Recent research shows New York City’s booming tech industry leads in workplace diversity, employing more women than Silicon Valley. But a new Dadaviz chart says the city that bills itself as the Silicon Valley of the East falls behind in producing women-led startups.
Other evidence, though, says female entrepreneurs in New York City are making big plans.
Out of the 20 global cities the Dadaviz chart studied, New York ranked 12th for the percentage of female-founded startups in its startup ecosystem. Chicago and Boston beat the city by double digits, landing in first and second place, respectively.
While experts who spoke with NYC Biz News said they found the data surprising because of New York’s position as the world’s second largest tech sector, they believe the reality of the city’s investment in female entrepreneurs is not as harsh as the chart suggests.
“There’s a huge influx of female entrepreneurs here in the city,” said Andrea Turner Moffitt, senior vice president of the Center for Talent Innovation, a New York-based talent agency, and author of “Harness the Power of the Purse: Willing Women Investors.” “It shouldn’t be this much lower than what we see in some of the other cities.”
Women founded 16 percent of startups in New York City compared to 24 percent in Silicon Valley, according to Compass’s 2015 Global Startup Ecosystem Ranking report, where Dadaviz pulled its data. In Boston, considered the fourth largest tech hub, the number jumps to 29 percent. In Chicago, it’s 30 percent.
Comparatively, women make up 40 percent of New York City’s tech sector employees, reports economic think tank Center for an Urban Future.
The number of female founders raising venture capital paints a brighter picture for women in New York tech, though. Researched conducted by venture capitalist firm Female Founders Fund (F Cubed, for short) showed that women founded 12 out of the 90 startups that received Series A funding last year. But in 2013, that number was significantly smaller — only one company out of the 53 Series A rounds was led by a women.
“That’s a 1000 percentage increase,” said Anu Duggal, who founded Female Founders Fund, which backed three of the female-led companies last year. “When you see that, that’s encouraging for women to start other companies.”
While more female entrepreneurs are seeking funding — and investments firms like F Cubed, Brooklyn Bridge Ventures and Lerer Ventures are giving it to them — women still receive far less capital than men. In 2013, only 7 percent of venture capital went to women’s enterprises, reports OWL, a national grassroots nonprofit geared towards women 40+. Turner Moffitt puts that number even lower, at 4 percent.
In order to encourage even more women to start their own companies, women need more access to capital, said Turner Moffitt. And in order to increase access, the field of venture capitalists needs to diversify.
More women also need to take on the role of investor, she said. “As women, we also have to step up and create the capital sources to invest and advance women entrepreneurs,” said Turner Moffitt.