Despite startup success, women entrepreneurs fight for capital

150 150 Michelle Bergmann

Attendees at TEDx Bay Area Ignite event “Celebrating Global Women Entrepreneurs.” (Photo Credit: Tatyana Kanzaveli)

Here are the facts: tech startups run by women show a 35 percent higher return on investment than those run by men. Approximately 1,300 women in the U.S. launch a new business every day and some of the most successful startups, like SpaceX or Eventbrite, are run by women. Go us.

“In terms of stimulating the economy, women are the solution because 85 percent of consumer decisions are made by women,” said Anu Bhardwaj founder of Women Investing in Women.

But while the numbers of female-operated businesses grow sky high, some numbers are astoundingly low. Less than 10 percent of angel investing goes to women entrepreneurs and more than half of women who launched startups used their own personal or family savings. Why don’t the numbers line up? For Bhardwaj, a big part of the reason is a lack of financial education for women.

“Financial literacy has a lot to do with it and women getting more comfortable with how traditional pitching is done,” said Bhardwaj.

Which is why companies like Bhardwaj’s are coaching women on how to pitch and approach investors and encouraging women to become investors themselves. Despite the fact that women get the short end of the stick from investors, Bhardwaj is optimistic.

“Things are already changing and what we have noticed in the market is the formation of women investment funds and a special focus on women looking for women to come to the table. It’s in the air right now,” said Bhardwaj.

Women like Ari Horie, founder and CEO of Women’s Startup Lab, who invites women into her Silicon Valley accelerator and introduces them to other women. She says it comes down to the network and the path to capital, not just a lack of capital.

“Getting capital is hard for anyone, but the reason why women have more challenges is because we have a smaller circle to grow, as in comparison to men,” said Horie.

Horie says that women entrepreneurs spend their time trying not to lose, while men spend their time trying to win within their robust network. No surprise considering that more than half of women doubt their ability to start a business. The Women’s Startup Lab is helping to change that mentality, starting in Silicon Valley.

The states with the largest percentage of women-owned businesses are the District of Columbia, Maryland, New Mexico, Hawaii and Georgia. California is not at the top of the list but certain organizations are working to help change that.

“We’ve got about 3.6 million small businesses [in California], the vast amount of companies have ten or less employees… and many of businesses are sole proprietors. It’s important we get them the right resources and services that will help them thrive”, said Marc Nemanic, Executive Director of 3CORE, an agency that helps small businesses get loans.

Women make up approximately 68 percent of small business owners in an economy where banks give 30 percent of loans to small businesses, as opposed to 50 percent before the economic downturn. Financial advisers like Nemanic and members of the California Economic Summit’s Capital Action Team are working to help entrepreneurs across genders, he emphasizes, gain easier access to capital.

“It’s going to benefit women business owners that come into the market for financing because we look at gaps. This will encourage us to develop products and services that respond to particular needs of women entrepreneurs”, added Nemanic.

The Capital Action Team will use a database of information and create a regional map of intermediaries and then disperse it to regions across California. The map (accessed through a search engine) would link the appropriate investors with the appropriate business ideas. The objective is to introduce both men and women to the investors they need to build their businesses.

“California should move us and transform us, not ten steps but 100 steps forward using innovation,” said Horie.

Hopefully innovative tools like the intermediary maps will help close the gap between men and women gaining access to capital, that, and the continuing growth of female-owned businesses. 

“This is a global wave because more investors are starting to realize that women are the winning ticket,” said Bhardwaj.


Michelle Bergmann

All stories by: Michelle Bergmann