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Investing in Women has a Positive Ripple Effect on Startup Ecosystems

July 16, 2018

A paradigm shift is underway, led by women investors who are actively seeking out and financing women-led startups. Known as Gender-Lens Investing, these women are working hard to overcome the financial barriers many women entrepreneurs face in funding their startups.

But Gender-Lens Investing is doing more than closing a funding gap between men and women, it is also reshaping startup ecosystems by fostering diversity and inclusion.

During the GIST TechConnect “Investing in Women,” a panel of expert women investors noted that in the last five years, significant strides have been made to improve where and how investors are funding startups founded by women.

In fact, Elissa Freiha, founder of WOMENA which is an angel investor network in the Middle East, pointed out that since 2013, the number of startups founded by women in her portfolio has doubled. Freiha noted that this not only encourages more women to become entrepreneurs, the trend is creating fundamental changes to the MENA startup ecosystem.

“What I think is the best return I’ve received from investing in female founders is the ripple effect that it tends to have on the ecosystem as a whole,” said Freiha. “Our female entrepreneurs are role models. Whether you want it to be economic or not, they tend to hire in a much more diverse way. You then see the most phenomenal mixture of people, whether that’s diversity in age, in culture, in religion, in sexual orientation and gender – really represented in these companies – which breeds success.”

Gwen Edwards, trustee and co-chair of the Angel Resource Institute, said part of the reason investing in women is having a positive impact on startup ecosystems is because women entrepreneurs consider the value impact of their companies – even when they are not social impact entrepreneurs.

“Women tend to want to build a business that really has impact, even if it’s not a social impact company,” said Edwards. “Women often are trying to think about how to integrate other factors, in particular where the impact is in the community in which they work – they actually make terrific leaders in terms of team building and focus.”

In her explanation, Edwards highlighted data she has seen that shows women entrepreneurs are more likely to build a diverse team which in turn leads to a more successful startup.

Finally, Freiha and Edwards noted that women entrepreneurs also support each other, building stronger networks that help more women become entrepreneurs and connect those women entrepreneurs to investors.

Their discussion shows that investing in women is more than investing in a single company, it’s investing in a movement that is seeking to make startup ecosystems more diverse and inclusive.

To watch the full GIST TechConnect discussion on “Investing in Women,” click here.


Photo Credit: Flickr | WOCinTech Chat