Despite the advances in gender equality in business that have been made in the past few decades, Women Entrepreneurs still face a host of unique hurdles when attempting to get funding for their ventures. We will address in this article what challenges women entrepreneurs face and how to mitigate them, if at all, what women need to consider when selecting their sources of funding, and what unique funding opportunities exist for women who venture into the startup sphere.
The Challenges of Being a Woman Entrepreneur
Women entrepreneurs often face unique challenges when it comes to finding funds for their startups. Some of the common challenges include:
Gender Bias
Gender bias can be prevalent in the startup funding ecosystem, with women entrepreneurs often facing stereotypes and biases that can hinder their access to capital. Investors may hold unconscious biases or have preconceived notions about the viability or scalability of women-led businesses.
Lack of Representation
There is a significant underrepresentation of women in venture capital firms and angel investor networks. The lack of diversity in these decision-making positions can make it more challenging for women entrepreneurs to find funding from investors who may not fully understand or relate to their business ideas or experiences.
Limited Networks
Access to strong networks and connections is crucial for securing funding, but women entrepreneurs may face limitations in accessing these networks. Traditional networks often centre around male-dominated industries or events, which can result in missed opportunities for women entrepreneurs to build relationships with potential investors.
Confidence and Self-Promotion
Women entrepreneurs may face challenges related to confidence and self-promotion. Research has shown that women tend to underestimate their abilities and may be less likely to self-promote or aggressively negotiate, which can affect their ability to secure funding.
Industry Bias
Certain industries or sectors may be perceived as more suitable for male entrepreneurs, and women-led businesses in these industries may face additional scrutiny or scepticism. This bias can make it more difficult for women entrepreneurs to secure funding for ventures in such sectors.
Family and Caregiving Responsibilities
Balancing family and caregiving responsibilities can pose challenges for women entrepreneurs, potentially impacting their ability to dedicate time and resources to their startups. Investors may have concerns about the founder’s commitment or ability to scale the business, which can affect funding decisions.
Risk Aversion
Investors may exhibit a higher degree of risk aversion when it comes to funding women-led startups. This risk aversion can stem from stereotypes or perceptions that women may be less likely to take risks or have the necessary business acumen to succeed.
Addressing the challenges listed above requires concerted efforts from various stakeholders, including investors, policymakers, and the startup ecosystem as a whole. Initiatives promoting diversity, inclusivity, and bias awareness, along with mentorship programs, educational resources, and support networks specifically tailored for women entrepreneurs, can help mitigate these challenges and create a more equitable funding landscape.
What to Consider when Finding a Funding Source that is Right for Your Business
There are several considerations you should keep in mind when selecting a funding source for your startup as a woman entrepreneur. Here are some key factors to consider:
Alignment with your business
Ensure that the funding source aligns with your business goals, values, and long-term vision. Different funding options have different expectations, such as equity ownership, repayment terms, or specific growth targets. Choose a funding source that aligns with your desired trajectory for your startup.
Track record and expertise
Evaluate the track record and expertise of the funding source. Consider their experience in your industry or sector, their understanding of your market, and their ability to provide more than just financial support. Look for investors or funding programs that can offer mentorship, industry connections, and guidance to help you grow your business.
Network and connections
Consider the network and connections that the funding source can provide. Look for investors or programs that have strong networks, industry connections, and access to potential customers, partners, or future funding opportunities. A supportive and well-connected network can add significant value to your startup beyond just the financial investment.
Diversity and inclusivity
Pay attention to the funding source’s commitment to diversity and inclusivity. Consider whether they have a track record of supporting women entrepreneurs or underrepresented founders. Seek out investors or programs that prioritise diversity, as they may provide a more inclusive and supportive environment for your startup.
Funding terms and control
Review the funding terms, including equity ownership, repayment terms (if applicable), and control over decision-making. Understand the implications of taking on outside funding and how it may affect your ownership and control of the business. Carefully evaluate the trade-offs between funding and maintaining control over your startup.
Long-term relationship
Consider the potential for a long-term relationship with the funding source. Funding is not just a one-time transaction but a partnership that can last for years. Assess whether the investor or funding program can provide ongoing support, guidance, and additional rounds of funding as your startup grows.
Reputation and credibility
Research the reputation and credibility of the funding source. Look for reviews, testimonials, or success stories from entrepreneurs who have received funding from them. Assess their reputation for transparency, integrity, and fair treatment of entrepreneurs.
Application and selection process
Understand the application and selection process for the funding source. Be aware of any eligibility criteria, application deadlines, and required documentation. Consider the time and effort required to apply and whether it aligns with your current stage of startup development.
Remember that it is always important to thoroughly research and evaluate multiple funding sources before making a decision. It can be helpful to seek advice from mentors, advisors, or fellow entrepreneurs who have experience with different funding options to gain insights and perspective. Ultimately, choose a funding source that not only provides capital but also aligns with your strategic objectives and offers support that can help your startup thrive.
What Funding Sources are Available for Women Entrepreneurs?
Several funding opportunities exist that have been specifically designed to support female entrepreneurs in their startup journey. The following are some notable options available globally. Note that this list may contain funding sources that are not available in every country or region, and that EquityMatch.co is not affiliated directly or indirectly with the organisations/funds in the following list.
The Women’s Venture Capital Fund
This fund focuses on investing in women-led startups and provides capital, mentorship, and support to female entrepreneurs.
The Female Founders Fund
Based in the United States, this fund invests in early-stage startups founded by women. They provide funding, as well as access to a network of experienced entrepreneurs and investors.
InnovateHER Challenge
Organised by the U.S. Small Business Administration (SBA), this annual competition aims to showcase and support innovative products or services that have a positive impact on women’s lives. Winners receive funding and other resources.
Female Entrepreneurship Fund (FEF)
Launched by the European Investment Fund (EIF) and the European Commission, FEF provides access to finance and mentoring for women-led startups in Europe.
SheEO
This organisation, operating in several countries, offers funding and guidance to female-led ventures. They assemble a network of female “Activators” who contribute funds to support selected ventures and provide ongoing mentorship.
Cartier Women’s Initiative
This global program supports women entrepreneurs from all regions and industries. It offers financial support, business coaching, and networking opportunities to selected participants.
Angel Investor Networks
Some angel investor networks, such as Golden Seeds, focus on investing in women-led startups. These networks provide not only funding but also mentorship and expertise.
Government Grants and Programs
Many governments around the world have initiatives to support female entrepreneurs. These programs offer grants, loans, or subsidies to help women start and grow their businesses. The availability and specific details vary by country.
Accelerator Programs
Numerous startup accelerators and incubators, such as Women’s Startup Lab, Springboard Enterprises, and Women’s Startup Lab, offer funding, mentorship, and resources specifically tailored to female entrepreneurs.
Remember to research each opportunity thoroughly, as eligibility criteria, funding amounts, and application processes may vary. Additionally, local resources and organisations within your country or region may provide further funding options for female entrepreneurs.
If you are a female entrepreneur in need of any guidance or mentorship on the subject of funding, consider becoming an EquityMatch.co member today. We take pride in our extensive network that is inclusive and diverse, and our connections will help you get the funding you need for your next venture!