How Can Female Entrepreneurs Attract Financing?
Money is the biggest stumbling block for start-ups led by women, but there are ways to workaround that.
|Female entrepreneurs gathered in Washington in September for a Visa-sponsored event championing their role in small businesses.|
The number of female entrepreneurs is on the rise around the world.
Women-owned businesses in the United States, for example, are surging, according to from American Express. Between 2014 and this year, the number of such enterprises climbed 21 percent, to nearly 13 million.
By contrast, the number of businesses overall in the United States increased by just 9 percent. Companies owned by women of color grew even more, by 43 percent.
Ireland and the rest of Europe have seen a burst in female entrepreneurship as well, said Joanne Hession, founder of The , based in Dublin.
It’s generally acknowledged, however, that women get a of venture capital , and that those who are black, Hispanic or Asian get significantly less.
“Money is the biggest stumbling block for female-led start-ups,” said Suzanne Norris, a partner at , a Boston-based firm that invests in companies with female founders and gender-diverse teams.
“People invest in people who look like them,” said Nathalie Molina Niño, author of “ and chief executive of.
Still, leadership and financing experts say there are ways women can attract money to their start-ups.
Half the challenge is seeing things through the lens of potential funders. Step into their shoes when you’re asked, “What’s your background? What have you done that shows your credibility to succeed in this business?” said Sanyin Siang, executive director of the Fuqua/Coach K Leadership and Ethics Center at Duke University and author of
“Don’t get defensive,” she added. “Lead them to your point of view.”
Start a “Mastermind” group of six to eight women with diversity in terms of ethnicity and industries, Ms. Molina Niño said. Commit to six to nine months of meetings. Come up with two or three concrete things to do each month, so you have accountability, which is imperative in the initial stages of entrepreneurship because that is a period full of unknowns, self-doubt and, in many cases, loneliness. To recruit your group, use every tool available: Facebook, LinkedIn, your school, your place of worship, your neighborhood bulletin boards, your chamber of commerce.
Even if you don’t win, you create an ecosystem, connect with potential advisers and build your network. Stronger and broader networks are linked to improved access to a variety of funding sources, according to the Boston Consulting Group. “Peer-to-peer networks encourage women to set higher aspirations for their businesses, plan for growth and embrace innovation,” according to the researchers.
“Women tend to be more realistic conservative, and authentic about what they are asking for when it comes to funding,” Ms. Norris said. “Men think bigger and more boldly about their idea and conviction of where they’re going. Women undersell themselves and tend to downplay those things. When you’re betting on the person, you want to believe it’s big and it’s bold. Be boastful.”
Crowdfunding via sites like Kickstarter and Indiegogo is an effective way to get a business off the ground. There are also a few crowdfunding platforms specifically for female entrepreneurs, such as and . Find other similar businesses and projects that have crowdfunding campaigns and observe what levels they set for their goals. Each crowdfunding platform has a different fee structure.
If you have a burning idea or a young business, tell someone. Tell everyone, Ms. Molina Niño said. “Women have really good reason to be reticent to unveil things before they are fully baked, because the level of scrutiny that we are under is measurably more significant” than for men. “Perfection is what is expected of us,” she added. “Don’t rob yourself of the community think that helps your idea get better.”