Funding Challenges of Women-Owned Businesses
November 11, 2015
Female entrepreneurs are an undeniable force in the economy, yet many still face fundamental challenges when it comes to securing start-up funding or other types of financing.
Facing Challenges – Although the number of women who apply for and obtain equity capital has increased in the past few years, progress has been low. According the U.S. Department of Commerce, women are less likely than men to use venture capital as a source of business funding.
Women lack experience in the equity markets. Women are not as experienced and therefore not as skilled as men at presenting their case to investors. This situation is very similar to what women experienced 10 years ago in terms of gaining access to credit.
Women need to gain visibility in the right networks. Knowing people in the right places and feeling comfortable tapping those resources is essential. The National Foundation of Women Business Owners found that two thirds of the proposals that receive serious consideration by institutional investors came through referral networks.
Not all businesses are candidates for equity investments. Women’s businesses tend to be concentrated in the retail and service sectors – areas that traditionally have received few venture capital or angel investor dollars.
Making Progress – More women, however, are learning how to pursue equity capital and some investors are beginning to take women-owned businesses more seriously.
The increase of women in decision-making positions in traditional equity investment firms is also helping to make a difference for women business owners.
Strategies for Success – What can you do to increase your chances of securing funding for your business? According to studies conducted by the Center for Women’s Business Research, women who have succeeded in obtaining equity capital share common characteristics:
- A willingness to give up/share management control
- Strong management teams
- The ability to project leadership qualities/marketing expertise
To talk to one of our advisors about funding your business or success planning contact Katherine@prosperwell.com or call 763-231-9510