The Case For Investing In Gender Diversity

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By supporting these undercapitalized companies, the Women’s Venture Capital Fund aims to provide meaningful exits.

By Monica Dodi (Founder & Managing Director, Women’s Venture Capital Fund)

Numerous research studies by McKinsey, Bain, Boston Dow Jones, the Kauffman Foundation and the National Center for Women in Technology have recently shown that gender diversity significantly increases profitability, productivity and return on investment. Nonetheless, over 92% of venture capital investments go to all male teams!

My partners and I at the Women’s Venture Capital Fund view this market inefficiency as a unique investment opportunity, not only to deliver high returns, but to also support overlooked women entrepreneurs. I have been involved in four successful startups, including as co-founder of MTV Europe and AOL’s Entertainment brand.

After a stint as Entrepreneur-in-Residence for Softbank Technology Ventures, I decided to work as an angel investor with seed stage companies. More often than not, I was the only woman in the room with other angels. Digging deeper into the data, I was amazed at the lack of gender diversity in these highly innovative companies that were getting much needed growth capital, especially as women start businesses at twice the rate than men. One of my partners and I decided to present our thesis at our 25th Harvard Business School Reunion to fellow alumnae and received incredible support. Many stepped up as early investors and we were off to the races.

We believe that by focusing on gender-diverse teams we can invest in early-stage companies that are more sensitive to the needs and desires of the female demographic which controls over 70% of consumer dollars worldwide and is projected to create 70% of the global growth in income over the next five years. Further data indicates that the worldwide female demographic is largely disappointed with the goods and services that are available to them.

We are seeing a very healthy deal flow from gender-diverse companies with high growth prospects that target this important demographic. While the United States can be proud of its highly developed and innovative venture capital ecosystems, women founders are largely left out of the picture. However, there is no lack of highly qualified female entrepreneurs building early stage companies.

By supporting these undercapitalized companies, the Women’s Venture Capital Fund aims to provide meaningful exits (returns to their investors) through corporate acquisitions. Large corporate strategic buyers are looking for ways to provide innovative products and services that better service this important female demographic.

According to the BCG study, “Companies are failing to meet the needs of women in five key ways: Poor product design and customization for women; clumsy sales and marketing; inability to address the need for time-saving solutions; inability to provide a meaningful hook and differentiation, and failure to develop community.”

Our vision is large and we welcome support from the financial services community to achieve our objectives. We have been very encouraged to see the large number of women who want to pursue entrepreneurism as a career path, either straight out of university or mid career. I have been fortunate to be involved in early stage companies throughout my career. It is incredibly satisfying to build a company from the ground up and see the results of your labors.

Women 2.0 readers: How have you found your team diversity to be beneficial to the company? Let us know in the comments.

About the guest blogger: Monica Dodi is Founder and Managing Director of The Women’s Venture Capital Fund, focused on early stage women led new ventures. She has over 20 years experience as a new media pioneer. After graduating from Georgetown in International Economics, she was one of the founders of a new technology company focused on military and government databases which was subsequently sold to a German conglomerate. She holds an MBA from Harvard Business School.