Is Inflation Haunting Your Financial Dreams? Part 1: What We Know
Written by Andrew Hunt
Written by Jason Hiley
Being a female entrepreneur brings about a new set of challenges for women in business. Will you be taken seriously? And how can you find female-friendly investors to help get your business off the ground?
While many investors and business leaders might not see the discrepancy between female-founded companies and those founded by men, an unconscious bias exists.
Take a look at while 30% of small businesses in the U.S. are founded by women, only 4.4% of small business loans went to women. And, according to Crunchbase, looking at venture capital dollars invested between 2010 and 2015 globally, only 10 percent of investments went to companies with at least one female founder.
If you look simply at return on investment, research by Illuminate Ventures shows that organizations with women in top management positions achieve 35 percent higher return on investment and 34 percent better total return to shareholders.
Female entrepreneurs who run businesses in certain industries such as fashion, design, home goods, or children’s products, are much more accepted and believed to be successful than a woman running a business in a more male-dominated industry. While this is positive for the women business leaders in those “more trusted” industries, it makes it difficult for female founders in other industries to gain investors.
So what can women do who are looking for capital investors? Here are a few tips to help female leaders fundraise successfully.
It’s always nice to have people around you who are supportive and go a great job of building you up. But it’s equally important when you’re starting a business to have people you can rely on to tell you the truth and give it to you straight. Don’t just make your network full of people who only tell you what you want to hear. Honest viewpoints are valuable.
When you’re pitching to investors, you’re likely to get a lot of rejections. And that’s okay. But most investors might not tell you why they’re passing. Do yourself and your business a favor and ask for feedback at the end of every investor meeting so you know what to expect and possibly what to work on. Ask questions like:
Getting answers to questions like these may help you know if you will gain their investment or give you ideas of how to better position yourself for investors.
Do your due diligence and research which companies are supportive of female entrepreneurs. Utilize resources such as Female Founders Fund, and put out your feelers and tap into your network to know who is likely to invest in your business.
You don’t typically walk into a job interview without doing a little background research on the company – at least if you seriously want the job. Treat pitching to investors like you would hunting for the perfect job. Make sure your business plan is polished like a resume. Do your research on the company and their investment profile. Know what you’re walking into before you take a seat and start pitching.
Female-founded companies are highly successful. Have confidence in your business and abilities and show that to investors.