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Why Women Are the Best Opportunity for Businesses If you're a set of guys looking to start a company, think about women you could team up with -- they will see things differently and solve problems you didn't even realize you had.

By Andrew Yang

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The Honest Company, which makes natural eco-friendly household products, is set to go public. It was recently valued at $1.7 billion with more than $150 million in revenue.

Jessica Alba first got the idea for the Honest Company in 2009, when she had an allergic reaction to an infant detergent recommended by her mother. She became obsessed with the idea of providing safe, beautiful and convenient products that parents could use worry-free. But she had a tough time convincing investors.

"I was getting rejected by so many people. They were like, 'Right you want to create a business? Good luck... why don't you just do perfume..."

Related: Jessica Alba's Honest Company Just Launched a Beauty Line

Even Brian Lee, who eventually co-founded the company and became CEO, passed on the idea initially. He came around almost two years later when he had a child of his own, and his wife started transforming the household. The Honest Company launched in 2012, sold $10 million in products its first year and took off from there.

The Honest Company is now a runaway hit. But the difficulties it had getting off the ground reflect some of the impediments facing women entrepreneurs -- only 20 percent of angel investors and 6 percent of venture capital partners are women. Between 2011 and 2013, only 3 percent of venture capital went to companies with female CEOs. Even Jessica Alba struggled to get financial backing, and she's a CELEBRITY. In a way, she's the exception that proves the rule.

I run a national non-profit that recruits and trains aspiring entrepreneurs around the country. Over the past five years, I've seen just how tough it is for female entrepreneurs. And I am more convinced than ever that there are incredible opportunities -- and unmet needs -- in building women-oriented and women-led companies.

On the market side, women are now a record-high 57 percent of U.S. college graduates and will comprise more and more of the employee and customer base in the years to come. There will be many more households in which women are the primary economic drivers -- one estimate is that as much as 85 percent of consumer purchasing power will be held by women.

Yet many corporations remain male-dominated in their approaches and leadership -- only 5 percent of Fortune 1000 CEOs are women. Quite often, the default offerings don't fully account for the female perspective.

This creates market opportunities. Sallie Krawcheck, the former head of Merrill Lynch, recently co-founded Ellevest, an investing platform designed for women. "It's time to give women an investing experience designed specifically for them," Krawcheck says, noting that women control $5 trillion in investing power and demonstrate better investment returns than men over time.

A friend of mine, Cariann Chan, went through the experience of freezing her eggs and found the process costly, uncomfortable and difficult to navigate. She now is working on a new product, Level, that measures fertility potential with a home test so that women can be better informed about their individual reproductive data before undergoing a procedure.

Investors are coming around too. One Silicon Valley venture capitalist said, "I'm on the lookout for companies that solve issues for women in innovative ways. There's a ton of potential." Indeed, a study indicated that women-led private technology companies achieve 35 percent higher return on investment than male-led tech companies.

This underscores the problem. Investors are cold-blooded capitalists (for the most part). If companies that include women statistically outperform others, then we're systemically under-investing in women entrepreneurs.

Some of our partners are investing to change this. Rent the Runway and UBS are teaming up to mentor 200 female entrepreneurs via Project Entrepreneur. Anu Duggal started the Female Founders Fund expressly to tackle the imbalance and take advantage of the opportunity.

Related: 12 Female Entrepreneurs Reflect Upon What They Learned in 2015

At Venture for America, I work with dozens of brilliant young women who clearly have the potential to start successful companies. I also have many accomplished women friends at different stages of their careers (I'm 41). The stories that my women friends tell me about the sexism they've experienced are astounding. Everything ranging from subtle patronizing to blatant harassment on a somewhat regular basis.

It remains very difficult for women to achieve and maintain positions of leadership. There are massive barriers at every turn. And not all of these are external -- my women friends talk about how easy it is to be worn down after years of pushing against resistance.

The tempting thing to do is say, "Sexism is terrible, but it will recede as we become more enlightened. Women will start more companies, investors will wise up and things will get better!" Which I really hope is true -- and I believe on good days. We all have to help make it happen.

In the meantime, I'd like to recommend an approach that's inspired by Stanford professor Tom Kosnik.

Tom is an incredibly highly-regarded entrepreneurship and engineering professor. He often gets approached by students looking to start companies. If he is approached by a male founder or team, which is typically the case, he tells them, "Come back to me when you have a female co-founder."

When I started Venture for America back in 2011, I wasn't the first employee. That was Eileen Lee, our chief operating officer, who got us up and running. Our first class was only 25 percent women (it's about 50% now). The female Fellows wanted more women, which isn't surprising. But here's the thing -- so did the men.

Studies have shown that companies with women in leadership positions perform better. First Round Capital published a report that portfolio companies with at least one female co-founder performed 63 percent better than all-male teams in increasing valuation over time.

High-performing companies with male-female leadership teams are becoming more common. Mark Zuckerberg has Sheryl Sandberg. Jessica Alba has Brian Lee. Sallie Krawcheck has my friend from Brown, Charlie Kroll. I'm in the camp that companies run better when both men and women are involved at the highest levels. This represents a fantastic trend that we should encourage.

Women are of course perfectly capable of founding and leading world-class companies on their own -- Sara Blakely, Arianna Huffington, Katia Beauchamp and Hayley Barna, Barbara Corcoran, Jennifer Fleiss and Jen Hyman and many others have shown that women don't have any limits when it comes to building companies.

But in my view, many entrepreneurs, both men and women, would benefit from building a balanced team as fast and early as possible, including at the founder level. Men enlisting women early on would often help the company. And in some cases, the reverse is true as well.

So if you're a set of guys looking to start a company, think about women you could team up with -- they will see things differently and solve problems you didn't even realize you had. And ladies, you don't necessarily have to go it alone -- there are guys out there who will appreciate the opportunity and want to work with you.

Related: Meet the Fearless Female Franchisors Who are Living Their Dreams

Andrew Yang

Founder & CEO of Venture for America and Author

Andrew Yang is the founder and CEO of Venture for America, a New York City-based nonprofit organization focused on placing top-college graduates in startups for two years in emerging U.S. cities to generate job growth and train the next generation of entrepreneurs. He is also the author of Smart People Should Build Things.

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