The tech sector has a serious gender gap problem. In 2022, women held just under one-quarter of the world’s tech jobs, according to the World Economic Forum. The gap is even more concentrated at the leadership level. A 2022 report from McKinsey & Co. found that only 1 in every 4 C-suite executives is a woman, and just 1 in 20 is a woman of color. This deficit starts at the managerial level, where McKinsey says just 87 women (82 women of color) earn managerial promotions per 100 men.

This imbalance tells us that opportunities for men and women are not equal in the tech field. But it also suggests that consumers could be losing out on the inherent strategic value of working alongside women-led tech firms. As our discussion will show, women-led technology firms are often uniquely well-positioned for innovation, profitability and corporate social responsibility.

Smart Innovation

Seventy-two percent of women in tech said they “have worked at a company where bro culture is pervasive,” according to a 2021 survey of 450 professionals by TrustRadius. This can not only contribute to a culture of gender discrimination but also stifle innovation by preventing critical reflection on increasingly important issues like AI bias, accessibility and inclusivity.

By contrast, a 2023 article from the journal Sustainable Development said companies that prioritize gender diversity are more likely to engage in “disruptive change processes within organizations in a participatory way [that] provides new ideas and solutions to problems, which are necessary for inclusive innovation.” This orientation is increasingly important as we work collectively to identify and resolve the inherent biases embedded in emergent AI solutions.

The 2023 article also said that gender diversity contributes to greater prioritization of corporate social responsibility, social performance and social innovation. This perspective is vital as we look for innovative ways to apply AI tech to sectors where experience, access and inclusivity are essential, such as the health, education and community service sectors.

Operational Efficiency

The numbers are pretty clear. Women-led tech firms have often had to do more with less. So far this year, just 1.1% of venture capital funding has gone toward women-founded startups and firms, according to Pitchbook data. Women-led startups frequently begin with fewer resources. This requires a leaner and more efficient pathway to profitability.

The numbers also show that women-led firms have been remarkably effective at finding this pathway. According to a 2023 report from European Women in VC, “Management teams mostly composed of women outperform men-only teams by 9.3 percentage points.”

I would argue that one reason for this outsized success is that women-led firms must often operate under leaner conditions by necessity. Over 20 years of growing our own women-led tech business, we’ve placed an emphasis on priorities like resource allocation, customer feedback loops and iterative development cycles. Together, these strategies have given us lower burn rates, faster time-to-market, and lower overall costs for R&D and production than a lot of our male-led competitors.

Strong Returns On Investments

The efficiencies highlighted above can actually make women-led startups a smart bet for investment firms and venture capitalists. A joint study published in 2018 by Boston Consulting Group and MassChallenge found that for every dollar of funding, women-led startups produced 78 cents in revenue, compared to 31 cents among male-led firms. The same study reported that women-led startups generated 10% more in cumulative revenue over their first five years than all-male firms.

High Profitability

There’s also evidence that gender diversity in leadership contributes to greater long-term profitability. According to a 2023 report by McKinsey, top-quartile companies with gender-diverse leadership are 39% more profitable than those without women represented in leadership positions.

This figure also marks a significant jump from a decade ago, when top-quartile companies with gender-diverse leadership outperformed their less diverse counterparts by 15%. In other words, there is a rapidly growing performance gap between businesses with women in leadership positions and those without.

Risk Mitigation Through Ethical AI

In 2024, the International Telecommunication Union hosted a forum on responsible AI that included women tech leaders from all over the world. During the conference, leaders acknowledged that there is a pressing need for more women leaders in AI. Today, with just 22% of AI roles occupied by women, so-called “AI innovations” risk deepening implicit gender biases.

Leaders at the conference called for greater involvement of women in the evolution of AI as a safeguard against bias, discrimination and exclusion. I can confirm this need through my own work in the field. I’ve seen firsthand how women-led tech firms are often uniquely informed by human-centric AI principles, committed to accountability and transparent about how they use data. From a business standpoint, this can translate to fewer legal and reputational setbacks. The economic value of avoiding these setbacks cannot be overstated in the high-risk AI sector.

Women-Led Economic Prosperity

This issue has far-reaching implications, not just for gender equality and improved outcomes in the tech field but also for the broader economy. As an example, a study by the European Institute for Gender Equality reported that closing the gender gap in STEM fields would result in a 2.2% increase in the EU’s GDP by 2050. This would amount to roughly 820 billion euros in economic growth.

Simply stated, when women are given a chance to excel in tech fields, we all stand to win. So as you consider partnerships, investment opportunities and service providers in the tech sector, think of a collaboration with a women-led tech firm as an opportunity to contribute to innovation, economic growth and the advancement of your own organization.

See full article on Forbes here