Bumble IPO a win for female founders, venture capital funds still low

When 31-year-old Bumble CEO Whitney Wolfe Herd takes her company public this week, she will be noted not only for her youth but also as one of the few female founders to lead her company to IPO.

It’s a fitting feat for the founder of a dating app designed to put women in the driver’s seat. But it also hammers home the still mismatched playing field for men and women entrepreneurs.

Bumble, whose board comprises 73% women, is expected to begin trading Thursday on the Nasdaq, just days before Valentine’s Day. The company will sell its stock at $43 per share, raising $2.2 billion from investors. The offering initially values the company around $8 billion.

The market response will act as a litmus test for investments in companies founded by women.

Today, women account for just 7.4% of Fortune 500 CEOs — an all-time high but still a staggeringly low figure. Female founders of public companies number even fewer. Nasdaq estimates that just 20 of today’s active U.S. public companies were led through IPO by their female founder.

The problem is not a lack of women entrepreneurs, but rather a lack of support where it matters: Funding.

In a 2018 study, Boston Consulting Group found a “clear gender gap in new business funding.” According to the research, investments in businesses founded or co-founded by women averaged $935,000, less than half the average $2.1 million received by men.

Despite that, for every dollar of funding invested, start-ups founded and co-founded by women generated 78 cents while male-founded start-ups generated just 31 cents.

The pandemic has only widened that gap.

In 2020, global venture funding rose 13% from the previous year, yet investments in women fell 27%. Meantime, the share of dollars apportioned to female-only founders dropped from 2.8% to 2.3%, according to Crunchbase data. That comes as women, often primary caregivers, are said to be more adversely impacted by the pandemic overall.

“Confluence of crises — demands for racial justice, #MeToo, Black Lives Matter, Covid-19, and an economic downturn — makes this a critical moment for corporate inclusion, equity and diversity,” Matt Krentz, managing director and senior partner at BCG, and co-author of the study, told CNBC. “Of all these issues, Covid-19 may pose the largest threat to female founders.”

The economic benefits of investing in women are well documented. By some estimates, equal entrepreneurial participation by men and women could add $5 trillion to the global economy.

And corporations and institutions now appear to be listening. Many have made bold commitments to better support gender equality and female founders.