Stepping into the world of entrepreneurship is a daunting task. Businesses bring with them a lot of nuances that need to be taken care of. Be it the creation of a business plan, finding customers, hiring the right talent and most importantly raising capital. In a world largely dominated by male entrepreneurs, the going gets slightly tougher for a woman entrepreneur!
Yet, women, today are becoming successful entrepreneurs. More and more women are breaking free from their traditional gender-specific roles. Working alongside many aspiring businessmen, women entrepreneurs have also carved out a place for themselves and have earned loads of money. Today women have made their mark in every industry – be it fashion, shipping, or technology. But the ride hasn’t been a bed of roses. There are ample obstacles a woman entrepreneur faces in these male-dominated fields. The top-most of these obstacles is funding.
Challenge in raising funds
The process of raising capital for a business is a complex process regardless of the gender of the entrepreneur. It gets slightly more difficult for female entrepreneurs as investors behind the curve, tend to prefer male-led companies. It is a very common misconception that male-led companies can grow faster as compared to women-led companies. But women seeking to make their mark in the business world can combat this challenge.
Ways to deal with funding challenges
Today, women have access to state aid, targeted at women. Local offices of the Small Business Association (SBA) assist women in getting grants. Such association also assist to connect women entrepreneurs with investment groups or to local programs ideal for women entrepreneurs. Some also offer SBA-supported micro-loan programs. Such programs involve non-profit intermediaries who disburse loans to women business owners.
A bank is yet another option. Most banks today have special departments that assist women business owners. Such departments guide women through the process and ensure they get access to the right financial services at the right time. Having a healthy relationship with the banker can be extremely helpful in getting business loans for women entrepreneurs. When the banker is in close contact and is aware of the health and strategy of the business, procuring the loan becomes hassle-free.
Women can also open an Individual Development Account (IDA). This is a matched savings program. It is designed in such a way that minority- and women-owned businesses get access to funding. Such an IDA program can be accessed at local banks. The government promises to match deposits to the IDA when the women business owners meet the milestones and also when they go for financial training courses. Such accounts require that the monthly account contributions should be on schedule. The monthly contributions are decided based on the size of the asset goal of the business.
According to a 2014 Babson College report, women CEOs who received funding were less than 3% of the total VC funded companies and 89% of investors of the venture capital world were males. Bonnie Crater, president, and CEO of Full Circle Insights states that often venture capitalists tend to invest in those start-ups that they feel are run by people of their own ‘tribe’. By tribe, it meant that – a Harvard-educated investor is more likely to back Harvard alum’s business. Similarly, men are more likely to support men, thus leaving women-led start-ups with limited access to funding.
Felena Hanson is the founder of Hera Hub co-working space. She is also heading the Hera Fund-a a women angel investor group. She suggests getting more female investors involved in venture capital funding. This would result in a higher probability of such firms to invest in women-run start-ups. Such groups would not only fund other female entrepreneurs but also encourage and support them strategically.
Bonnie Crater recommends another way to break such scenarios. She recommends women looking for funding their businesses should build confidence by having a well thought and researched business plan, backed by real financial projections. She recommends women entrepreneurs to work on visibility, and noticeability, try connecting with the right people, stay active on formal social media like LinkedIn and form a strong team to work with.
Other funding opportunities for women-led startups:
- Specialized funding initiative created with women entrepreneurs in mind
- Winning competitions organized by the government/ private sector that aims at encouraging female entrepreneurship.
- Subsidized bank loans for women entrepreneurs who offer unique products/services
There were times when entrepreneurship was considered a thing for men. PERIOD. But today, things are different. The last two decades have witnessed more and more women emerging in the field of business and entrepreneurship. Women are nurturers by nature. God has gifted them this inborn capacity to develop, cultivate and foster. And they bring the same with them to the business world, by way of entrepreneurship.
Like Margaret Thatcher said- “If you want something said, ask a man; if you want something done, ask a woman.”
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