Building the next generation of women leaders, part 1: Why move to a private equity-backed company?

As a female Fortune 500 executive, why would you leave your job for one at a smaller, private company? Because the game changed, and it is time to follow the opportunity.

For as long as I can remember, success for women was defined as an executive or C-suite position in the world’s most recognizable public companies. However, despite the number of females in the C-suite of public companies slowly increasing in recent years, the current state of the market signals an even bigger opportunity for women, if you follow the investment trail.

More capital has been raised for private companies than in the public markets each year since 2009, with late-stage and growth-stage technology startups raising $196 billion more in 2021 than in 2020. The number of private companies exceeds the number of public companies by more than 2x, and there is still $1 trillion of “dry powder” in private equity (PE) funds waiting to be deployed. While women have been fighting for positions at publicly traded companies, have we missed this shift of dollars toward privately funded enterprises?

It is time for female executives to rethink what we grew up believing defined success. While there are barriers to entry, it is time we recognize our own role in capturing and enabling this opportunity for more talented women.

First, let’s address the shifting definition of success. By moving into a leadership role at a private equity-backed or venture-backed company, success is defined by equity ownership, influence over the strategic direction of the company, and an exit strategy that could yield real wealth creation. Success in private equity-backed companies is not defined by a title alone, the size of your organization, or the size of your PnL ownership. Is redefining success and capturing this opportunity risky? Yes, and maybe that is holding some women back, but there is no reward without some level of risk.

IN PE-BACKED COMPANIES, BEING IN THE TRUSTED NETWORK OPENS DOORS.

Less than 20% of private equity employees worldwide are women, just 5% hold board seats, and under 10% hold senior positions at their firms. Even considering the underrepresentation of women in tech, these figures are disappointing. But what does a private equity firm’s male-to-female ratio have to do with opportunities for women at the companies they fund? A lot, actually.

When everything is on the line, people call who they know and trust. When important senior positions become available, leaders tap their networks to find candidates. While this might be done without malice, private equity is male-dominated, which can leave women out of the running for the top jobs. Without more women seeking these opportunities, accepting them when someone comes knocking, and opening the door for other women, the cycle will remain unchanged.

Now, let’s get back to the problem of risk and the shifting definition of success; many women are still hanging on to their roles at public companies despite the opportunity being presented and the shift of money and power in the market, possibly because they believe the company has their best interests at heart, but probably because they are afraid to take the leap.

SO HOW CAN WE BREAK THE CYCLE?

The opportunity in today’s market for women to gain equity, strategic ownership, and real authority over the future of the company at private organizations is accelerating. It is partially up to senior female leaders like us to pave the way for others. History has shown that while experience may qualify women for a position, many are not considered candidates for available roles. With a commitment toward change and better support for one another, we can help more women redefine success, capture the opportunity in the market, and embrace the risk required to reap the rewards.

BUT THAT’S JUST HALF THE BATTLE.

While changes need to occur in the organizations themselves to widen the net for more diverse executive talent, the real question is, will you take the call for a private-equity or venture-backed leadership position if it comes? That call may only come once. Given the shift of investment toward the private markets, the increase in the number of private companies, and the funds still available to be deployed, it is worth reassessing your definition of success and your perspective of opportunity in the market. You may be stuck competing for fewer and fewer executive positions in the public market, but to be a candidate for a private-equity or venture-backed company, you will need to embrace the risk, proactively reach out to your network, and take the call when it comes.

Paola Doebel, SVP and managing director of North America, Ensono