The article first appeared on the Forbes.
Bumble has just announced a fund to invest in female founders, noting that last year female founders got just 2% of all venture capital funding. While this is great news, there is another industry bias worth exploring, which is not about women founders, but products for women.
Products aimed at the female customer are being underfunded, because most startup investors are male and do not understand the use case for products that they would not use themselves. This is supported by hard evidence: Crunchbase reports that women make up only 8% of partners in the top 100 VC firms.
This study from the Boston Consulting Group shows that companies with at least one female founder raised around half of the funding raised by all male teams, but made 10% more revenue. The group reports that “many of the female interviewees told us that their offerings—in categories such as childcare or beauty—had been created on the basis of personal experience and that they had struggled to get male investors to understand the need or see the potential value of their ideas.”
I have come across this while raising funding for the company I run: a platform for women to discuss what to wear and buy with stylists and a community. Over and over again, I heard potential investors say that our company may or may not be a success, but because they could not understand the use case they would not invest. As a result, and without intending to, we became a female-funded company, because women could intuitively understand the need for feedback and reassurance about their outfit choices and could see our global potential.
I used to put this experience down to the fact that I am a first-time founder and a woman. Not only am I navigating the fundraising world for the first time, I am also facing the biases we know women face in the workplace.
At a recent industry event, I was surprised to hear Treatwell founder Lopo Champalimaud speak about the difficulty he faced raising money for the beauty services booking platform he founded. On Treatwell, users can find and book salons for beauty treatments and leave reviews, and salons get access new customers. Not only does Treatwell make discovery easy, it also saves women the embarrassment of calling from the office to book a waxing appointment. When speaking to the mostly male investor market, Champalimaud had trouble convincing them that the problem was worth solving.
Read more on the Forbes.