New research from Boston Consulting Group (BCG) found that if female entrepreneurs received as much support as male entrepreneurs, the global economy could experience up to a $5 trillion boost.
It is well-documented that women-led businesses are underfunded, with data revealing that in 2017 only 2.2% of venture capital (VC) funding going to women-led companies. Women received only $1.9 billion in funding compared to the $83.1 billion that men received. In addition, research found that only 2% of female-led businesses earn $1 million or more in revenue. Research has also determined that women-led businesses experience more positive outcomes and even outperform their peers. Given all the potential benefits that accompany female-led businesses, it’s imperative to uncover impediments to their growth. What are the causes of these barriers and how can they be overcome so that women-led businesses experience more support and success, thus stimulating the global economy?
- Greater access to capital. The Alison Rose Review of Female Entrepreneurship analyzed some of the common barriers that female entrepreneurs face. The review found that one of the most common obstacles faced by women-led businesses is low access and awareness of capital. One culprit that could be to blame for the shortage of capital is the lack of visibility that plagues many women-led companies. If no one knows about your company, how could you ever secure funding? Despite the fact that women are building successful businesses, research indicates that there is a visibility gap, and only 26% of internet news stories and media tweets combined focus on women. To increase the visibility of female-led company platforms like Globally Spotted and Savor the Success were designed to overcome the lack of visibility that many female entrepreneurs experience. In addition, social media and social media marketing can be a great resource for amplification.
- More mentorship and networking opportunities. Female entrepreneurs may have difficulty navigating the terrain and would greatly benefit from mentorship opportunities. When women enter into rooms to pitch their company, they realize that they do not look like the people that they are pitching to. One report found that only 8% of partners in the top 100 venture capital firms are female. Similar-to-me effect indicates that people will show more favoritism towards others who are like them, which is often demonstrated when women attempt to gain VC funding. These stats are even more daunting for women of color and particularly Black women, who are the fastest growing segment of female entrepreneurs. Partnering with successful female business owners can help those starting out gain a deeper understanding of how to navigate potential obstacles and gain funding. Attending networking events and joining groups like The Boss Network and the Female Entrepreneur Association that are aimed at equipping women with the skills needed to be successful, can also prove advantageous.
- Increase awareness and education. A 2017 Harvard Business Review article suggested enlisting some sort of blind system for evaluating businesses that are seeking funding. The obvious draw for investors would be the fact that women-led businesses outperform their counterparts, which would ultimately impact the investors. It’s imperative that studies examining these disparities in male and female entrepreneurship continue. Increasing awareness and understanding of this issue can be the catalyst for action and change. More discussions must take place regarding suggested solutions. In addition to more research on this issue, each person has the power to amplify the reach and the voice of female-led business. Sharing your support of a female-led business is one small, yet extremely impactful way to increase awareness and ultimately drive more traffic to these businesses. Sharing resources that can help women-owned businesses grow can also be instrumental in growth and expansion.
By: Janice Gassam
Source: Forbes
