Earlier in the week, I wrote that in team building, studies show that it’s better to choose women ahead of Einsteins. That’s because the collective intelligence of a group is not strongly correlated with the individual intelligence of group members but is correlated with the proportion of females in the group.
One critical part of the economy that has still to learn this lesson are investors in high-tech startups.
While the number of women small business owners hovers around 50 percent, the number of women founders of hi-tech start-ups is in the low single digits.
What makes the technology industry different?
In an fascinating article entitled, “Where are the Women Entrepreneurs in Hi-tech Start-ups?” Cynthia Kocialski writes: “Thinking back on numerous start-up companies I’ve had the pleasure of being involved with, only 2 percent to 7 percent of the technical staff were women – none had a woman as CTO, CSO, CIO, or Vice President of Engineering…
“Delving into the companies listed on a recent Forbes’ Top 25 Hottest Tech Stocks, the statistics gathered on senior management teams showed no woman held the CEO position, 13 percent of the senior managers were women, and 1.9 percent of the women senior managers held a technical position…
“Similar statistics can be gathered from the Fortune 500 companies: 16 percent of the senior leadership teams were women and only 1.7 percent were women in senior technical positions. Business Insider’s list of the 40 Hot Start-ups in Silicon Valley and New York City showed 87 founders, of which only 3 were women, and 36 of the 40 start-ups were investor-backed companies - even a start-up focusing on women’s fashion was co-founded by three men.”
“Most venture capitalists admit that start-up investment is a high touch, personal business – investors fund people they like and everyone likes people like themselves. A recent survey showed that 70 percent of women funded by venture capitalists were funded by firms with at least one woman partner. There is a Silicon Valley angel investor group with 139 angel investors, all about the same age. Only 3 are women.”
It's not diversity: it's the future
Sounds like these angel investors should wise up. This is not about diversity for diversity’s sake or filling quotas. This is about getting better performance.
For more on women and management: