Throughout history women have shown themselves to be natural entrepreneurs, and in modern times, the BRW Rich Women list illustrates that the entrepreneurial spirit of women continues.
Female entrepreneurs are no different to their male counterparts, in that they have contributed, and continue to contribute, to the economy, society and the nations in which they live. Despite the enormous successes that these businesswomen and innovators have achieved in the 21st century, one of the biggest challenges they face is securing funding to establish or grow their business.
A Lack Of Funding Support
Female entrepreneurs are on the rise.
The Australian Women Chamber of Commerce and Industry conducted a study of 3,000 women in 2013. It was found that while female business managers had risen by 8.9 per cent, 50% of the participants were in need of more funding if they were to continue to develop their business.
In what is both a positive and negative – that is, showing the resourcefulness and determination of these women – most of the women in the survey started their business with less than $5,000.
A Gender Issue
So, why do they have funding problems?
Why are women not able to access the funds they need to grow their business?
According to research findings, one of the reasons for not being able to access funding lies in the old-age challenge of gender inequality.
A recent American study by the Harvard Business School, Pennsylvania’s Wharton School, and MIT’s Sloan School, found that only 7% of all venture capital funding in the United States has gone to companies led by females.
By itself, this 7% figure is certainly troubling, but when coupled with other study findings, the results look even worse. The same researchers also found that when a pitch to obtain funding for a business idea was presented at both highly experienced angel investors and average individuals, both groups selected more pitches from males than females. (The win rate was even higher when the individual pitching was an attractive male!)
The “Lack of Fit”
So what is this gender issue and female entrepreneurship all about?
According to research, the reason for females winning fewer pitches lies in the “lack of fit” phenomenon – an occurrence first referred to by NYU psychologist Madeline Heilman.
It relates to how stereotypes of gender affect how women are viewed and valued in the work environment. In other words, the lean towards men can be explained by the fact that males are more often associated with being entrepreneurs, rather than women. As such, when the female goes in for the pitch, a “lack of fit” works against them from the start.
Tips For Acquiring Funding
Despite the “lack of fit”, female entrepreneurs are making headway and, as we all know, the world is changing. Female entrepreneurs can undertake a range of activities to ensure they increase their wins.
Some of the simplest of these include:
• Relationships and Networking. Attend industry events, expos and tradeshows to network, learn about the industry and share information and knowledge.
• Advisory Board. Not only can forming an advisory board for your company increase your potential to acquire funding, in many cases industry knowledgeables/board members will also become investors.
• Solid Pitches. Ensure your pitch is the strongest it can be. Be engaging, determined, and carefully analyse all aspects of your pitch.
• Have Answers at the Ready. Anticipate what investors are going to ask you. They will want to know financial details, and they will want to see that you understand those financials. An ‘idea’ is simply not good enough; make sure you have the evidence to support your numbers.
While funding challenges for female entrepreneurs remain an obstacle to business establishment and growth, the good news is that the issue has been acknowledged, and the with that acknowledgement, changes are sure to follow.