Women-Owned Firms Perform Better Than Those Run by Men

The catch?

"Unfounded Ltd" was not a real startup but it was created by a corporation to shed light on the sorry state of investing in women entrepreneurs and the obstacles women face in gaining financing.  

The pitch was sent by non-profit company H&M Foundation to 100 multinational venture capitalists in an effort that was unveiled Thursday to inspire funders to promote women in business.

"Unfounded Ltd is a tool to break the barriers that women entrepreneurs face in access to finance," said Diana Amini, global manager of the H&M Foundation, founded by the owners of the Swedish fashion chain.

"By using the language of investors, we want to reach the individuals who make judgment calls and write the cheques."

On average, women-owned businesses perform better than those run by men, the study said, but often lose out on the resources they need to expand.

Women-based companies received 3 per cent of U.S. venture capital funding last year, according to figures quoted by H&M.

A latest UN report showed that 80 per cent of women-owned businesses in emerging markets are unable to access financing.

Overcoming discrimination in order to invest more in women might raise the global economy by up to $5 trillion – about the size of the economy of Japan, the Boston Consulting Group said last year.

The report offers advice for investors and other financial businesses who it said are "uniquely positioned" to drive change - and also stand to benefit from businesses neglected by rivals.

Key steps include training men to shed bias, hiring more women to make funding decisions, and making investors aware that female pitches may be less bombastic - and much more realistic.

Funding women can also create a "domino effect" beyond work, said Reintje van Haeringen of humanitarian organization CARE, which works with the H&M Foundation to help women entrepreneurs.

"Women are often seen to have a modest role in their families' decision making and the business gives them the self-confidence and opportunity to grow," she told the Thomson Reuters Foundation.

"With the increased income and that extra power, they start transforming their whole communities," she said.

Source: Thomson Reuters Foundation