Improving startup results through female leadership – TechCrunch
Over the course of my career – spanning entrepreneurship, academia, arts management and venture capital – I have learned the importance of female leadership in contributing to good results.
A variety of perspectives, including those of women leaders, enhance problem solving and decision making. I believe new perspectives generate ‘additive’ moments: instances where one member of a team further enhances another member’s idea. Teams made up of like-minded people with similar backgrounds are limited in the scope of their perspectives and, as a result, they limit the potential of their businesses.
So the question is, are you recruiting and organizing to access the widest range of ideas and perspectives?
As a partner of Pegasus Technology Companies, I realize that the venture capital industry prides itself on finding teams with distant ideas that change the industry. However, the truth is that the industry has a low percentage of female leaders compared to other industries.
Not only are there few female partners in venture capital funds, but we are also not doing enough to support female founders. Startups received an unprecedented financial investment during the pandemic, but founders have lost ground.
Research has proven time and time again that diversity is good for business. Public companies with at least one woman on the board tend to outperform those with only men. Various teams were also found to produce the most creative ideas.
A key element of the Design Thinking and Lean Startup methods – which have served entrepreneurial ecosystems well – is to lead by doing. Let’s take specific steps that will translate into more female leadership in the startup world.
Here is what I do; Hope this inspires you to take your own action.
Hire to improve results
I think startups (and venture capitalists) need to change their recruiting practices to diversify their teams. While it’s easier to leverage the founders’ existing networks to recruit, it’s worth expanding your reach.
One technique I have used is to partner with leading universities around the world that are committed to recruiting diverse student bodies. It helps me tap into a larger pool of diverse talent, including female leaders. These new recruits have more varied backgrounds and life experiences, so they bring new perspectives.
It is also helpful for startup executives to organize open office hours during which potential candidates can ask questions about company culture, open positions, and how to apply for them. Personally, I have succeeded in attracting a more diverse pool of applicants when I made it a comfortable and welcoming process. Make sure candidates understand your business goals and your belief that diverse perspectives directly contribute to the creativity and productivity of your teams.
Here’s a great case study: Orchestras found they naturally achieved greater gender diversity when auditioning new members with review boards that didn’t know the names of the candidates and couldn’t see them. By focusing only on what matters – their musical talent – they were able to overcome unconscious prejudices.
How can we do this in startups? Some companies hide candidates ‘names when reviewing resumes, and some offer tests or other assignments where candidates’ aptitudes for specific types of work can be assessed, regardless of gender or background.
Invest in diversity
On the venture capital investment side, the parallel with hiring is selecting the type of management teams you want to invest in. By looking for entrepreneurial teams with female managers and employees, you are likely to find more creative and resilient startups.
It’s best to challenge and improve products during the development process, not after launch. A diverse team gives you a better opportunity to see your target market accurately and understand the customer’s perspective. As an investor, you will get exactly what every investor wants by supporting more diverse teams: greater financial reward for a given level of risk.
A healthy and diverse team will challenge old ideas and generate a greater variety of innovative solutions. If you invest in consumer-oriented businesses, you can’t afford to exclude women from leadership positions. Since women control the majority of spending decisions and an increasing amount of wealth, you will improve your chances of success by investing in teams that include women decision makers.
We should also look at ourselves in the mirror. These principles would benefit the operations of venture capital firms, not just our portfolio companies. Equipping your venture capital firm with diverse talent helps you broaden your perspective on where the next big idea came from. By diversifying investment teams, we will counter unconscious biases and recognize great ideas, no matter where they come from.
At Pegasus Tech Ventures, we strive to hire diverse employees. About 40% of Pegasus decision makers are women.
I don’t think we should be promoting greater participation of women in startups and venture capital just because it’s right. Smart startup founders and investors should pursue their enlightened self-interest: Recruit and invest in female employees and leaders to improve your bottom line.
In doing so, you will establish and support startups designed for long-term success. Better ideas, more innovation, higher income and long-term profitability will be your reward.