Female Startup Funding: Challenges and How to Overcome Them




  • — July 11, 2019

    The startup funding landscape is not the same for men and women. In fact, men entrepreneurs are almost twice as likely to raise at least $ 199k or more than women, according to a survey conducted by 99designs. And you will be surprised to know that $ 38.9 billion was invested in companies with a female founder that is just 17% of venture dollars founded globally, reports CrunchBase. So what are the challenges that female startup owners face and how can they overcome these challenges?

    I have listed the four challenges that women entrepreneurs often face.

    Let’s dive in:

    1- Constant Battle to Prove Seriousness

    Despite a strong wave of equality and woman empowerment, the world around us is still male-dominated. So it happens oftentimes that male-dominated society doesn’t want to accept women in a leadership role.

    Women-led startups have to struggle many times to be taken seriously, let alone the matter of funding. How to overcome this challenge?

    Well, my friend, this should not be a challenge in the first place because business acumen is gender-neutral. But we are not living in the perfect world. Gender-biased exists. And the only way to fight it is to build confidence and overcome self-negative talk.

    Don’t let negative comments stop you from reaching your full potential. First, you need to consider yourself winner, the others will later join. If you develop a powerful business plan and financial model, make a list of key milestones, create a story that includes the problem your startup solves, write and practice your pitch, and draft an executive summary, you are more likely to attract the attention of investors.

    2- Poor Networking

    Needless to say, success in fundraising depends a lot on visibility and getting noticed by the right investors. Who knows you and whom you know play an important role in getting funded. One important reason why men-led startups score more than women-led startups in securing funding is men have solid networking. And despite many efforts, networking is still a big challenge for women. Why?

    Vast networking opportunities are organized around male interests, according to Herminia Ibarra’s classic study. This makes networking a challenging task for women. How can you overcome this challenge and build a strong network?

    My secret tip to networking is to collaborate with other women entrepreneurs and expand your reach. Make yourself easy to approach and be confident to approach others.

    Also, you should not ignore the power of social media. LinkedIn is the best social media platform to network with the right people.

    3- Limited Access to Funding

    “Venture capitalists offer funding to those in their “tribe,” notes Bonnie Crater, the president and CEO of Full Circle Insights. And 89% of investors are male in the venture capital world. With that said, women-led startups have limited access to funding as compared to men-led startups. How women entrepreneurs can overcome this hurdle?

    Following are some funding opportunities for women-led startups:

    • Female-led funds – Many successful female entrepreneurs want to give back to up-and-coming women-led business
    • Funding initiative for women entrepreneurs – Many funding options have been created with female entrepreneurs in the mind
    • Winning entrepreneur competitions- Government and private sector organize competitions to encourage entrepreneurship
    • Bank loans – Banks sometimes offer subsidized loans to startups that have unique products/services

    In the super-connected world, your business will not suffer if you have unique products/services to offer.

    Work on your visibility, make efforts to get noticed, try to connect with the right people, and be active on social media, especially on LinkedIn. This can open new doors for you to get funded.

    4- Stereotypical Mindset of Investors

    Women are not just entrepreneurs – they can have spouses, children, and other responsibilities. So some investors think that demand from professional and personal commitments can pressure a woman entrepreneur; and as a result, she cannot focus on business full heartedly. However, this is nothing but just a stereotypical mindset.

    Don’t Arianna Huffington, Sheryl Sandberg, Debbie Fields, or Indra Nooyi have their personal commitments! Of course, they do. And their success is enough to bust the stereotype.

    “Leadership knows no gender. As an entrepreneur, you will also think about your company’s interest first, whether you are male or female,” says Upasana Taku, the co-founder of MobiKwik.

    Breaking stereotype is your fight. Some can help, but you should not expect anyone to fight for you.

    Getting your basics right often helps in fighting stereotypical mindset – capture essentials, make a powerful business plan, do your investor research, learn the vocabulary. And most importantly, be confident

    Final thoughts:

    It is always difficult to find funding for a startup. For women-led startups, it becomes more difficult. But if you believe in yourself, nothing is impossible. If one door closes, open another door. Don’t let gender stereotyping come in the way of your dream.

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    Author: Kamalika De

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