Women Entrepreneurs: 6 Secret Techniques to Overcome the Funding Gap

Companies Founded by Women Finding it Difficult to get Venture Capital

There are more than 11.6 million businesses in the United States that are women-owned. Out of businesses that generate $1 million or more, 1 in 5 is owned by women. Being a female entrepreneur is looking better each and every day. But, with all of the progress that’s been made, there are still looming disparities.

Women Finding It Difficult to Get Venture Capital

The number one challenge women face is a significant disadvantage in securing access to venture capital funding compared to their male peers. In 2017, just 2.2% of all venture capital in the US went to companies founded solely by women. According to Entrepreneur, “Women are also raising smaller rounds than men — averages of $5 million and $12 million, respectively. Last year, the largest VC deal cut by a team of female founders was Moda Operandi’s $165 million Series G, contrasting starkly with the largest round of their male counterparts: WeWork’s Series G at $3 billion.”

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Here are Six Ways to Overcome the Funding Gap:

Get a Mentor– find yourself someone who has successfully obtained venture capital funding. Practice your pitch, have them look over your business plan, and solicit their advice to so when you go into the lion’s den you’re as prepared as possible.

Find the Right Investors– don’t throw your pitch to just anybody. Carefully research which firms you want to target and make sure that your idea is something that they might be interested in.

Also seek out companies that are investing in women. There are venture capital firms out there that are dedicated to closing the gender funding gap. Inc. has put together a database, called The Fundery, that helps women find venture capital firms that invest specifically in women entrepreneurs.

Overcome Your Fears– the statistics being what they are, it can be intimidating for women to ask for funding. But, women entrepreneurs are taking the economy by storm. Four in every ten businesses in the US are women-owned those businesses generate over $3.1 trillion in revenue.

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  • Get comfortable talking about money and what your investors’ money can do you for your business and your investors’ pockets
  • Be confident and let your numbers show it
  • Clearly understand your business plan from front to back and be able to relay knowledge
  • Be prepared for investors to ask the tough questions

Ask for More– Gloria Kolb, CEO and co-founder of Elidah and mentor at UConn’s Technology Incubation Program shared with Business News Daily that women need to change their pitching strategies. She says that when men seek venture capital funding, they typically inflate their numbers, while women tend to be more realistic and conservative. As a result, investors are more likely to reject the first set of numbers. Kolb recommends women adopt this tactic so that they have more room to negotiate when their initial request is shot down.

Explore Other Funding Sources- venture capital funding isn’t the right choice for every business. If you’ve got all of your ducks in a row and you’re still consistently striking out, it might be time to consider other funding sources to grow your business. Other options can include:

Put Your Money Where Your Heart Is– if the time comes that you have enough capital to invest, pay it forward and invest in other women-owned businesses. At the end of the day, the only way that women will continue to seek venture capital funding is if more women receive venture capital funding.

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  1. It got kind of buried in the middle, so I’ll point it out here – ASK FOR MORE. VCs want to feel like they “won” a negotiation by getting more ownership or reducing the amount for the same percentage. Give yourself more room with the numbers to let them “win” while you also get what you want.

  2. It is sad to know that there is a funding gap. Everyone has to be the same. I guess it is all about proving yourself that you are worthy of the investment.