THE BIGGEST CHALLENGE FACED BY WOMEN IN BUSINESS
Over the past couple of years, we have seen a surge in female run businesses. According to “The 2018 State of Women-Owned Businesses Report” from American Express, covering 2007 to 2018, women run 40 percent of firms of all sizes—an increase of 58 percent—and employ 9.2 million people, with revenues of $1.8 trillion. However, this has not come without its challenges. Today I’d like to discuss what is considered to be one of the greatest challenges faced by females in the start-up world.
Only 2.2% of all venture capital in the United States goes to female founders. Female entrepreneurs are often faced with bias when it comes to funding. In fact, female run businesses are among the leading ventures that lack the necessary financial support. Access to capital is crucial to any small business’s growth trajectory. This is the biggest underlying issue as to why women entrepreneurs are unable to grow their businesses and become more impactful. This is in part due to pre-existing biases. Additionally, only 8% of partners in the top 100 venture firms are female, according to a recent report by CrunchBase.
One of the factors that unfortunately contributes to the lack of funding that women entrepreneurs face is that of profiling. The profile of a successful entrepreneur is predominantly male. When we think of great successful entrepreneurs, our mind often wanders to the likes of Mark, Jeff Bezos and Bill Gates. As a result, an unconscious bias exists in the minds of investors, who may deem that these entrepreneurs are not as reliable as their male counterparts. In order to combat this, we must further highlight successful female entrepreneurs in different fields. Examples of which would be Virginia Rometty, CEO of IBM; Vera Wang, founder of Vera Wang; Cher Wang, co-founder of HTC; Arianna Huffington, co-founder of Huffington Post; and Robin Chase, co-founder of Zipcar. This will help fade the unconscious bias in the general public, and promote the idea that the face of success also comes in the female form.
Another factor that plays a role in reduced female funding is that venture capitalists often fund their own. There is a demonstrated lack of diversity among venture capitalists, as the vast majority are male. Often, these venture capitalists prefer to allocate these funds to people they are familiar with, be it from their fraternities or past employment. This poses a significant issue for female entrepreneurs as the business world remains predominantly male.
In order to combat this, The F-Project has decided to launch a website where consumers can purchase and support female-founded brands and share information about the founders and their products. This way, the business founders are able to bolster their business networks and promote brand collaboration.
All in all, while there have been massive breakthroughs for women in the entrepreneurship world, it still remains an uphill battle. Greater diversity of decision makers in early stage funding should pave the way to allow female-led businesses the same opportunities as their male counterparts to receive the funding needed to grow their business and make a greater impact.