Women entrepreneurs finding funding out of reach?

It is not a mere coincidence that the entrepreneurial landscape remains skewed, with women entrepreneurs often finding the path to funding more like an obstacle course than a level playing field.?

The sobering truth is that despite significant strides towards gender equality in various spheres, the realm of business and innovation continues to grapple with a disheartening disparity in funding accessibility.?

In this article, we look at some of the challenges faced by women entrepreneurs when it comes to finding funding and strategies that can help them.

Gender disparity in entrepreneurial funding

Studies and surveys have, for a while shown that women entrepreneurs often face trouble when seeking funding for their ventures. From gender-biased questions, such as questions about childcare and family support, to questions that specifically aim to highlight incompetence in women business leaders, many hindrances lie in the path of women entrepreneurs finding funding around the world.?

In India, for example, only 0.3% of India’ VC funding went to women entrepreneurs in 2021, and a survey conducted by an NGO in 2022 showed that nearly 85% of women entrepreneurs had trouble availing loans from public sector banks.?

A study published in the Academy of Management Journal in April of 2018 showed that investors often asked male entrepreneurs types of questions that led to a higher chance of funding compared to female entrepreneurs. While not every women entrepreneur will face these challenges, studies indicate that most do, which is why these concerns need to be addressed.?

What Are The Challenges Women Entrepreneurs Face??

While the world of business can be challenging on its own, women entrepreneurs face several unique challenges that can hinder them from finding capital and funding. Here are some of the most prominent ones

• Gender bias in investment decisions – One of the most significant hurdles women entrepreneurs encounter is the pervasive gender bias that affects investment decisions. Studies have shown that investors, who are predominantly male, tend to be more receptive to pitches presented by male entrepreneurs. This bias can manifest as a lack of confidence in women's business acumen, leading to reduced funding opportunities. As a result, women often have to work harder to prove the viability of their business ideas, hampering their access to essential financial resources.
• Lack of women representatives in venture capital firms – The lack of diversity within venture capital firms compounds the challenges women entrepreneurs face. When decision-makers in investment firms are predominantly male, the perspectives and needs of women-led businesses can be overlooked. This absence of relatable mentors and advocates diminishes the chances of securing funding and accessing strategic guidance tailored to the unique challenges women-led startups might encounter.
• Gender stereotypes? - Stereotypes about women's roles and abilities can cast a shadow over their entrepreneurial endeavours. Investors may hold preconceived notions that women are more risk-averse or less capable of handling high-pressure business situations. These misconceptions can lead to women entrepreneurs being denied funding or offered less favourable terms, hindering their growth prospects and perpetuating a cycle of limited access to capital.
• Market bias – Women entrepreneurs often find it difficult to gain investor trust in untested or innovative markets. Investors might perceive certain industries as more suitable for men, leading to women-led ventures in emerging sectors facing scepticism. As a result, women entrepreneurs may be pushed toward traditional or "feminine" industries, limiting their opportunities to tap into new and potentially lucrative markets.
• Networking disparities – Anyone who has done anything related to business can tell you how important networking is for entrepreneurs. Yet, women entrepreneurs frequently have limited access to the right circles. Exclusive networking events and informal gatherings can exclude women due to the historical male dominance in such spaces. This lack of exposure to key decision-makers and potential investors can hinder women's ability to showcase their ventures and build the connections necessary for funding success.
• Underrepresentation in pitching opportunities – Opportunities to pitch business ideas to investors are vital for securing funding, yet women often face challenges in obtaining these opportunities. Some events and competitions might have a biased selection process or be dominated by male participants, making it harder for women to present their ideas to potential backers. This underrepresentation limits their exposure and access to potential investors.What Are The Strategies Women Entrepreneurs Can Apply?Build a strong support network – Cultivating a diverse and robust support network is crucial for women entrepreneurs. Connect with mentors, advisors, and fellow entrepreneurs who understand the challenges you face and can provide guidance, insights, and valuable introductions. Leveraging these connections can help bridge the networking gap and provide access to resources that might otherwise remain out of reach.
• Leverage online platforms and crowdfunding – In the digital age, women entrepreneurs can harness the power of online platforms and crowdfunding to raise funds directly from a broad audience. Crowdfunding platforms allow entrepreneurs to present their ideas to a global community, potentially attracting a more diverse and inclusive set of backers. These platforms also offer a chance to prove market demand and gain traction before approaching traditional investors.
• Craft a compelling business pitch – A well-crafted business pitch is essential for capturing the attention and confidence of potential investors. Focus on showcasing the market opportunity, your expertise, and the unique value proposition of your business. Address any potential concerns head-on and provide data-driven evidence to demonstrate the viability and growth potential of your venture.
• Seek out diverse investors – Look for investors who value diversity and understand the untapped potential of women-led businesses. Research and identify funds, angel investors, and venture capital firms that prioritize supporting women entrepreneurs. These investors are more likely to appreciate the market opportunity and bring a more open-minded approach to funding decisions.
• Participate in women-focused programs and competitions - Numerous accelerator programs, pitch competitions, and grants specifically target women entrepreneurs. Participating in these initiatives not only provides access to funding but also offers opportunities for mentorship, skill development, and exposure to a supportive community. Research and apply to these programs as they can serve as valuable stepping stones for funding success.
• Build a robust online presence – Having a strong online presence can help establish credibility and attract potential investors. Develop a professional website, maintain active social media profiles, and showcase your expertise through thought leadership content. A well-curated online presence can contribute to building trust and generating interest among investors.
• Look for funding options for women entrepreneurs – Due to the disparity in funding opportunities, many countries have governmental initiatives that can provide women entrepreneurs the capital needed to either kickstart their project, or carry it forward once it’s off the ground. Hese programs and initiatives not only vary by country and state, but can also provide benefits based on your background and specialization. So definitely keep an eye out for those that can help your needs.?Here Are My Concluding ThoughtsThe future looks bright for female entrepreneurs who are shaping the business landscape. Over the last two decades, there has been a remarkable 114% increase in female entrepreneurs, and their businesses are growing at an impressive rate of 84%. These positive trends highlight their adaptability and innovation, seen in how they're adopting new business approaches, flexible work setups, and diverse leadership structures. The rise of smaller businesses, made possible by smart outsourcing, is helping women excel while maintaining balance.?