Gender disparities in startups, it starts from the beginning

We know that tech startups have a gender diversity issue at many stages, and this isn’t a recent phenomenon. The disparity between male and female employees has been a significant and consistent challenge within the startup world for many years. 

Our data revealed that, among startups with 100 employees or more, only 36% of the workforce is female.

With this lack of gender diversity comes a major opportunity cost, both for individual tech companies and the entire sector. Diverse teams, including those with greater gender diversity, are on average more creative, innovative, and, ultimately, more profitable.

More recently, tech companies’ public struggles on gender related issues have demonstrated the more immediate costs that result from a lack of inclusion and diversity—lost stock value, lower market share, HR costs, and public relations costs, among others.

So, where does this problem come from?

It comes as no surprise that this problem starts from the beginning. The ratio of male to female employees is the worst at the earliest stages of a company. 

A deeper assessment of our data indicates that as companies mature, they become more balanced. As a founding team, you have the opportunity to think about how to reconcile the gender disparity before your growth fully accelerates.

When a team is just started every single hire requires extreme care. Founders are so dead-set on filling a role, but if they keep waiting for a later stage, they end up working from behind.

Diversity data takes a favorable turn when the co-founding team is also more diverse. This may seem obvious enough, but it’s important to remember how the initial team will set the standard for the company’s growth moving forward. 

When hiring, expect that each new hire will go on to attract 10x more employees with a similar background. Your early hires matter 10x more than you think. 

With greater transparency into the data underlying all things HR, teams can make the right decisions when building their companies. Track and report on the diversity of your team to hold yourself accountable to building an inclusive culture that is set up for long term success.

Interested in other compensation data questions? Reach out to pdl@pave.com with ideas you’d like us to explore next.