March 8, 2019, marks International Women’s Day, celebrated at a time when data shows that women are gaining traction in their work and entrepreneurial efforts, and increasing their overall contribution to the global economy. Women within the entrepreneurial community are becoming wealthier, and are re-investing their wealth and success in other women-led businesses. The e-commerce world is seeing more and more women-led businesses, and in some industries like pharmaceuticals and agriculture, women are dominating the economic landscape.
The McKinsey Global Institute suggests that women’s influence on trade could add $28 trillion to the global GDP by 2025. Let's look at some of the trends that add clout to that prediction.
Women Are Becoming Wealthier
Women entrepreneurs are becoming wealthier, partly because investors are increasingly recognizing their worth. Senior executives with The Boston Consulting Group find data suggesting that women-owned startups are a better investment than male-owned startups. While the authors do not give reasons why women-owned startups perform better, the data show that over a five-year period, women-owned startups generated 10 percent more revenue compared to male-owned startups. The data also shows that for every dollar in funding, women-owned startups generated 78 cents versus 31 cents generated by those owned by males.
First Round Capital is a US-based seed-stage venture firm for technology startups. The firm has found that over the past 10 years, investments they have made in companies with at least one female founder significantly outperformed those of all-male teams – by a whopping 63 percent. Of the company’s top 10 investments since their inception, three of the 10 have had at least one female founder.
In European countries like Iceland, Norway, France, and Germany, quotas for women on board seats have helped women increase their wealth and professional opportunity. Germany, the largest economy to impose a quota, mandates that 30 percent of supervisory board seats be filled by women. Iceland, Norway, and France each mandate 40 percent.
Women and Venture Funding
The willingness of venture capital firms to support female entrepreneurs is expected to have a profound effect. The BMO Wealth Institute looked at the progress of women over 50 years and found that they controlled 51 percent (or $14 trillion) of personal wealth in the United States in 2015. This amount is predicted to grow to $22 trillion by 2020.
As women become wealthier, they are more able to invest their earnings; moreover, they can invest in other women. Kay Koplovitz is the co-founder and chairman of Springboard Enterprises and the managing partner of Springboard Growth Capital, a US-based accelerator for women entrepreneurs. Koplovitz says that, as women gain wealth, “They are looking not only to make a return on investment but to do so in a way that is aligned with their values.” To that effect, they are increasingly investing in female-founded companies, according to Koplovitz.
Women are also increasingly becoming angel investors and targeting female-led ventures. In 2004, the US had 225,000 angel investors — 5 percent, or 11,000 of whom were women. In 2016, the last year this data was available, the US had 300,000 angel investors — numbering 78,000, 26 percent of these investors were women. And in 2004, 3 percent of the 48,000 companies that received angel funding were led by women. In 2016, 22 percent of all companies that received angel funding were led by women.
Women and E-commerce
A space that women are successfully leveraging is e-commerce. A new study by PayPal Canada and Barraza & Associates found that 50 percent of new e-commerce businesses launched in Canada since 2016 were female-led; that figure is up from just 34 percent 10 years ago.
E-commerce provides access to rapidly scaling global markets. By 2023, retail e-commerce sales in Asia-Pacific are projected to be greater than the rest of the world combined. While this is good news for all e-commerce businesses, it offers an especially strong opportunity for women-led businesses to capitalize on — close to 30 percent of women sell their products across borders while their male counterparts are less likely to do so. Case in point, only 23 percent of male-led ventures serve international markets.
Women Are Dominating Certain Industries
E-commerce is not the only space where women are making their presence known. Authors Samuel Stebbins and Thomas C. Frohlich report on recent changes in women’s participation in the workforce. According to the authors, in some occupations, the share of female workers has increased by over 20 percentage points since 2000.
The jobs cited by Stebbins and Frohlich include graders and sorters of agricultural products (with a 12 percent increase in the share of female workers), pharmacists (with a 15.5 percent increase), natural science managers (for a 22.5 percent increase in the share of female workers), and veterinarians (with a 25 percent increase in the share of women workers). In fact, the number of female veterinarians has actually doubled since 2000, reflecting a persistent trend whereby women are increasingly choosing science and engineering occupations. In total, the authors list 20 jobs that have become dominated by women, like fundraising managers, pharmacists, and compliance officers.
According to WBENC, who is the largest certifier of women-owned businesses in the United States, there were 12.3 million women-owned businesses in the nation as of 2018. In 1972, there were only 402,000 women-owned businesses. Women now own four out of every 10 companies in the United States. While data for the United States is arguably more positive and reliable than data from less economically stable nations, the trends are indicative of a global movement to boost women's financial standing. The path to growing their economic global presence is a navigable one for women; it begins with increasing wealth and endures with reciprocal investment.