Five Ways Female Founders Get Funded
The stats are staggering. Female founders receive less than 3% of all venture capital and founder teams with a least 1 female receive about 12%. Why? I will come back to that in future posts.
For now, let’s talk about how female founders growing game-changing businesses get money?
Getting money, starts with asking for money. In many cases, societal norms have made women less comfortable asking for money. Therefore, many women try to personally fund their business relying on internal resources – like taking out credit cards.
But there are other options available particularly at the early stages.
1. Female-Focused or Female-Friendly VCs. These funds invest in female founders at various stages though many are early stage investors – I would also include angel groups like 37Angels and Golden Seeds in this category. Most often these funds are started by women and women are making the decisions about who to invest in. For example, BBG, Female Founders Fund, SoGal Ventures, Plum Alley. To name a just a few.
2. Crowdfunding. This is a very popular route for women to go and, in fact, women-led crowdfunding is 32% more successful than male-led. Women tend to be better story tellers using language that creates a positive emotional response. Crowdfunding also levels the playing field, doing away with unconscious bias that often comes with pitching VCs. In addition to the big names – Kickstarter, GoFundMe and Indiegogo there is the female-focused iFundWomen.
3. Grants. There are federal, state and local government, private sector and philanthropic grants available. Each one has its own application process and eligibility requirements, and some will require more information and lots more work. You may want to check out ones that are focused on women, but you should apply to all! There are so many so do your homework. Here are a few women focused: Amber Grant, Walmart Global Women’s Economic Empowerment Initiative, Cartier Women’s initiative, and Women Entrepreneurs NYC (WE NYC).
4. Loans. 1 in 4 female entrepreneurs apply for business loans and, on average, ask for $35,000 less than men. This goes back to - ask for what you need. There are lots of options – microloans from Kiva or Elizabeth Street Capital, or online lending platforms like Funding Circle or Lending Club, or the SBA Office of Women’s Business Ownership. Or, you can get a line of credit so you only pay interest on what you use.
5. Accelerators. In addition to capital, these short-term programs offer mentoring, relationships with service providers, and a community to help you scale your business. Often this includes introductions for follow-on funding. There are some that are focused on women, for example, Women Start Up Lab and Springboard Enterprises.
At the end of the day, capital is available yet getting funded is hugely competitive for all founders. Women face additional challenges and often do not find the funding they need to scale. There is hope. Inc. Magazine recently reported that more than $1billion of new capital is earmarked for women entrepreneurs - listing 50 funds focused on investing in women.
