Joining the Unicorn Club

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Female FoundersFortune‘s latest cover story, “The Age of Unicorns,” details the rise in the number of tech companies that are valued at $1 billion or more. The once-rare designation—hence the mythical name—is now shared by more than 80 startups.
The Unicorn Club remains exclusive. The Decacorn Club, with valuations of $10 billion or more, even more so. But the most exclusive one of all?

Unicorns led by women.

Just four companies on Fortune‘s Unicorn List have female CEOs—about five percent of the total. A handful more have female co-founders on their leadership teams. Many entrepreneurs and venture capitalists have acknowledged a rise in the number of female-founded startups.

So why aren’t more unicorns led by women?

Aileen Lee, the venture capitalist who made the term famous, has some thoughts. She says that the shift in the number of women-led unicorns hasn’t been “as dramatic as it should be or we want it to be.”

Women famously struggle to raise capital. Eighty-five percent of companies that were funded between 2011 and 2013 have no women on their executive teams, according to Babson College researchers. The firm Lee launched in 2012, Cowboy Ventures, is “open for business for supporting a more diverse group of founders.” She believes female founders (and teams with more diversity) will drive “awesome” returns.

Until Lee’s viewpoint spreads down Sand Hill Road, aspiring female founders have a handful of role models to emulate. Founder-CEOs such as Elizabeth Holmes of blood diagnostics upstart Theranos, Lynn Jurich of solar energy provider SunRun, and Adi Tatarko of home design community Houzz have proven that it’s very possible for women to build companies that cross the billion-dollar hurdle.

Tatarko, who started Houzz with her husband Alon Cohen in 2009, joined the Unicorn Club after raising $165 million in 2014, but that was never her goal. “It’s too difficult to start and run a business for [reaching a billion-dollar valuation] to be your ultimate objective,” she says. “It will be very hard to get up in the morning if that’s all that drives you.”

Bootstrapping in the early days can be invaluable experience, she says. “Spend the first six to 12 months building a great product or service that people love, rather than chasing investors,” she explains. “When the time comes to engage investors, you will be meeting them from a position of strength. This makes all the difference.”

Read more at Fortune.