An Economic Argument For the Female Decade

I was a teenager in the 1970s, the heady days of the women’s movement when bra burning and slogans such as “A Woman Without A Man Is Like a Fish Without A Bicycle”  were in vogue.  We were promised we could have it all.

There has most certainly been progress in the last 30 years. But there are still too few women leading venture-backed companies. Too few in top management of bigger companies in Europe and not enough women on the boards of companies of any size. If we women want to change that then we have to frame it in economic terms.

I’m convinced strong economic arguments for funding women-led companies , equalizing the pay gap between men and women and adding gender diversity to top management and in the boardroom will be more effective in bringing about change then passionate debates about social justice.

This was the focus of a panel I moderated at DLDwomen “The Female Decade”, the first women-focused conference organized by Hubert Burda Media, a platform investing in Internet companies such as Glam Media and organizer of the DLD conference. Steffi Czerny and Marcel Reichart did a terrific job in lining up a group of intelligent, successful women from a variety of fields at the invitation-only event.  The conference, which took place at the Deutsches Museum in Munich June 10-11, touched on many themes, including women’s health and sexuality, art, architecture  and technology. Speakers included renowned architect Zaha Hadid, French author Catherine Millet, Mozilla Foundation chairwoman Mitchell Baker and Gaby Zedlmayer, vice-president of HP‘s Office of Global Social Innovation, to name but a few.

But a big focus of the conference was women in business.  My panel focused on finance.  Panelists included Dunya Boucahene, who heads up Paris-based Women Equity, the first European private equity program focusing on the financial and operational support of women-led businesses, Sonali de Rycker, a venture capitalist at Accel Partners in London who focuses on Internet, digital media and software and Ana-Christina Grohnert, a Germany-based partner in Ernst & Young’s financial services division whose job is to help banks restructure. Three women, three different areas of finance.  All fields dominated by men.

 We talked about why there are so few women in private equity, venture capital and financial services and why that are not more venture-backed start-ups led by women. Accel Partners ‘s European fund has 50 companies in its portfolio. Two are led by women. This is no better and no worse than other VC firms. It just reflects the current situation.

But most of all we talked about how to fix the problems. There are very strong economic arguments about why it makes sense to change,  For starters, there is capital efficiency. A 2007 survey of 600 European venture-backed companies by British research outfit Library House found that those run by female chief executives delivered higher revenues using less capital than those headed by men.  The Library House study showed that the average venture-backed company run by a woman had annual revenues that were 12% higher than those run by men, using on average one-third less committed capital, says Bouhacene. That is why she says she is convinced that investors in the new Women Equity for Growth funds will end up making better than average returns.

But it is not just investors but European economies that will benefit from a closing of the gender gap. Indeed, the reduction of economic inequalities between males and females is considered the principal level of economic growth in Western economies. Studies conducted by the European Commission, Swedish Presidency of the EU and others estimate that a reduction of econmic gender inequalities would significantly boost countries’ economies. The ratio for a boost in the GDP of EU member states would be 27% ,which corresponds to a theoretical gain of 6.800 euros per inhabitant, says Boucahene.

Grohnert, who heads Ernst & Young’s own diversity efforts, made a strong case for adding women into top management.  Numbers back up her arguments.  Studies show that companies with a significant number of female managers perform better than their counterparts. For example, some 14 companies from the CAC 40 (top 40 companies listed on the French stock market exchange) have a proportion of female managers superior to 35%. These companies showed, over a five year period, 61% more growth than companies with less than 35% female managers and nearly double the profitability, according to a 2009 study by Michel Ferray, a researcher at France’s CERAM Business School in Sophia Antipolis, which recently merged with ESC Lille and renamed itself SKEMA Business School.

 Women Equity, the pan-European program is trying to instigate change in four important ways: a private equity arm, focusing on growth capital, with a range of dedicated investment vehicles for institutional, family offices as well as private investors that only invests in women-led companies; a network of business and industry experts to support and advise the development of the portfolio companies; a pan-European network of co-investors, providing complementary expertise and geographical focus to its investment program; an academic research network and publishing capacity to document and promote the successes of women-led growth companies.

The figures Women Equity provides are just as important as the funding.  The message – with hard numbers to back it up – is that funding women-led growth companies and adding women in management and in boardrooms isn’t about doing women a favor. It translates into more revenues, more jobs and more innovation.

There is another  more important ingredient needed to bring about change and that is role models.  Women like Bouhacene,  de Rycker, and Grohnert serve as great examples for us all. Ten years ago I regularly attended private dinners organized by a London networking group called Capital Women.   Members included investment bankers, venture capitalists and entrepreneurs.  They ranged in age from early twenties to early fifties. At one dinner at SoHo House the 20 plus women around the table were asked  if they had children. Only two – including me – applied in the affirmitive. I found it very distressing that the young women all said that they had concluded that was impossible to juggle high powered careers and kids, so they chose their jobs over family. This was not progress. Men don’t have to make that trade-off. Why should we?

Thankfully this is changing. All three of the women that spoke on my DLDwomen panel are blazing trails in very different parts of the finance sector. All are successful at what they do. And guess what? Each one of them has children.  It isn’t easy and they don’t pretend it is.  They just do it.  We are finally moving, as a society, away from saying “I don’t know how she does it!” to one where we can look towards role models and exclaim “This is how she does it!”  That is what truly convinces me that after thirty years of struggle the Female Decade is finally here.




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