Why Women Entrepreneurs Face Problem in Raising Funds
Headlines on the rise of women entrepreneurs show that the entrepreneurial world is leading the way in empowering gender equality. As per the reports of the National Association of Women Business Owners, more than 11 million U.S. firms are now owned by women, employing over 9 million people and generating $1.7 trillion in sales.
Aston University released a study of Global Entrepreneurship Monitor data. It said that in comparison to 2003-2006 and 2013-2016, the total number of female-led business ventures increased by 45% compared to only 27% among men.
But this is just a fairy tale story. Women-owned companies are still in the minority, and the challenges of women who want to start their own business are vast and often very different than those experienced by their male counterparts.
Female-owned business gets only 7 percent of venture capital investment money that is very low. Besides, loan approval rates for women entrepreneurs is 15 to 20 percent less than it is for men.
Funding is essential for any business.
Hard to Achieve- Capital Funding
Whether you are a man or a woman, it is tough to get capital for business ventures. The overall approval rate is approx. 50%. Women entrepreneurs are at a gender disadvantage, here, even male entrepreneurs have tough times. VCs are in the business of taking chances, but they are very careful about the risk they take. Getting fund is daunting regardless of gender.
The Stereotype about Successful Entrepreneurship
The major reason why women don’t get funding- the profile of the successful entrepreneurship is male. If you think about the great businesspeople of today’s world, we mostly get the image of Mark Zuckerberg and Steve Jobs.
That is why, when women entrepreneurs approach investors, there is an unconscious bias in investors that they will be as reliable an investment as their male counterparts and hence not as fundable.
The best way to break this unfair stereotype of the successful entrepreneur is to highly the great businesswomen of today like Cher Wang, Betch Comstock, and more.
Problem in Acknowledgement
Most women CEOs find themselves in a male-dominated industry or workplace that does not acknowledge their leadership role. Many women entrepreneurs have shared their struggle journey for respect.
Many of them had to go through negative comments that have built up in their head are stopping them from reaching their full potential.
VCs Support Their Own
There is a tendency among VCs to invest in startups run by people who share a connection. The problem with this is that the business and political world is dominated by male. You can take for each woman, there are four men.
If we talk about VCs, here 89 percent of investors are male, women entrepreneurs are getting overlooked for funding in favor of giving the money to the men whom they share a direct or indirect connection.
It is good that eleven percent of venture capitalists are female and firms having female partners mainly invest in a female-run startup.
Don’t get demotivated with these points. My purpose is to make you ready for your upcoming challenges. And keep in mind that if you are resourceful enough and grab control of the process, you will surely get the funding you require and get back to building your dreams.
That’s it for now. If you are interested in reading more empowering articles, meet me at Female Insight.