Tech’s Gender Problem Means Money Lost
Female entrepreneurs are under-represented in Silicon Valley even though research shows their companies generate more revenue.

Only 17% of Fortune 500 CIOs are women, according to data released this year by the National Center for Women and Information Technology. The stat is roughly in line with a 2014 study showing that women account for only 11% of executive positions at top Silicon Valley companies.

While Facebook COO Sheryl Sandberg and HP CEO Meg Whitman are well known, the overall lack of female founders, executives, and venture capitalists limits the value of the tech sector.

Female entrepreneurs generate 20 percent greater revenue than their male counterparts, while receiving 50 percent less VC funding, according to a 2012 report in Harvard Business Review, citing Kauffman Foundation data.

Explanations for the under-representation of women in tech abound. Some cite an over-reliance by VCs on existing networks, who are mostly male. Others bring the problem back to elementary and secondary education, when girls may get less encouragement in STEM courses.

Whatever the case, the under-representation of women is an economic detriment, regardless of the industry.

$28 Trillion

A recent McKinsey report stated: “In a ‘full potential’ scenario in which women play an identical role in labor markets to that of men, as much as $28 trillion, or 26 percent, could be added to global annual GDP by 2025.”

Given the numbers, gender equality should be a funding priority in tech ecosystems across the world. So why isn’t it?

Craig Newmark, founder of Craigslist, argues that venture capitalists in tech ecosystems are not putting their money where their mouths are, citing issues such as a lack of female-led startups when the data doesn’t support those claims.

Though acknowledging the true problems is an important first step, systemic, measurable changes are needed: from STEM education, to recruitment processes, to funding. Otherwise, we hinder both social and economic progress.

 

IBM BlueMix