It’s no secret that women have traditionally been paid less than men, but it can also be challenging for women entrepreneurs to find funding for startups.
Statistically, women earn only 7 percent of venture capital investments overall. And historically, acquiring a loan hasn’t been much easier, as women see only about 80 to 85 percent of the loan approvals that men do.
Lately, there’s been a lot of buzz around the new Netflix series “Girlboss,” based loosely on the rise of Sophia Amoruso’s ecommerce fashion company, Nasty Gal. Amoruso’s company has had some significant challenges lately, but her ability to hook venture capital investors over the lifespan of her company has been exceptional. Though Amoruso’s success is inspiring, accessing startup funds is still a major obstacle for many women.
Why is it so difficult for women to obtain funding?
Perhaps women struggle to secure startup funding in part because of the misconception that male entrepreneurs are more trustworthy in terms of bringing in reliable returns, because they currently dominate the market. Or maybe it’s the fact that 89 percent of venture capitalists are men, and VCs generally favor those most like them. No matter how you spin it, when it comes to funding, women are at a disadvantage compared to men.
Implicit bias aside, it can also be difficult to navigate the funding landscape. There are lots of different funding types, and without proper training and access to resources, finding the capital to help your business flourish can be tricky. I’ve seen this myself as a woman in the business world; it’s hard to get a leg up while you’re still trying to learn the rules of the funding game.
There is good news, though: the number of small businesses owned by women has increased by an astounding 68 percent in the last ten years. Women everywhere are bridging the funding gap—and so can you. Here are three ways to increase your chances of joining the ranks of successfully funded female-owned businesses.
1. Learn to pitch to venture capitalists the right way
Entrepreneurs often fail to earn investments simply because they haven’t fully researched the best way to sell their ideas.
It’s important to determine who to share your pitch with and how to present your idea in a way that will earn funding. Investors expect high returns on their investment and a certain degree of expertise and professionalism, so you need to know how to prepare and think like a venture capitalist.
Don’t waste your time on the wrong people
Venture capital firms specialize in different markets, so make sure you do your research before selecting an investment firm to pitch for funding. Check to see what level of involvement potential venture capitalists have had with past investments, how familiar they are with your industry, and which aspects of business they care about the most.
A venture capitalist who specializes in your area of expertise will be better able to help you get your business off the ground in ways that extend far beyond financials—they can also provide a great support system and expert industry advice as you figure out how to move forward.
Learn how to sell your idea
Investing a chunk of your own money into training resources on pitching strategies can pay off big time. Coaches like David S. Rose devote entire careers to training individuals and teams on the best way to present business ideas. Other companies, such as Perfect Pitch, can help you turn a lackluster presentation into something visually appealing and stimulating to venture capitalists. Bplans also has a helpful pitch guide, a pitch ebook download, and many other resources on venture capital and angel investment.
Whether you learn about pitching from reading helpful articles online, watching a TED Talk on pitching, or paying for an actual training seminar, knowledge is key. It’s the best way to walk into a pitch meeting with confidence.
2. Seek out government contracts
As you’re seeking funding, don’t rule out government contracts—there are more opportunities than you might think.
In 1994, the federal government made a goal to allocate 5 percent of contract money to women-owned small businesses. However, it only just reached this goal in 2016.
Entering into a government contract can be a bit more tricky than applying for a grant; grants provide recipients with funding for projects with few repayment expectations, while contracts generally require some sort of payout—in the form of goods or services.
Fortunately, thanks to nonpartisan organizations like Women Impacting Public Policy and the ChallengeHER program launched by the Small Business Administration (SBA), it’s becoming easier for women to claim a portion of government contract money. The Minority Business Development Agency is also a good resource.
3. Apply for specialized grants for women
The stereotype that men are simply dominating the entrepreneurial world because they are “more successful”—that they appear more vocal, committed, or capable—doesn’t hold much water when you consider the number of women who have made a huge impact on the world we know today.
From inventing one of the earliest computer languages to developing sustainable alternative feminine hygiene products, successful female entrepreneurs are out there revolutionizing their industries and filling needs that often go overlooked.
Many foundations and private organizations like GrantWatch have started to notice this trend and are offering grants specifically to women in business. When searching for women-owned business grants, remember to begin by looking within your own state of residence. There may be specific grants available to you based on your location, so be sure to do your research.
Don’t limit your searches, either. Searching for a variety of terms (“funding for female entrepreneurs” and “grants for women in business,” for example) will give you more results than sticking to very narrow queries.
Here are a few other specialized grants you can look into:
- The Eileen Fisher Women-Owned Business Grant: This grant awards up to ten recipients between $12,000 and $120,000. Eligible companies must have been in operation for three years and not receive more than $1 million in annual revenue.
- Amber Grant: This is a $500 monthly grant awarded to women in business. There’s also one additional $1,000 grant offered each year.
- Walmart’s Women’s Economic Empowerment Initiative: Walmart has pledged to source $20 billion to women-owned small businesses in the United States.
Whether you are just entering the startup world or have had your fair share of rejection and difficulty finding funding, learn all you can about pitching, seek out contracts and available grants, and put your best foot forward so you can secure the funding your small business deserves. With proper planning, research, and dedication, you too can follow in the path of famous entrepreneurs and find funding success.
Are you a female entrepreneur? What have your experiences been like while searching for funding? Let us know by sharing this article on Facebook or Twitter and joining in the conversation.