Why The Smartest Investors Bet On Women: Unpacking The Data And Decision Logic

Why do the smartest investors bet on women founders? Historical data on their investment decisions indicate otherwise. Female entrepreneurs have raised less funding than their white male counterparts. This phenomenon is consistent across continents worldwide.

Women are part of the underrepresented groups of founders who attract less investor attention. Moreover, they often realize lower profits after a successful merger or acquisition. Surprisingly, this situation is changing as investors recognize these founders’ potential to outperform their peers.

Let’s Unpack the Data Behind Changing Investor Logic

Statistics clearly indicate that women-founded companies contributed more than $3.3T in revenue to the US gross domestic product (GDP). This number exceeds the aggregate economies of France and the UK. Women own nearly 36% of businesses in the US, employing 16% of the workforce.

Statistics also indicate that having women on the startup’s executive panel results in 50% larger check sizes. Investors are now more willing to underwrite inclusive teams because they anticipate higher, more consistent returns on investment. And they deliver–with 25% higher-than-average profitability.

In fact, venture capital (VC) funds and private equity (PE) firms with women partners are 2x more likely to back women-led companies. If you focus on the returns, investing in these companies is a smart decision.

Female-entrepreneur-led companies generate approximately 78 cents for every dollar of revenue. In comparison, male-founder-led companies deliver 31 cents for every dollar. This metric is twice the revenue earned, a robust indicator of capital efficiency.

Between 2019 and 2023, American women started twice as many new companies as compared to men. Women running startups are also likely to achieve 10% higher aggregate revenue over a five-year time frame. Their companies also demonstrated 63% better performance over 10 years.

Women have proven they can execute exits more quickly and achieve higher profit margins. These numbers are clear signals that, from modern-day investor perspectives, supporting women is not about social impact; it’s about good business sense. And that’s why the smartest investors bet on women founders.

Top investors such as Sequoia Capital, BlackRock, Caius Capital, and Goldman Sachs have launched women-focused arms in recent years. Their objectives range far beyond altruism and charity; they’re all about returns and economic gain.

And how’s this new strategy working for forward-thinking investors?

Take, for example, Zehra Ventures, a Paris-based fund focused entirely on gender-specific underwriting. The fund’s portfolio has grown by 42%, which is astonishingly 3x the market average.

Their winning approach: they’ve eschewed male-dominated sectors and focus primarily on women entrepreneurs in SaaS, agri-tech, and logistics. Zehra’s thesis is simple. When 50% of the market is female, why should they attract only 5% of the total capital available?

This is but one example of the radical transformations occurring in the venture capital and private equity investment sphere. Investors now recognize that gender does not define leadership skills or business acumen.

Founders—who redundant thought processes have long overlooked— will now build the top unicorns. The year 2025 underscored the shift — white men no longer dominate the entrepreneurship sphere.

Female entrepreneurs are not just building successful startups and entering the boardroom. They are also building the top boardrooms worldwide. And the smartest investors bet on women founders.

Check Out These Notable Examples

Among the many women entrepreneurs who have appeared on the Dealmakers Podcast is Lisa Falzone, who has experimented with several ideas. Eventually, she cofounded Revel Systems, achieving ideal product-market fit through customer interactions.

Lisa created a cloud-based iPad POS solution and scaled the company to a $500M valuation. After exiting Revel Systems for $250M, Lisa built Athena Security to prevent gun violence in educational institutions. Her companies raised funding from XFactor Ventures, Pathfinder Venture Capital Funds, and Capital Factory.

Ella Guillotin, the co-founder of Beyond Aero, successfully combined innovation with sustainability. Her company has addressed aviation’s environmental challenges with hydrogen-electric aircraft, effectively redefining the future of aviation.

Beyond Aero secured nearly $1B in Letters of Intent (LOIs) and attracted funding from leading investors. They included Bpifrance, Y Combinator, Initialized Capital, and Female Funders Found.

Another notable founder is ex-Google engineer Valentine Njoroge, who founded Jumba, a Kenyan fintech startup. Jumba started with a seed round of $4M, and within less than two years, it has scaled to five countries. It also has impressive EBITDA margins comparable to Silicon Valley companies.

Other examples that created waves in the startup ecosystem include Claire Tomkins (Future Family), Suneera Madhani (Stax and Worth AI), and Christine Spang (Nylas). These are only a few names; thousands more are making their presence felt.

The “Funding Gap” in Capital Allocation Pipelines

Traditionally, women have attracted just 2% of the total capital venture capitalists allocate. This trend has remained consistent over the past 15 years. The “funding gap” exists, undoubtedly. But it’s not for a lack of viable business ideas or opportunities. It’s more about unintentional bias.

When evaluating pitch decks and interviewing founders, investors have distinct criteria for men and women. They rely more on instinct, preconceived founder typecasting, and pattern recognition. These factors subconsciously influence their decisions to support more male-led businesses.

For instance, investors are more likely to ask male founders “promotion-focused” questions about growth potential, upside, and vision. On the other hand, women answer more “prevention-focused” questions about expected downsides, risks, and how to manage them.

Typically, VCs look for young, male founders, preferably in the tech sector, who are alumni of certain universities. Their track records of success and unicorns they’ve built in the past are also critical. As a result, women raise lower funding amounts even though their startups and metrics are identical.

Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Peter Thiel, Silicon Valley legend (see it here), that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.

Drivers that Have Changed Investor Perceptions: Targeting Underserved Demographics

Interestingly, not only have women founders been sidelined, but women customers have also been underserved. The latest census reports that 49.7% of the world’s population is women, with minor regional and age-group variations.

Women entrepreneurs recognize the challenges their counterparts face vis-à-vis health, employee benefits, family and child care, and financial stability. These sectors represent a $32T opportunity waiting to be tapped.

According to Silicon Valley Bank’s latest Innovation in Women’s Health data, VC investment in women’s health startups more than tripled (over 314%) from 2018 to 2023. It reached approximately $2.6B in 2024, the highest annual total to date.

Women have developed technology designed to transform female employee benefits, targeting a $2.8T market. Financial health solutions are also under the spotlight and will help all employees, including women, achieve economic stability.

The smartest investors bet on women because they are more adept at identifying the pressing problems women face and the solutions they need. Solutions that can translate into billion-dollar companies. That’s also why female partners at top VC firms have doubled to 18% in the last 5 years.

Strong Leadership and Risk Management Skills

When it comes to entrepreneurship, women often face traditional biases that influence not only the development of their companies but also the frameworks and criteria investors use to evaluate them. As a result, women need to work harder and more strategically to navigate these hurdles.

These experiences develop stronger leadership skills, improved risk management, and more effective communication. Women are more disciplined in managing expenses and in planning their company’s spending to optimize cost-effectiveness. They are also more adept at business strategy and funding.

Interacting with investors, aligning their objectives with the company’s, and managing employees with greater empathy—women excel at every step. They are less impulsive and more cautious, enabling them to build resilient, agile companies with high risk tolerance. The result? Higher success rates.

Diverse Perspectives that Fuel Innovation

Companies with gender-diverse teams see 25% higher performance and innovation. The unique perspectives that women bring to the table can help drive technological breakthroughs. And, this is one of the reasons why the smartest investors bet on women.

Female team members bring varied experiences that inform their problem-solving approaches. As a result, the solutions developed in the company are more creative and disruptive. They can identify unmet, gender-specific market gaps and develop solutions to address them.

Distinct perspectives help break out of conventional business strategies and benchmarks. Some research finds that, on average, women score higher than men on specific aspects of emotional intelligence.

Although results vary by method and measure, empathy and emotional awareness can support organizational development. Open communication skills and the ability to adapt to diverse cultures and fields ensure the company’s agility. And maintains its competitive edge.

Focus on Mission-Driven Businesses

Women entrepreneurs tend to build mission-driven businesses that prioritize environmental, social, and governance (ESG) factors alongside strong returns. At least 70% of women-founded startups focus on the positive impact they can have on the community and the environment.

Financial institutions recognize that consumers are more likely to support companies that demonstrate principles such as community impact and social responsibility. Thus, they perceive a higher potential for returns and prefer to underwrite companies that cater to customer preferences.

Mission- and purpose-led companies foster a strong culture focused on creating long-term value. They underscore the need to balance profits with responsibility to people and the planet. As a result, they have a stronger brand reputation and thus, secure higher customer loyalty and stakeholder trust.

Building Resilient and Risk-Resistant Companies

Ultimately, investors are concerned with protecting their capital and achieving substantial returns upon exit. And, women entrepreneurs deliver. Strong leadership skills, building mission-driven companies, and earning customer loyalty and stakeholder trust — are all traits of resilience.

The smartest investors bet on women founders because they recognize that women are exceptionally well-suited to build forward-looking companies. The resilience they demonstrate helps them navigate crises such as economic downturns, supply chain disruptions, and geopolitical uncertainties.

Women-led companies also adapt quickly to changing customer needs and preferences. These qualities protect them from market volatility, ensuring long-term stability, growth, and profitability. Women are more open to building demographically diverse teams and nurturing collaboration.

This factor contributes to the company’s operational integrity, allowing it to thrive in the most high-stakes commercial landscapes. They strive to achieve measurable social and environmental impact without compromising the balance sheet.

Even though investors are focusing on women-led companies, they do have a careful vetting process to assess startups. Take a look at this video in which I have described in detail what investors look for in founding teams. These criteria are universal across the board.

Top Niches in Which Women Entrepreneurs are Gaining Ground

The smartest investors bet on women founders, particularly those in sectors poised for significant growth in 2026. As most sectors integrate technology and AI capabilities, they are attracting substantial capital.

Statistics suggest that women-led tech companies secured increasing amounts of funding from top venture capitalists. This number increased from 23% in 2024 to 28% in the first quarter of 2025. Here are some of the key industries.

• Demand for AI-driven services, including enterprise SaaS, artificial intelligence (AI), machine learning (ML) tools, and automation, is growing substantially—especially in areas such as workflow automation, human resources, climate change modeling, and mental health services.
• Ethical and regulatory compliance technology.
• Startups focused on climate tech, sustainability initiatives, and ethical customer products that are eco-friendly and produced with a minimal carbon footprint. Recycling, repurposing, and the circular economy are quickly gaining traction as customers trend away from use-and-throw products.
• Sustainable agriculture is another sector attracting investor attention, with a focus on greener farming techniques that do not negatively impact the environment.
• Women’s health or femtech startups focusing on reproductive issues such as fertility, midlife wellness, contraception, obstetrics, and menopause. Investors are allocating substantial capital to digital health platforms that deliver gender-specific care and solutions.
• Educational technology that enables students to learn, train, and upgrade skills through online learning platforms is rapidly gaining traction. The global economy and the ability to recruit talent worldwide have expanded remote and hybrid work opportunities. The target audience increasingly includes women seeking flexibility to balance family and child care with competitive salaries.

Investors Can’t Overlook the “Feminization of Wealth”

The smartest investors bet on women founders and women-led startups because of the potential for returns they anticipate. Another interesting phenomenon has been noted by Ellevest, which has coined the phrase, “the feminization of wealth.”

According to estimates, women are poised to inherit nearly $30T from the baby boomer generation by 2023. A survey of 500 retail investors indicates that at least 33% of pre-retiree women expect to receive over $1M in retirement.

These numbers indicate that women may no longer have to wait for investors to support their startup ideas. They may have the funds to bootstrap and build unicorns without the need for external capital. That’s precisely the kind of incentives traditional investors need to underwrite women-led ventures.

Before We Sign Off!

The years following 2025 are likely to see women-led startups make significant strides and achieve breakthroughs. The women customer demographic is underserved, and women founders have traditionally been ignored, undervalued, and overlooked.

When you connect the two, the resulting amalgamation is poised to take on the world, with billion-dollar businesses and unicorns. The current trajectory is moving toward previously unexplored horizons, and investors must capitalize on this rapidly evolving and innovative landscape.

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