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Women Startups – Generates more Revenue with less funding

At this point, it is a very sad but commonly known fact that female entrepreneurs earn a small fraction of all venture capital funding – exactly 2.2% as per the data of last year. This is because companies or firms started by women are unable to gain as much money as male entrepreneurs. According to a study by Boston Consulting Group & MassChallenge, startup accelerators network, examined 350 companies and found the average female-founded startup earned $935,000 in funding. That is below 50% of the $2.1 million awarded on an average to the men founded startups.

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This is quite depressing because the investment gap is actually larger than what was estimated in research. But still there was one encouraging spot in the data – The women-established startups beat their men counterparts’ in the form of revenue, generating $730,000 over 5 years period as compared to $662,000 for the men. If you compare the number, the women-founded companies are generating 78 cents compared to 31 cents for the men.

Reasons for the difference in funding mentioned in the report will likes similar to broadsheet readers. Female entrepreneurs are more likely to receive rejection during their pitch presentations, & often investors believe that women don’t have technical knowledge. They always assume that the male-founders know all the technical things and will answer them appropriately.

The researchers found that the women entrepreneurs are very conservative in their estimations & may ask for less. On the other hand, “male often overestimated & overpitch.” That’s why the investors may suffer from “affinity bias”.

According to the calculation, if Venture Capitalist invested equally in both the startups then he could have made more than $85 million over 5 years.

So the actual lesson here is for the investors: They are majorly missing out.

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