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.
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| Female entrepreneurs gathered in Washington in September for a Visa-sponsored event championing their role in small businesses.Credit...Eric Kayne/Associated Press |
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 the 2019 State of Women-Owned
Business Report 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 Entrepreneurs Academy, based in Dublin.
It’s generally acknowledged, however, that women get a fraction of
venture capital globally, 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 Victress Capital, 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 “Leapfrog: The New Revolution
for Women Entrepreneurs” and chief executive of O³.
Still, leadership and financing experts say there are ways
women can attract money to their start-ups.
Show
your value. 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 “The Launch Book: Motivational
Stories to Launch Your Idea, Business or Next Career.”
“Don’t get
defensive,” she added. “Lead them to your point of view.”
Create
an inner peer circle. 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.
Seek out accelerators, incubators and pitch contests. 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.
Be audacious. “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.”
Consider crowdsourcing. 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 iFundWomen and Women You Should Fund. 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.
Spread
the word. 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.”
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