Editor’s note: Zoe Barry is the founder and CEO of digital health startup ZappRx.
In Silicon Valley, the percentage of women starting technology companies is astronomically low, at a rate around 3 percent. Of privately held companies, only 6.5 percent have a female CEO, and 1.3 percent have a female founder. How is this the case, when women are earning more than half of all bachelor’s, master’s, and doctorate degrees for the first time in history?
Despite these disappointing numbers and the gender issues that have recently made headlines around the Ellen Pao and Kleiner Perkins trial, there is good news, too. Women who are in tech are doing well and getting noticed. Recent data has shown that women-led technology companies are more capital-efficient, achieving 35 percent higher return on investment. Companies founded by women also represented a record 13 percent of venture capital deals through the first half of 2013, up from only 4 percent in 2004. In other words, investors are starting to notice that it pays to have a woman in charge.
As a female entrepreneur and sole founder and CEO of a venture-backed digital healthcare startup, I’ve experienced a positive shift in how I’m treated as a woman in tech compared to the horror stories of women who came before me. This leads me to believe that now is the perfect time to make the leap into entrepreneurship as a women.
Women are being recognized as powerful leaders
Heavy-hitting women such as Marissa Mayer, Sheryl Sandberg and Ginni Rometty are in C-suite roles, running major Fortune 500 companies. Their leadership, and the headlines they garner, have popularized the image of women in high-level roles and opened the door for a conversation about the need for more female leadership in tech and beyond.
Fortunately, women outside of the spotlight are also excelling and being recognized for their outstanding leadership skills. A 2011 study in the Harvard Business Review evaluating men and women in the workplace found that:
At every level, more women were rated by their peers, their bosses, their direct reports, and their other associates as better overall leaders than their male counterparts — and the higher the level, the wider that gap grows. Specifically, at all levels, women are rated higher in fully 12 of the 16 competencies that go into outstanding leadership. And two of the traits where women outscored men to the highest degree — taking initiative and driving for results — have long been thought of as particularly male strengths.
Considering it wasn’t very long ago that women were relegated to the home and shunned from the boardroom, that is a pretty amazing and inspiring update. And for enterprising female entrepreneurs, the timing of this shift couldn’t be better.
Women-led businesses are succeeding
With strong women at the helm, something interesting (but unsurprising) is happening to their businesses: They are growing at a higher rate than their traditional, male-led counterparts. Over the past 10 years, the growth in the number of women-owned firms with $10 million or more in revenues has increased by 56.6 percent, a rate 47 percent faster than the rate of growth of all $10 million-plus firms.
Women in leadership roles also seem to be key in driving the success of an enterprise. The failure rate of startups with two or fewer female executives is 50.3 percent, but with five or more women in high-level positions, the success rate jumps to 61 percent.
In particular, women are emerging as key players in healthcare, both on the ground and in the C-suite. Women account for 73 percent of medical and health services managers, making them the face of healthcare to the general population. And over the last decade, not only has the number of high-revenue, women-owned healthcare and social assistance firms nearly tripled, but those companies are growing at an impressive rate – 54.9 percent across all healthcare and social assistance firms, and nearly 183 percent for firms with over $10 million in revenue.
With healthcare in the national spotlight, women are emerging as successful leaders capable of shepherding America into a new era of health and wellness.
The VC snowball effect
Women-led firms are succeeding and in turn, attracting more venture capital investment, leading to even higher growth. During the height of the dot-com bubble, venture capital investments in women-led businesses lagged pathetically, receiving less than 6 percent of total funds invested in the U.S. between 1997 and 2000. But between 2000 and 2011, that number shot up to 41 percent.
Combine that with the fact that when venture-backed, women-led technology companies bring in 12 percent higher revenue than male-owned tech companies and you have a Pandora’s box of potential.
As VC firms continue to be positively rewarded for investing in women-led companies, they will be more open to future investments. I’d be hard-pressed – and reluctant – to stop this snowball from reaching warp speed.
The women-supporting-women movement is just starting
There are more women entrepreneurs supporting younger and less-experienced female entrepreneurs today than ever before. For example, I had a mentor who had a huge impact on my growth and success, so I’m paying it forward.
Over the past year, I’ve been mentoring a young female entrepreneur who recently raised $1 million for her own startup and was named to the Forbes 30 Under 30 List. The great thing is, 80 percent of female tech entrepreneurs reported having mentors and, in my experience, that bodes well for their future success.
There are more women investors looking for women-led companies, or great companies to invest in and add women to their leadership teams or advisory boards because the numbers don’t lie — the odds of success with women calling the shots. The more women there are in tech, the more opportunities there will be to develop mentor relationships. If this doesn’t make right now an exciting and promising time to be a young woman launching her first company, then I don’t know what will.