International Women’s Day, which is being celebrated Tuesday, began as a huge protest by women who wanted better pay and a right to vote. In 1908, 15,000 women marched through the streets of New York City and since then women have earned the right to vote and may even elect the first female president this year. But the fight for better pay continues.
Wall Street’s Sallie Krawcheck thinks 2016 will be a big year for female entrepreneurs. The declining cost of technology, lower overhead costs, improved access to capital and proven business out-performance by women are drawing investors’ attention. The more women who are funded to start businesses, the faster the gender gap can be closed.
The cost of building out a company’s technology has declined dramatically, allowing women to overcome what had previously been a big barrier. “When I had responsibilities at Merrill, the platform there cost $1.3 billion to put in place,” Krawcheck said. “A similar platform now costs $25 million.” Her latest venture is only spending $2 million on a platform. Krawcheck noted that women are no longer held back by what used to be an insurmountable technology investment.
It’s also cheaper to establish an office now. “Whether you’re working in the cloud or using a co-working space, it’s just not as expensive to get started,” Krawcheck said. The idea of using shared spaces like We Work helps women get established without the expense and commitment of leasing office space.
No one can get a business off the ground without some capital and Krawcheck noted that more sources of funding are opening up for women. In addition to traditional private equity and banks, crowdfunding is becoming another avenue for women to tap for needed capital.
Crowdfunding sites such as Indiegogo and Kickstarter are becoming popular places for women to reach financiers. A Berkeley report found that on average women raised more money than men through crowdfunding.
Some investors are actively seeking out women. “Companies with women have 63 percent better performance,” said Krawcheck, “Sixty-three percent!” She went on to say, “A fellow reached out to me looking for female entrepreneurs to introduce them to.” One reason is that women use fewer dollars to start their businesses. “They are much more capital aware than men,” Krawcheck said. Performance data is also a big motivator for investors to trust their money with women.
A McKinsey 2012 report on U.S. firms found that mixed-gender boards outperformed all-male boards. A 2011 Catalyst study of Fortune 500 companies found that the ones with the highest proportion of women on their boards performed significantly better than firms with the lowest proportion. Also, accounting firm Rothstein Kass in 2012 determined that hedge funds run by women outperformed hedge funds run by men.
A report from the Peterson Institute for International Economics said, “The correlation between women at the C-suite level and firm profitability is demonstrated repeatedly…a profitable firm at which 30 percent of leaders are women could expect to add more than 1 percentage point to its net margin.”
Krawcheck pointed out that there is a growing ecosystem to support women. “Whether its Tory Burch, who has her initiative, or Springboard Enterprises, there’s a whole group working on this,” said Krawcheck, whose own community, Ellevate Network, was established to advance women in business.
More women-owned companies should shrink the gender pay gap. Despite all the focus on more female chief executive officers, recent SNL Financial research showed that in 2014 median total compensation for male ceo’s was $646,803, while for women it was only $499,738. It isn’t any better at the bottom of the ladder, with male retail salespeople earning $694 on average versus women retail salespeople earning $494, according to the latest data from the Bureau of Labor Statistics.