Hello, boys: why investing in women makes sense

Edie G. Lush says women have a strong track record as entrepreneurs and managers, yet struggle to find support from Britain’s male-dominated venture capital community

And where they’re in business, women make an impact on the bottom line. A 2007 study by McKinsey, the management consultancy, looked at 89 top European companies and found that those with the most women on the board and at senior-management level outperformed others in their sector in return on equity, earnings before interest and tax and share-price growth.

But it isn’t just European women who drive performance. A study by the New York think-tank Catalyst ranked hundreds of Fortune 500 companies by the percentage of women on the board. They found that the top quartile outperformed the bottom quartile by 53 per cent in terms of return on equity.

If the business case exists, why isn’t there more interest in investing in women-owned businesses? I asked Margaret Manning, chief executive of independent digital media company Reading Room and this year’s winner of the Fast Growth Female Entrepreneur of the Year award. ‘To be honest, while it’s slowly changing, the venture capitalist world is still an old-boys’ network. The VC community has a certain style and people tend to support people that they get on with – many times, this is other men.’

She’s careful to point out that it isn’t impossible to raise money – she raised £1 million in funding from Octopus Private Equity last year to grow her business. ‘This was a VC that understood us implicitly – our first Octopus non-executive director got to know us well after interviewing us while studying for his MBA. And the current Octopus non-exec is female – and she’s lovely.’ If you apply either McKinsey or Catalyst’s analysis to Reading Room’s board and senior management team, Reading Room is destined for success – half of her executive directors and 56 per cent of her management team are female.