Why So Few Women Have IPOs

2021 was another banner year for women-led companies. 

There were more IPOs led by women in 2021 than ever before, topping 2020’s total of four women-led public offerings, which was a record at the time. Women-helmed IPOs in 2021 included:

• Dating app Bumble went public under Whitney Wolfe Heard in February 2021. 
• In May 2021, health care clothing company FIGS, led by two women, held its IPO.
• Actress Jessica Alba also took her consumer goods business The Honest Company public in May. 
• During the same month, Vimeo CEO Anjali Sud conducted the video platform’s IPO. 
• Clothing rental company Rent the Runway, created by Jennifer Fleis and Jennifer Hyman, went public in October 2021.

While it’s exciting to celebrate women breaking new ground, women still led a small percentage of the more than 1,000 companies that went public in 2021. I can’t stop myself from wondering: Why do so few IPOs come from companies run by women? 

“Homosocial reproduction,” says Elizabeth J. Sandler, founder and chief executive officer of executive coaching, solutions, and design company Echo Juliette, based in New York. She adds that Rosabeth Moss Kanter, a professor of leadership and strategy at Harvard Business School, created the term in 1977, and it is what still dominates business today.  

“It is the principle that we are most comfortable working with people who are socially similar to ourselves,” Sandler says. “Because corporations are run mostly by men, investors are mostly men and therefore founders of companies taken public are mostly men.”

Sandler says when the pandemic first hit and caused travel and meeting cancelations, her calendar had more than 100 meetings with investors, tech founders, and senior executives. All of them were men. 

Big challenges for women-led companies 

Other statistics bear witness to this trend: Only .64 percent of venture capital money has gone to companies with Black or Latinx women founders since 2018, according to one recent study of minority women in business. Women-led startups also consistently get under 3 percent of all venture capital funding. In 2021, women start-up founders received 2% of venture capital, the smallest amount since 2016. And more generally, some women may experience a  motherhood penalty, workplace sexual harassment, which goes unreported 75 percent of the time, even the feeling some women reported to this writer about being “pushed out” by their male peers.

Still, mentoring programs, concerted efforts by companies to address gender discrimination, and, of course, incredibly talented women are helping change the game.  

Groundbreakers of the past two years

In 2021, founder and chief executive  of the dating app Bumble, Whitney Wolfe Heard, became the youngest-ever woman to lead her company to an IPO in February, 2021. She is 31, and her company was valued at $8 billion. Meanwhile, Anjali Sud was the first South Asian woman to take a business public when Vimeo joined the Nasdaq. 

2021’s strong start follows 2020, when Leen Kawas, founder of the pharmaceutical company Athira Pharma, was the first woman to take her company to an IPO in the state of Washington in more than 20 years. Roni Mamluk guided Ayala Pharmaceuticals through an IPO the same year, when the company was valued at $10 billion. In Michigan, Ann Marie Sastry took her A.I. software company Amesite through an IPO in September. And rounding out the 2020 foursome was Maria L. MacCecchini, whose drug company works to cure Alzheimer’s and Parkinson’s disease, and had its IPO last January. 

“We are catching up to progress, but it just takes time,” says Lindsey Allard,  CEO and Co-Founder of PlaybookUX, a user experience testing company in New York. “The more women who take that leap and become a leader or founder are pushing things forward a little bit more.”