more likely to be successful than companies with less female executive representation, the Dow Jones VentureSource study suggested.
Only 1.3 percent of privately held companies have female vice presidents, and 6.5 percent have a female chief executive. But a little more than 7 precent of executives at successful venture-backed companies are female, as compared to 3.1 percent at unsuccessful companies. For start-ups with five or more females, 61 percent were successful and 39 percent struggled.
The study considered a company to be successful if it had gone public or registered for an initial public offering, was privately held and profitable, or had been acquired for more than the venture investment. The conclusions were based on data from 15 years of venture-backed company data and executive information, and covered 20,194 venutre backed companies between 1997 and 2011.
Brooke Salkoff, chief executive and founder of CampEasy, a McLean-based Internet company helping parents search and schedule camps and programs for childrens’ out of school time, has one other woman on her four-person executive team. Founded in January of this year, the company already bringing in revenue, though not yet profitable — so while her company does not yet qualify as a “successful venture-backed company” by the study’s standards, she believes it soon will.
In Salkoff’s experience, women are often strategic thinkers — but they don’t always articulate their strategies as well as men do, explaining why so few women are in executive positions.
Even so, as chief executive, Salkoff said she doesn’t making hiring decisions based on gender. CampEasy’s vice president of sales happens to be female, Salkoff said, because she was adept at relating to CampEasy’s mostly female target audience.
“Women do tend to choose their teams very carefully,” she said, which could explain her company’s success.
But for Rose Park Advisors founding partner and former venture capitalist Whitney Johnson, the presence of female executives alone isn’t the key to success. Instead, she believes the interaction between male and female executives helps companies get ahead.
“There are different skillsets and gender strengths, because men and women approach the world differently. There’s a little more friction — not everyone’s exactly alike, and there tends to be an openness to innovation,” she said.
“If there were all women there, there would be a problem on the other side,” she said.
Johnson said the creative tension is part of her investment philosophy.
“You need to have men and women involved,” she said, noting that in her experience, the return on investment for a company with a significant number of women has historically been 35 percent higher than those without.
But she also noted that, in her experience, women often have to work twice as hard than men to get promoted — so it’s possible that the female executives had already cleared a “higher bar” of success, she said.
This story has been updated to reflect that CampEasy is not yet profitable. An earlier version said it was profitable.
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