Closing the Gender Wealth Gap
“People do business with people” – Unknown.
Over the years, a lot has been said about the gender pay gap. This is naturally so because, in 2018 (barely three years ago), it was estimated that for every dollar a white male earns, his female counterpart earned just 82 cents. At the current rate, A Lean In study predicts that it will take until 2059 for women to attain pay parity.
As alarming as this might sound, it is only a precursor to a much larger problem that appears to get a lot less consideration — the gender wealth gap.
The gender wealth gap is the amount of money that women have in comparison to men. However, what it truly indicates is that women own only 32 cents for every dollar a man owns with that number getting significantly less when compared to Black and Latinx women who own just one penny.
So to commemorate International Women’s day, we pose the question: Just what can we do to decrease this gender wealth gap?
Investments and Enterprise
The short answer according to one source is that wealth is often derived from entrepreneurship or investing. A look at the world’s richest people affirms this, as they all started their companies — or inherited fortunes from others who did. If this is so, then we simply need to facilitate both by investing in companies that are led by women and in products or services that ensure financial ‘wellness’ for women.
So Obvious right! Why then does the wealth gap persist?
Every year, hundreds of companies go public on the New York Stock Exchange yet historically, only 20 women have founded and led a company through to an IPO with eighteen of those IPOs occurring in just the last seven years.
2020 was no different, with 442 logged as of December 14th and only 5 of those founded and led by women. This lack of female-led public companies starts at the earliest stages with women receiving less than 3% of venture dollars. This is known as the gender funding gap and it holds countless female founders from launching their businesses.
Why does the funding gap exist?
Well, research shows that it’s more about biases than the bro culture that exists, particularly in tech-driven businesses. For example, a study published in Harvard Business Review found that VCs tend to be biased in how they frame their questions, asking male entrepreneurs about the potential for growth and female entrepreneurs about the likelihood of losses.
Believe it or not, this is an improvement. While conditions for female entrepreneurs are steadily improving there’s still a long way to go in achieving full investment and entrepreneurial equity with men.
Bridging the Gap
If we agree that this is all valid, how then do we ensure that funding companies built by women or for women are not an empty assertion?
Keep pushing, keep pitching.
Says Elizabeth Gore, CEO and co-founder of Alice, a business accelerator for women. “It can be frustrating, especially with the odds against you, but no system changes without an uncomfortable period of tension before growth.”
Check your biases
Helping women get more funding isn’t simply a charitable duty. Giving women ample and equitable funding serves everyone. A recent McKinsey study found that gender equality could unlock up to $28 trillion in global GDP. Companies with female CEOs and executives have been found to perform better and may be better for employees.
“Understanding the link between women’s empowerment and the wealth and health of societies is crucial for humanity,” Melinda Gates wrote in The Moment of Lift. “If you want to lift humanity, empower women, she said. “It is the most comprehensive, pervasive, high-leverage investment you can make in human beings.”
Are there companies that we should be chatting with that are developing products or services by or for women? We at Oui Capital would love to hear from you on how we can help lessen the gender wealth gap and build a more inclusive economy. Say firstname.lastname@example.org