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.
Why Women Are Under-Represented
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.
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Both explanations point to the same pattern: the gap compounds. Fewer girls choosing computing leads to fewer women in engineering jobs, which leads to fewer women in senior roles and fewer women starting companies. Fewer women investors means fewer people writing cheques who share the networks and experiences of female founders. Each stage narrows the pool for the next one.
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.”
That figure describes a best case, not a forecast. The same McKinsey report’s title points to a more modest scenario, in which every country matched the progress of the fastest-improving country in its region, adding $12 trillion. Even that smaller number is larger than most national economies, which is why the report framed gender equality as an economic issue as well as a social one.
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.
Where Funding Stood Next
The funding gap proved stubborn in the years after this article. In 2018, U.S. startups with only female founders raised $2.88 billion across 482 teams, according to PitchBook and All Raise data reported by Fortune. That was just 2.2% of the $130 billion invested in venture capital that year, the same share Fortune had reported for 2017.
The dollar amount was rising, but the share wasn’t. Fortune noted that all-male teams received 76% of the money invested in 2018, and that the average deal for a woman-led company was $5.9 million, compared with $17.3 million for men. One explanation it offered was the growth of very large “mega-rounds,” which nearly always went to male founders. Fortune also pointed out that, combined, female founders received $10 billion less that year than a single e-cigarette company, Juul, raised on its own.
Changes at the Top
The two high-profile executives mentioned above have both since moved on. Meg Whitman stepped down as CEO of Hewlett Packard Enterprise in February 2018, handing the job to company president Antonio Neri. She later served as U.S. ambassador to Kenya. Sheryl Sandberg announced in June 2022 that she was leaving her role as chief operating officer of Meta, Facebook’s parent company, after 14 years.
When a sector’s best-known women leaders can be counted on one hand, each departure is felt more. That’s part of the argument for widening the pipeline rather than relying on a few visible role models.
What Needs to Change
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.
For startups and investors, the measurable part matters most. Tracking who applies, who’s hired, who’s promoted and who gets funded is the only way to tell whether good intentions are turning into results. The numbers from 2016 and 2018 show how easy it is for the conversation to grow louder while the share of money barely moves.
Frequently Asked Questions
How many Fortune 500 CIOs were women in 2016?
Data released in 2016 by the National Center for Women and Information Technology showed only 17% of Fortune 500 CIOs were women, roughly in line with a 2014 study finding women held only 11% of executive positions at top Silicon Valley companies.
Do female entrepreneurs perform worse than male entrepreneurs?
No. A 2012 Harvard Business Review report citing Kauffman Foundation data found female entrepreneurs generate 20 percent greater revenue than their male counterparts while receiving 50 percent less VC funding.
How much could gender equality add to the global economy?
A McKinsey report estimated that in a "full potential" scenario where women play an identical role to men in labor markets, as much as $28 trillion, or 26 percent, could be added to global annual GDP by 2025.
What share of venture capital went to female founders in 2018?
According to PitchBook and All Raise data reported by Fortune, U.S. startups with only female founders raised $2.88 billion in 2018, just 2.2% of the $130 billion invested that year.
What changes did the article say are needed?
It said acknowledging the problem is an important first step, but systemic, measurable changes are needed in STEM education, recruitment processes and funding, or both social and economic progress will be held back.