A recent study from Babson College underscores the unsettling pattern in the high-tech innovation world, a pattern that fundamentally sells women short. The Babson study found that, over the period from 2011 to 2013, about 10 percent of the total venture capital investments in Massachusetts were made to startups that had at least one woman among their team members. The state ranks third in the nation, after California (41 percent) and New York (12 percent).
The most telling data point reflects back on the investors themselves, who are overwhelmingly men. They are generally veterans of the high-tech world, many of whom have started and sold several companies. According to the Babson study, only 6 percent of venture capital firms have a female partner, down from 10 percent in 1999, and the lack of female venture capitalists undermines an important multiplier effect: Venture capital firms with women partners are more than two times as likely to invest in companies with a woman on the executive team; and they’re more than three times as likely when a woman’s leading a company.
There is reason for optimism in Massachusetts, however, according to Candida Brush, a Babson entrepreneurship professor who is a co-author of the study. She points to startup incubator MassChallenge, where this year close to 40 percent of the companies in the incubator have at least one woman founder. MassChallenge is one local institution that is making a concerted effort to break the traditional, male-centric mold.
One of the best ways to bolster the number of female venture capitalists is to encourage more female entrepreneurship — and to learn more from local success stories, among them Care.com’s Sheila Marcelo and Constant Contact CEO Gail Goodman. In coordination with the Center for Women and Enterprise, Care.com last month held a business plan competition for women, the Female Entrepreneurship Challenge, offering a $10,000 prize for the winner. Over 100 business plans were submitted. Grass-roots efforts like these ultimately will move the needle for women’s entrepreneurship.