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Capitalizing on Women’s Ventures

Even though women-led businesses are more likely to yield market-beating returns, they are woefully neglected by venture capital firms, which are dominated by men. This translates directly into lost productivity gains and foregone innovation, starting in Europe.

LUXEMBOURG – If you are a venture capitalist, you are almost certainly a man. But you would do well to know that your best chance to outperform the market is to invest your money in a company led by a woman.

That rule of thumb – cherchez la femme – would radically simplify complicated VC investment decisions. Yet, because men make up 91% of the VC industry’s executive ranks, the bottom-line performance of women-led companies has been chronically overlooked.

Securing funding to enable women-led businesses to reach their potential is needed to drive European innovation. The annual productivity loss to the European Union as a result of women leaving their jobs in information and communications technology (ICT) is around €16.2 billion ($19.1 billion). Though women represent roughly 52% of Europe’s overall population, they constitute only 34% of the EU’s self-employed workers, and 30% of its start-up entrepreneurs. Worse, in 2017, women-led ICT companies accounted for less than 10% of VC invested across the continent.