Raising the first round of venture capital is not an easy job for anyone. But stats show that raising money is especially difficult for female entrepreneurs. According to Women Who Tech, only 7 percent of investor money “goes to women-led startups”. However, the numbers also show that “women-led tech startups have 35 percent higher ROI when venture backed and generate 12 percent higher revenue than male-run startups”.
So why is there such a gap between men and women when it comes to getting VC funding? There are a few reasons why this is happening. And it is important to understand the problem from the root to be able to come up with reliable solutions.
“One particular sector where the (gender) divide is hard to ignore is technology”, says Kellie Pevy, a digital marketing tutor with over 15 years experience giving advice to women in tech. In a male dominated industry, there has been a change in attitude in the past years. But there is still a lot of work to do. Pevy acknowledges that today “the statistics show that only 24 percent of the technology industry workforce are women. But I see this as a big change from the 10 percent that Pinterest reported back in 2013 or 15 percent by Facebook in 2014”.
The increase in women working in tech has a direct effect on the rise of women founding and co-founding startups. These three tips may help women entrepreneurs who are planning to take their businesses up to the next level:
1. Start a Typical VC-Backed Business
As this article published by Wharton University of Pennsylvania on why VCs aren’t funding women-led startups puts it: “
There are many reasons why women don’t receive their share of VC funding and interest. One explanation is that women don’t start businesses that look like typical VC-backed businesses. Women-founded businesses tend to be smaller and in lower growth industries like retail or food, rather than technology.”
A well-known imperative before approaching investors is doing your homework. The more you know about the person you want to invest in your project, the more chances you will have to get their trust. Make sure your idea is a typical VC-backed up business and that potential investors have invested in related or similar projects before.
2. If You Don’t Ask, You Won’t Receive
It is not a secret that startup owners need money to launch their business and to grow. Although it is possible to start with your own personal savings, when the time to grow comes, you will do it much faster using early-stage venture capital.
However, according to a Kauffman Foundation survey of nearly 350 female tech startup leaders, women ask for money less:
“Nearly 80 percent of the women in the study used personal savings as their top funding source, even though 31 percent of them had angel investors and 14 percent had venture capital funding.”
Although rejection isn't nice, it is necessary to try and learn from the experience. What is for sure is that if you never ask for funding, you will never get it. So, do your research, nail your business plan or one pager, then build your confidence to get out there and raise the first round of investment for your business.
You can also search for funds that specialize in female talent such as Female founders fund. This is an early-stage fund investing in the exponential power of exceptional female talent.
3. Surround Yourself With Female Talent
In order to build up your confidence and grow your network, there are a number of things you can do to surround yourself with female talent.
You may want to join an accelerator specialized in female entrepreneurs. Or if you decide to join a traditional startup accelerator or co-working space, make sure you meet other female entrepreneurs working on exciting projects that will inspire you. This will create an ideal working environment to motivate you to boost your business possibilities.
A good idea may be to find a female role model or mentor. Surprisingly, women are less likely to ask for mentorship and to be mentors than men, explained in this remarkable interview Linkedin career expert Nicole Williams. After surveying more than 1,000 female professionals, she had this to say:
“By and large, women, in my experience, tend to want to be the givers. They want to be the ones who are helping versus actually asking for the support and the assistance.”
To get inspired by successful women, it is highly recommended to read books such as Innovating women: the changing face of technology. You will find over 500 interviews, stories, experiences and advice from women in technology. It includes entrepreneurs, venture capitalists and Senior Managers at some of the world’s largest tech companies.
Image: Flickr / WOCinTech Chat