Citi estimates that closing the gender gap for women-led businesses could increase global GDP by $2 trillion.

• In 2021, only 2.1% of the venture capital dollars invested in the U.S. went to companies founded by women, as per PitchBook.
• According to a Citi analysis, increasing gender parity in business growth could increase global GDP by up to $2 trillion, or 2% to 3%, making it a significant contributor to global economic growth.
• Between 288 million and 433 million jobs could be generated through gender equality, as stated by Citi.

A report from Citigroup suggests that closing the gender gap in venture capital funding could boost economic growth, as women currently receive only a small portion of such funding.

In 2021, only 2.1% of the venture capital dollars invested in the U.S. went to companies founded by women, as per PitchBook.

Women entrepreneurs globally face one of their greatest challenges, which is limited access to finance, according to Andrew Pitt, the global head of research at Citi, as stated in the report.

Boosting gender parity in business growth could increase global GDP by up to $2 trillion, or 2% to 3%, according to Citi's analysis. Additionally, gender equality could create between 288 million and 433 million jobs, as found by Citi.

Venture capital gender disparities

Since 1979, 43% of public U.S. companies founded have been backed by venture capital, as stated in a 2015 report from Stanford Business.

Female entrepreneurs are less likely to receive VC funding due to lenders overestimating the risk involved, according to Citi.

Despite evidence suggesting that female-led businesses have a higher return on investment than male-led counterparts, the perception of risk remains. According to a BCG report, women-owned start-ups generated 78 cents in revenue for every $1 of investment raised, compared to 31 cents generated by male-owned companies.

The underrepresentation of female VC investors contributes to the gender disparity in VC investments, as only 4.9% of U.S. venture capital partners are women, according to a 2020 report by Women in VC.

The report from Citi stated that the majority of funding is driven by male investors, while many women in the industry are not in positions to make funding offers.

PitchBook found that female VC partners are three times more likely to fund companies with a female CEO than male investors.

Since 2009, only 0.6% of U.S. venture capital investments have been directed towards Black women, as per an analysis by ProjectDiane.

Recommendations for financial institutions

Venture capital firms and other financial institutions can enhance women entrepreneurs' prospects by implementing Citi's recommendations.

Citi recommends that firms gather gender-disaggregated data on their investment portfolios, update their investment instruments with a gender perspective, and ensure that start-up incubators are inclusive.

Financial services companies should collaborate with women's associations and networks, set targets for female founder inclusion, and support female employees, according to Citi researchers.

Pitt urged us to take action based on the report's findings.

— CNBC’s Michael Bloom contributed to this report.