It used to be that only men were called entrepreneurs.“From Ideas To Independence: A Century Of Entrepreneurial Women.” National Women’s History Museum. Accessed March 11, 2019. But women have been entrepreneurs for a long time.Greenberg, Molly.”15 Female Entrepreneurs Who Have Left Their Mark on America.” MBA@UNC. July 6, 2015. Accessed March 12, 2019. We have opened and run businesses out of necessity, passion, and genius. We’ve had to do it while caring for children and prior to having the right to vote. We started businesses back when we could not take out a loan without a man, and we are still starting businesses while earning 80% of what men earn.Wylie, Melissa. “28 Years Ago, Women Gained Control of Their Finances. Here’s How.”The Business Journals. October 25, 2016. Accessed March 11, 2019; “The Simple Truth About the Gender Pay Gap.“ Accessed March 11, 2019. Maybe we weren’t called entrepreneurs, but we were doing it anyway: because we needed to, because we cared, because we knew we had it in us, or because our ideas were just too good.
Today, more and more women are launching businesses“The 2017 State of Women-Owned Businesses Report.“ American Express. 2017. Accessed March 11, 2019.—and this is good for everyone. As of 2017, woman-led enterprises employed nearly nine million people in the US.Ibid One international survey found that women are more likely to engage in entrepreneurship that has an environmental or social mission.Hechavarria, Diana M., Rachida Justo, Amy Ingram, and Siri Terjesen. “Are Women More Likely to Pursue Social and Environmental Entrepreneurship?” In Global Women’s Entrepreneurship Research, 135-51. Edward Elgar, 2012. More than one study has indicated that women-led businesses produce greater returns for investors.First Round 10 Year Project. 2015. Accessed March 11, 2019. Venture Capital, Social Capital and the Funding of Women-led Businesses. Report no. 406. U.S. Small Business Administration. April 2018. Accessed March 11, 2019.
But, somehow, women are getting way less investment funding than men. Way less! In 2018, only 2.3% of venture capital investments went to female-founded startups.“The VC Female Founders Dashboard.” PitchBook. February 28, 2019. Accessed March 11, 2019. This isn’t necessarily because women aren’t trying (as some people claim). It turns out (surprise) that more than 90% of investment partners in venture capital firms are men,Teare, Gené, and Ned Desmond. “The First Comprehensive Study on Women in Venture Capital and Their Impact on Female Founders.” TechCrunch. April 20, 2016. Accessed March 11, 2019. and (you guessed it), men prefer to invest in other men.Ewens, Michael, and Richard Townsend. “Are Early Stage Investors Biased Against Women?” 2017. Accessed March 12, 2019. One research team believes this is due to “outright sexism (explicit or implicit) more subtle things, such as a desire by male investors to mentor founders who remind them of themselves.”Ibid Another study concluded that “omen do face bias in terms of the masculine stereotype held by the majority of the male dominated investment community: during the pitch, women should ‘act’ like men and indicate masculine behaviors or they may be penalized by investor audiences for not having the qualities they believe to be consistent with entrepreneurship.”Balachandra, Lakshmi, Anthony R. Briggs, Kimberly Eddleston, and Candida Brush. “Pitch Like a Man: Gender Stereotypes and Entrepreneur Pitch Success.” Frontiers of Entrepreneurship Research 33, no. 8. June 8, 2013. By contrast, according to a TechCrunch report, “here is clear evidence . . . that the small number of venture firms with female founders and/or an unusually high percentage of female partners invest at elevated levels in female entrepreneurs.”Teare, Gene, Ned Desmond, Gene Teare and Ned Desmond. “Announcing the 2017 Update to the Crunchbase Women in Venture Report” TechCrunch, October 04, 2017. Accessed March 11, 2019.
It’s possible that adding more women to the VC mix could help balance things out. Ewens, Michael, and Richard Townsend. “Are Early Stage Investors Biased Against Women?” 2017. Accessed March 12, 2019. But maybe, for those of us who want to build a new economy, this is not the best use of our energy. As Jenny pointed out last month, the VC model is designed to enrich a few wealthy people, and it perpetuates inequality regardless of the identity of the founders that get funded.
And anyway, until the VCs include more women, assuming that will help, what are women entrepreneurs going to do? They can (a) struggle in silence and bootstrap their businesses (find out what that is and why it’s a problem here); (b) try to act more like men and lean in at meetings with VCs (which might not help much according to Michelle Obama and a bunch of other people);Wamsley, Laurel. “Michelle Obama’s Take On ‘Lean In’? ‘That &#%! Doesn’t Work’.” NPR. December 3, 2018. Accessed March 11, 2019; hooks, bell. “Dig Deep: Beyond Lean In.” The Feminist Wire. October 28, 2013. Accessed March 11, 2019; Fitzsimmons, Grainne, Aaron Kay, and Jae Yun Kim. ““Lean In” Messages and the Illusion of Control.” Harvard Business Review, July 30, 2018. Accessed March 11, 2019. Your Startup Is More Likely To Get Funding If You’re A Man.” Fast Company. March 11, 2014. Accessed March 12, 2019. or (c) they can get off those treadmills, organize for their common goals, and do something more productive.
Women, let’s (c), get organized. Why wait for male VCs to finally decide we are worthy? We—and our mothers and grandmothers—didn’t wait for anyone to tell us we could be entrepreneurs.
Here are some suggestions. Business owners or not, we can:
- Invest in women-owned businesses that share our values. Investment crowdfunding platforms are a great place to start. They are easy to browse, and anyone—regardless of wealth—is allowed to invest at least something (there is a weird sliding scale based on income and net worth that you should know about). Check out these female-led, mission-driven companies on Crowdfund Mainstreet.
- Join investor communities that prioritize women-owned businesses. Angels of Main Street is open to everyone and is a place to learn about investing in mission-driven enterprises and be introduced to companies currently raising capital, including many led by women.
- Tell other women to do (1) and (2).
Are you a woman entrepreneur focused on raising capital for your business? Do you want to connect with legal and capital-raising experts and join a mastermind group of like-minded, badass female founders? Please join us at our July 2019 Retreat—Be A Money Magnet—to step into your power and get the RIGHT funding for your business.