Julie Castro Abrams is founder and CEO of How Women Lead, a network of more than 14,000 executive women. The organization recently conducted a study that assessed how women invest in startups.

The result was not pretty. Women face obstacles that result in far less venture capital investing than men, and women-owned startups receive a paucity of the dollars raised by VC funds.

An active investor and adviser to thousands of startups, Castro Abrams spearheaded the launch of How Women Invest with partner Erika Cramer in 2020. How Women Invest, a sister organization to How Women Lead, is an early-stage venture firm seeking to realize untapped economic potential by focusing on the intersection of female founders and female investors, particularly those of color.

What have been the chief obstacles to VC investing by women?

Women tell me they haven’t been invited to invest in venture. It is a closed system, and most financial advisers don’t offer venture as an investment strategy. So, unless you are assertive and actively inquire, you have no idea that it’s even an option. I’ve also heard that it can feel intimidating to invest in venture because of the language and the perceived minimums required to become a venture investor. The minimums to invest in traditional venture funds are likely to be $250,000 into the millions, which can feel like a big leap even if you are very wealthy. Because it is such a closed system, many wealthy women make assumptions about the expertise needed to invest in venture and assume they need to know more than they do about how to evaluate companies, for example, which isn’t their role. That is the venture fund’s role.

How do women invest vis-à-vis men — especially with respect to high-risk capital?

In our recent report, How Women (and Men) Invest in Startups, research shows that women are great investors, and it’s mainly because they are more risk aware. Women’s style of investing is different from male investors. For instance, women are more likely to invest for the long haul, buying diversified funds instead of individual stocks to spread risk, and make a social or environmental impact with their investments. Women are less likely than men to trade frequently and rely on their gut. Women are also more likely to invest in mutual funds. Women (37 percent) are more likely than men (18 percent) to invest in startups to diversify their portfolios to mitigate risk. Because funds invest across startups, venture funds will be more appealing than individual startups to women.

What about the female entrepreneurs who receive VC funding? How big a male/female discrepancy exists and how successful are venture-backed women compared with men?

Only 2.4 percent of all venture funding goes to companies founded by women with no male co-founder. Startups with at least one female founder received 17.2 percent of venture capital. This is despite the research that demonstrates that women-led startups are more capital-efficient than male-led startups.

Is the situation improving for women? What needs to happen to significantly close that gap?

For women founders, the numbers haven’t moved, and, if anything, they have gone down. Despite the research saying women return more for their investors, venture investors are biased in their decision making. The environment is also quite hostile for women; whether it is sexual harassment from investors when seeking funding or the pervasive bro culture, it is a distasteful experience at best for most women founders. They have to pitch more, the valuations for their companies are less — the list goes on. To change this dynamic, we need more women investors dedicated to investing in women, and that’s starting to happen.

You founded an organization named How Women Lead. What have you discovered in terms of female versus male leadership styles?

Women and men can both be great and flawed leaders. In general, research shows women are more cooperative and participatory as leaders, they are more empathetic, they listen more and create environments that are more family and lifestyle friendly. Men are generally known to have a more command-and-control style. In venture, we see that women founders hire six times more women, and they are more likely to be in the C-suite. The kind of leadership I see consistently is that women want to make a difference with their companies, find solutions that solve problems, and manage with ESG and other values in mind. More and more women founders want to do well by doing good. So, I am very optimistic that as more women understand they can invest in venture startups, they will put their money where their values and their heads are, and this will be the difference the world needs to create more companies that succeed by doing positive things for the world.