• About
  • Article PDF
  • White Papers
  • Listening Tours​
  • Contact
  • Support Us
  • Advertising & Sponsorships
Tuesday, March 28, 2023
No Result
View All Result
  • Login
Times Of Entrepreneurship
Growth and Equity for a Changing World
Times Of Entrepreneurship
No Result
View All Result

Op-Ed: The Real Reason Women Entrepreneurs Struggle to Raise Funding

The prevailing narrative is that women need to adapt what they do, and how they do it, to achieve their goals. But decades of trying that approach have barely moved the stats.

by Brigit Helms
February 3, 2021
in Women Entrepreneurs
Reading Time: 6 mins read
0
Share on FacebookShare on Twitter
Erica Plybeah Hemphill, founder and CEO of MedHaul, met investors’ expectations and more, and yet still did not receive funds. Image courtesy of Starboard and Port

Something interesting happened at last October’s 2020 Women in Global Development Leadership Forum, dedicated to empowering women leaders on the global stage. Before a panel discussion on “The Many Ways to Invest in Women Entrepreneurs,” a Zoom chat poll asked participants, What is your biggest challenge? Overwhelmingly, the answer was ‘funding’—raising enough of it or raising any at all.

After the panel discussion and breakout groups, a second poll asked the same question. This time, the answers were starkly different. They revolved around insufficient networks for women entrepreneurs seeking funding, lack of confidence in asking for funding, and recognition that their more modest and realistic approach to fundraising often clashes with the predominant investor culture.

What happened in the span of 30 minutes to trigger such a shift in answers? While talking among themselves, these women leaders began to dig into the ‘why’ behind the larger questions around funding inequity—looking below the visible surface of the funding landscape to get to the systemic root causes of why the funding ecosystem undervalues women entrepreneurs.

One thing is for sure: the answer isn’t for women entrepreneurs to change themselves to fit into the expectations of the existing funding environment, which is merely the visible manifestation of long-standing biases and ways of working. Rather, women leaders need to navigate their own paths to success: planting and cultivating new seeds—forming new networks and ecosystems—while also pressing for change at the hidden levels of the larger ecosystem.

Women Entrepreneurs Face Significant Headwinds

Worldwide, women are underrepresented as business owners and executives. When starting their own businesses, women receive less funding than their male counterparts.

According to analysis by Boston Consulting Group (BCG) of data from the MassChallenge accelerator network, investments in companies founded or cofounded by women averaged $935,000, compared to the average of $2.1 million invested in companies founded by men. And in 40% of economies worldwide, women’s early-stage entrepreneurial activity is half or less than half of that of men’s.

And Yet, Women’s Leadership Achieves Superior Results

In reality, businesses founded by women deliver more than twice as much per dollar invested than those founded by men.

When companies have higher percentages of women in leadership and board positions, they average better returns on sales, assets and equity compared to those with the lowest percentages of women in leadership and board positions. A January 2019 Forbes article cited studies showing that women-founded companies outperformed companies founded by men, including delivering higher revenues, stronger growth, less employee turnover, and greater return on equity.

Empowering women economically goes beyond the success of individual businesses, too; it is a global good. If women and men participated equally as entrepreneurs, global GDP could rise by approximately 3% to 6%, boosting the global economy by $2.5 trillion to $5 trillion.

Exposing the Roots of Women Entrepreneurs’ Funding Challenges

What’s going on here? If women entrepreneurs perform so well, why do they continue to face serious challenges obtaining the capital they need? What’s at the root of gender-based funding disparities?

In a couple of publications, BCG identifies some reasons for gender disparity in funding, including:

  • Women have relatively limited access to the kinds of robust support networks that have long nurtured startups founded by men.
  • “Men often overpitch and oversell,” while women tend to give more conservative projections and might ask potential investors for less funding than men.
  • When pitching their businesses to investors, women founders receive more challenges and pushback than men.

At Miller Center for Social Entrepreneurship, we’ve witnessed time and again both the challenges that women social entrepreneurs face and their ability to succeed, despite the odds stacked against them. Here are three examples that illustrate BCG’s points above.

Manka Angwafo is the founder of Grassland Cameroon, a premier grain-handling company in North-West Cameroon that works closely with smallholder farmers to improve the lives of the farmers, their families, and their communities at large.

Of her challenges starting her company and securing funding, Manka has said: “Initially I had only male advisors to look up to, and male counterparts to work with.” She advises women leaders to “seek out other female founders, regardless of their business sector. Create a tribe of unfailing supporters, and hold them close to you. This is what will keep you going through all the tough times.”

Allison Archambault is President of EarthSpark International, which delivers microgrids and other small-scale clean energy products to hard-to-reach places, starting with Haiti. According to Allison: “My biggest reflection on the gender funding gap is the degree to which overpromising is rewarded. I have a sense that women tend to be more candid about their ventures, but candid conversations about uncertainty and risk don’t sell.”

Erica Plybeah Hemphill is CEO and founder of MedHaul, the end-to-end platform that helps healthcare providers find and book safe, transportation for people with special needs, beginning in Memphis, Tennessee. Erica faces the extra challenge of being a Black woman in the United States, considering that Black women have raised only 0.0006% of the $424.7 billion total tech venture funding since 2009.

In the early stages of launching MedHaul, Erica struggled to raise funding—despite exceeding the metrics that investors said she needed to meet. She said: “[Potential investors] would say, get one letter of intent, I would get four. They said, get one paid pilot, I got two paid pilots. We overperformed on their expectations and still never got funding.”

Growing Strong, Successful Women Leaders

It’s one thing to celebrate women leaders who rise against the odds, but we shouldn’t expect them to carry the full burden of growing their own success. The prevailing narrative is that women need to adapt what they do, and how they do it, to achieve their goals. But decades of trying that approach have barely moved the stats.

Instead, it’s the system itself that needs to change, starting at the roots. Yes, women leaders must work to support and boost one another, but everyone has a role to play.

For example, investors can consider a gender lens investing strategy, taking into account how well their investment decisions support women’s economic and social well-being. And as more women step up to become investors, their male colleagues can embrace and encourage them.

Social entrepreneurship is an important part of the solution, as well. Social enterprises empower women economically not only as leaders, but also in the other important dimensions: as employees, value chain participants, and customers.

We all have a stake in women’s economic empowerment. We should seize any opportunity to encourage women to take leadership roles—then support them once they get there.

Brigit Helms is executive director, Miller Center for Social Entrepreneurship. She previously wrote
“Four Ways That Social Entrepreneurship Can Advance Women’s Economic Empowerment.”



This story and others on Times of E are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.

Tags: Miller Center for Entrepreneurshipwomen entrepreneurswomen in business
Brigit Helms

Brigit Helms

Brigit Helms is executive director, Miller Center for Social Entrepreneurship

Related Posts

How Trailblazers Could Benefit from Executive Coaching

Angel Investors Are the Engines Of The Women’s Economy

by Silvia Mah
March 9, 2023
0

A survey of the data on the women-led economy shows that 33% of millionaires are women and 22% of people...

How One Woman Reinvented a Hot Niche in the Beauty Business—and Built a Franchising Empire

How One Woman Reinvented a Hot Niche in the Beauty Business—and Built a Franchising Empire

by Lori Ioannou
February 14, 2023
0

Noemi Grupenmager created the unisex waxing franchise Uni K Wax Studio. Photo: courtesy of Uni K Wax Studio Noemi Grupenmager...

Trailblazer: An Audacious Denver Entrepreneur Recruited An Xbox Creator To Develop Her Gaming Vision

Trailblazer: An Audacious Denver Entrepreneur Recruited An Xbox Creator To Develop Her Gaming Vision

by Lori Ioannou
January 18, 2023
0

The Last Gameboard cofounders Tim Schukar and Shail Mehta, also the CEO. Photo: courtesy of The Last Gameboard. Shail Mehta...

woman sitting alone on concrete steps, open computer on her lap

Commentary: The Pandemic Slammed Women Entrepreneurs. Hardly Any One Noticed.

by Dr. Carrie Santos
September 29, 2022
0

Young businesswoman using laptop while sitting on steps. Full length of female professional working on staircase. She is wearing long...

VC Spotlight: Women-Led Chloe Capital Signed On Bank of America As An LP

VC Spotlight: Women-Led Chloe Capital Signed On Bank of America As An LP

by Elizabeth Macbride
September 19, 2022
0

Funding for woman isn’t budging despite all the attention paid to it. In 2021, companies founded solely by women garnered...

Video: Armory Square Ventures’ Sawhney On The Rise of Upstate NY

Video: Armory Square Ventures’ Sawhney On The Rise of Upstate NY

by Elizabeth Macbride
June 19, 2022
0

This interview is one of a series of Women Entrepreneurs sponsored by YPO. You can see an interview of BankMobile...

Subscribe to Times of E’s Free Weekly Newsletter

Learn about the emerging ecosystem of diverse founders

Popular

  • A Crop Intelligence Startup Backed by Salesforce’s Benioff Aims to Help Farmers Feed the World

    0 shares
    Share 0 Tweet 0
  • Top 20 U.S. University Entrepreneurship Competitions

    0 shares
    Share 0 Tweet 0
  • VC Spotlight: Living Cities Raising $100M Fund of Funds To Help Close Wealth Gap

    0 shares
    Share 0 Tweet 0
  • Venture Capital Returns Are More Skewed Than People Realize

    0 shares
    Share 0 Tweet 0
  • Angel Investors Are the Engines Of The Women’s Economy

    0 shares
    Share 0 Tweet 0

Recent

Editor’s Note:  One Guiding Principle for Bank Regulators

Editor’s Note: One Guiding Principle for Bank Regulators

March 20, 2023

Weekly Newsletter: Small Business’ Surprise Rebound; Michelle Yeoh’s Leadership; Indy’s Agtech Superstar; $100M Fund of Funds

March 20, 2023
Black man in a suit

VC Spotlight: Living Cities Raising $100M Fund of Funds To Help Close Wealth Gap

March 17, 2023

Recommended

  • Health
  • Climate
  • Deep Tech
  • Finance
  • Education
  • Women Entrepreneurs
  • Mentorship
Two white women in profile with bright red lipstick

California Sisters on Roller Skates Put a Twist on a Hot Dog Car Hop

1 year ago
white woman smiling

Weekly Newsletter: CEO Steps Down After Race Controversy, Myopic Mistakes, And Going Undercover At A Giant Weapons Show

1 year ago
  • About
  • Partner
  • Bespoke Research
  • Listening Tours​
  • Contact
  • Support Us
  • Privacy Policy

(703-966-7357)

© 2020 Mondial Publishing Inc. All Rights Reserved.

 
Facebook Twitter Linkedin
No Result
View All Result
  • Research
  • Finance
  • Women Entrepreneurs
  • New Builders
  • Ecosystem
  • Events
  • Newsletter
  • Editor’s Note

© 2022 Mondial Publishing Inc. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Support Times of E

Times of E covers the emerging ecosystem of diverse founders.

With your support of our journalism, you will receive our weekly newsletter and one of these resources for free: 

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?