You’ve heard of the gender gap. You’ve heard of the wage gap. But have you heard of the funding gap? Well if you haven’t, allow us to introduce to this major disparaging issue that women entrepreneurs face everywhere, even our very own founders of the Lala. Here are the facts:
- Less than 3% of venture capital goes to female founded companies in the U.S. (Diana Report)
- There is a $50 billion gap in the U.S. (Diana Report)
- There is a $280 billion funding gap globally
- Men start firms with nearly twice the capital that women do
- 11% of Small Business Administration (SBA) 7(a) loans are awarded to women-owned businesses (Connect2Capital)
So what does this mean for us? A woman with an idea, a business plan and some hustle who wants to start a business or launch a product currently grabs at 3% of the whole pot. That means a woman entrepreneur will have to work and pitch investors 97% harder than men entrepreneurs do. That means woman have a dramatically reduced chance of actually launching their idea into reality. Can you imagine walking into a room, pitching a ground-breaking idea, and then having your vision shattered, all because of your gender?
It is pretty easy to see why this is happening. In most cases, investors are men. In the most cases, men don’t fully understand the products or the missions behind female-lead companies. In most cases, men will trust and rely on men more, especially in matters of business. And in most cases, women are more risk-aversive and less likely to be demanding and pushy when it comes to asking for money. So in most cases, we have a problem.
Not only is the blatant sexism rooted in this issue infuriating, but it means we are missing a host of ideas, products, and innovations for women and girls worldwide. Think about it. For years now companies that make products for women have been headed up by men. That doesn’t always make sense, especially in cases such as tampons. In fact, many tampons are actually full of toxins. But when women start their own feminine hygiene businesses, you get toxic-free, innovative companies like Thinx, Natracare, and Orchidea.
We can think of so many other spaces ready for disruption and innovation lead by women. Have an idea, but stifled by the gap? Here’s what to do…
- Ask For It: Funding and investing may seem needy or risky to you. But if you have an idea and you’ve worked hard, then you deserve it. Own your idea and believe in it when talking to investors. You have every right to be there, so don’t you dare under estimate your worth.
- Broaden your funding horizons: Get creative and go beyond venture capital. In Entrepreneur, Zeynep Ilgaz said, “There are many wonderful options out there, including bank loans, crowdfunding, lines of credit and Small Business Administration loans. Educate yourself on the variety of available funding sources to find out which one suits your needs.” Even large corporations like American Express, have support programs for women entrepreneurs with forums, boot camps and more.
- Build Your Network: Meet people at every chance you get. The more people you know who have gone through the same thing and are successful, the more chances you have for insight and funding. Join women networking organizations that provide business insights and mentorship and look for events that bring entrepreneurs together.
- Be the Change: All of us should support this initiative and advocate for women entrepreneurs. Start your own support group, buy from women-owned businesses, and once you are capable, invest in women-owned businesses yourself.
Photo Credit: Anna Schultz