Gerry Poirier is CEO and Founder of AngeLink, a social crowdfunding platform powered by women.
The data is clear: There is a huge economic disparity between genders in finance and accessing funding. After three decades of working in the finance industry as almost always the only woman in the room, I know this too well.
At every level, there is a lack of gender diversity, from the investment tables to the entrepreneurs receiving funding. A lack of access to financial resources, networking and support means that female founders and their business successes now equate to a $3 trillion missed investment opportunity.
Something needs to change.
The Potential Of Female Founders
The number of women starting businesses is increasing every year and now exceeds male-led businesses. A report from Lendio revealed that there are 11.3 million women-owned businesses in the U.S., generating more than $1.6 trillion in revenue annually, and yet they still do not have the same access to capital. In fact, around 40% of women business owners applying for funding will not obtain it, hindering their ability to grow and scale.
The Rogue Women’s Fund also found that women-led startups are five times more likely to become billion-dollar companies compared to male-led businesses. Female-led startups also generate more revenue, achieving more revenue per dollar invested compared to men.
I have seen women create incredibly successful businesses, and these statistics confirm the true potential of women in business. Yet, the lack of access to funding that so many female entrepreneurs face means that very little of it is realized. The difference that the first $5,000 or $10,000 makes when starting out must not be overlooked, and for many women, crowdfunding is the way they have to obtain these funds when abandoned by banks and investors.
And let’s not forget that it isn’t just these women missing out. Small businesses are the lifeblood of our economy, spurring innovation across all sectors and creating more new jobs than the largest companies combined. Female-led businesses generate around 9 million jobs alone, according to SBA. The lack of diversity and equality in funding means that the entire market loses out when these founders can’t bring their innovation to the industry due to a lack of financial support.
Bringing Gender Equity To The Table
On average, female founders receive less funding than men. In 2021, female entrepreneurs received only 2.3% of total venture capital invested across all industries.
And why is this? My years in finance and fintech have revealed just how male-dominated the sector is. It is men making the decisions at the investment tables, and there are simply not enough women speaking up for other female entrepreneurs.
Stats show that 89% of VC partners are men, and when it comes to investment pitches at the table, there is a clear gender bias on the side of investors.
TechCrunch Disrupt revealed that female founders are asked different questions than men when pitching. Whereas investors would ask men promotion-orientation questions about advancements, achievements and ideals, women were instead asked preventative questions, such as those focused on the issues of security, responsibility and safety. For every question asked, the answer could equate to around $3.8 million less in funding for female founders. This is because investors were unwilling to fund when they were aware of risks, something that male founders are not affected by when no one asks them these questions, even though the answers are likely to be the same.
On top of this, there is also an enormous disparity in access to funding networks where women might build relationships to propel them forward in the ecosystem. It’s suggested that women are less likely to attend networking events due to imposter syndrome and knowing that they will likely be the minority in a room full of men. Furthermore, it’s more difficult for women to gain access to these networks due to the need for men to first open the door for them. And if there’s no one at the top championing women’s cause and extending the invitation, how are we supposed to gain access in the first place?
Social Crowdfunding Can Bring Balance
I founded AngeLink in response to the gender disequality of access to finance and funding. Women make up 70% of fundraisers and users on crowdfunding platforms. They are the clear majority, generating the majority of dollars, and yet there still lacks the sufficient support and resources that these women need to be successful in their ventures.
By targeting gender inequality at the roots to help resolve issues throughout the system, we can equip women with the tools they need to gain financial security and realize business potential.
Empowering Women In Entrepreneurship
We know how successful female-led startups can be. Supporting female entrepreneurs through community, network, education and funding will bring greater success, innovation and development to the market. Balancing the playing field will bring greater gender equity to all levels of finance and fintech, creating a virtuous cycle with increasing amounts of female entrepreneurs, thought leaders and investors.
Women turn to crowdfund platforms because they are underserved in venture capital. More broadly, investors need to examine their investment portfolios and determine how they can help address this issue. Actively pursuing female-led ventures, supporting female founders and bringing more women to the investor table are just a few of the steps investors can take.
Similarly, providing more opportunities for education, mentorship and support across the ecosystem will have profound effects on the success of female founders. Founder Institute’s Female Founder Program and other initiatives, such as the Women’s Startup Lab, are paving the way for female entrepreneurship across the globe.
Yet, still more needs to be done. Peer-to-peer crowdfunding is one of the best ways for female entrepreneurs to connect with their community and seek startup capital on their journey to attract institutional funds. From startup to funding and education, women need to be championed at all stages if we want to see a real change in the state of the U.S.
Article Credits: Forbes