The 2016 DWEN Research Symposium Panel on Challenges, Needs, and Key Drivers focused on funding challenges for women-owned businesses, including the scope of the problem, the role of bias, and what we can do about it.
The Disproportional Nature of Venture Capital
Statistics show that only about 2-4 percent of venture capital is awarded to women-owned businesses. With limited access to funding, about 90 percent of women-owned businesses are bootstrapped. While bootstrapping provides some benefits (for example, it boosts creativity and skill development), limited funds place limitations on the growth of women-owned businesses.
The Role of Bias
In trying to explain these discrepancies, panelists agreed that bias plays a role. For example, there are more men in positions of power at VC companies, and funding decisions are often based on gut reactions, where bias may play out. That said, panelists agreed that focusing on bias was not productive. Several other factors contribute to disproportionate VC funding, including that women may lack experience with the VC process, lack access to the right networks, lack confidence needed to pursue VC funding, and own businesses that typically don’t offer the growth potential required by VC investors.
What Can Be Done
A majority of the discussion focused on what we can do about funding discrepancies and how we can help women get the funding they need to start and grow their businesses.
• Collect better data so we can understand disparities and the entrepreneurial ecosystem.
• Encourage governments to support women entrepreneurship, including certification that opens doors so large companies and governments can work with women-owned businesses.
• Better prepare women on how to seek funding and how to negotiate so they can advocate for their businesses.
• Educate women about other funding options, including peer-to-peer funding, angel investments, crowdfunding, and women focused investment groups.
• Celebrate role models and use the power of the media to tell the story of successful female entrepreneurs in order to change perceptions.
Each of these individual efforts can add up to big changes for women-owned businesses. For each woman entrepreneur we help raise up, perceptions will change and so will actions. One panelist said it best: in the end, “the best change maker is success.”