Lady Business: Female founders and the billionaire boys’ club
Hello, and welcome to Lady Business, a newsletter about women, the business world, and all the ways they overlap. You can sign up for Lady Business and read previous issues here. This is the 136th issue, published December 5, 2021.
Billionaire Boys’ and Girls’ Clubs
I spent last month reporting and writing the new cover story of Fortune’s December/January issue, with my colleague Emma Hinchliffe. We started with a small but extremely rare 2021 trend: At least three U.S. female founders became billionaires this year by selling or taking public their companies—Bumble’s Whitney Wolfe Herd, 23andMe’s Anne Wojcicki, and Spanx’s Sara Blakely (above)—joining some of the same ranks as Elon Musk, Jeff Bezos, and Bill Gates. And we used the ensuing 3500 words or so to examine the larger significance of what their success does and doesn’t mean for the breathtakingly inequitable startup ecosystem. Is this the start of a tipping point for female founders?
The billionaires’ exits may have been the most spectacular, but they were part of a larger surge of blockbuster IPOs, SPACs, and sales led by female founder-CEOs, including Jennifer Hyman of fashion company Rent the Runway; Caryn Seidman Becker of biometrics screening company Clear; and Heather Hasson and Trina Spear, of medical scrubs maker FIGS. So far in 2021, five U.S. venture-backed companies with all-female founding teams went public or were sold in deals valued at $1 billion or more, according to Crunchbase. Five in a year may not sound like an earthshaking stat, but consider the context: Since 2011, only 12 female-founded companies managed to hit that number.
Reaching the billion-dollar mark is a huge deal for these founders, obviously. But it also has significant implications for the larger startup ecosystem—and for those who benefit from the massive wealth generated by a successful exit. The women enriched by these “liquidity events” can also include investors, board members, and employees—groups of people who are, in many of these cases, predominantly, and for the startup world, unusually, female.
“It’s really important when you have these large exits, because it creates an ecosystem not only of talent, but also of wealth,” says Deena Shakir, a partner at VC firm Lux Capital, which has coinvested with Wojcicki in several startups. “And that proliferates for future companies down the road.”
This is certainly a happier story than my feature last year on the double standard facing women running startups. As Wojcicki told us, “Having cash—and being able to fund projects—opens up doors. And seeing all these women actually having liquidity is amazing.”
But… the overall status quo is still pretty bleak. The usual litany of VC percentages hasn’t gotten any better this year (only 2.1% of VC investment goes to all-female teams; less than 0.5% of that investment goes to Black and Latina women). And there’s little that three women—no matter how wealthy or successful—can do alone to change that ecosystem, especially compared to the many (many) more men who became billionaires last year by selling or taking public their companies:
According to a Crunchbase analysis for Fortune, 110 men who achieved billion-dollar exits this year—a group that includes the founders of Coinbase, Robinhood, Affirm, and Warby Parker—have made 732 public investments in other startups. Of those, 6% of deals went to all-female founding teams, and 14% to companies with mixed gender teams. Meanwhile, Crunchbase counted 10 female founders who achieved billion-dollar exits and made a total of 59 public investments, 22% of which went to all-female teams and an additional 25% to startups with founding teams that included at least one woman.
No single man tracked by Crunchbase has invested in as many women as Wojcicki, who has backed 14 companies with at least one female founder (out of 29 overall investments). She’s comfortable investing in and potentially losing money on entrepreneurs that the white, male Silicon Valley establishment might consider to be “higher risk.”
“A lot of people will say, ‘I don’t mix philanthropy with investing.’ But my line is more blurry,” Wojcicki says. “I’m investing to do good, and to drive change. If that has less of an ROI, I’m happy to take that ding—but I also believe that long term, it’s the right financial choice.”
So yes, three female founders crashed the billionaire boys’ club this year. But it is still a boys’ club, and will likely remain so until men start doing as much to change it as the few women who gain entrance. As Rent the Runway CEO Jennifer Hyman says, “There’s a lot of men who have made billions of dollars, who I wish were investing in women.”
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