Under 10% of venture capital funding goes to women, people of color, and underrepresented founders. Six Dragonflies views this as the biggest opportunity in investment.
The Value of Investing In Female Founders
The business case for funding female founders is simple—female founders outperform their male counterparts. A recent study from Boston Consulting Group evaluated 350 companies that had been part of the MassChallenge program. The study revealed that, for every dollar of investment raised, female-run startups generated 78 cents in revenue, whereas male-run startups generated only 31 cents. As we might expect, women outperformed their male counterparts despite raising less money ($935k versus $2.12M).
Why Are Revenue-Based VCs Investing In Women and Underrepresented Founders?
A new wave of reveue-based investors are emerging who are using creative investing structures with some of the upside of traditional VC, but some of the downside protection of debt. These venture capitalists are accomplishing a major social impact goal…without even trying to.
For context, revenue-based investing (“RBI”) is a new form of VC financing, distinct from the preferred equity sturcture most VCs use. RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital, which they agree upon in advance.
See the leading companies Six Dragonflies has invested in.