For many women entrepreneurs it is a challenge getting the funding needed to support their business. Despite the number of women entrepreneurs being on the rise running 30 % of all small businesses as of 2016 employing 7.9 million people and as of 2015 have generated 1.4 trillion (https://www.nawbo.org/resources/women-business-owner-statistics) only get 4.4% of the business funding they get from banks (http://lionessmagazine.com/3-reasons-women-entrepreneurs-trouble-finding-funding/). Credit is essential for businesses to prosper and if there is one thing that is clear from this statistic it’s that women entrepreneurs are disproportionally under funded so what are the reasons for this?
When people think of an successful entrepreneur the main image that always come to mind is always that of a man with a suit and it is very clear to see why considering the most successful entrepreneurs of our time are mostly men Steve Jobs, Mark Cuban and Mark Beiderbecke being the main example. History has given men the advantage of dominating in all industries and businesses for decades and so there is already an established notion that men are better entrepreneurs which creates a preferential bias. Some may assume that any business run by a women will not have long term success therefore are too risky or unreliable to fund so they’re turned down. The problem then is that we’re not seeing successful female entrepreneurs in the media but there are a lot Cher Wang co-founder of HTC, Oprah Winfrey and Sara Blakely founder of Spanx to name a few and now that women have more rights then ever to do what they want we will see more of them assume the position of business owners and entrepreneurs in the future.
For issue concerns the difficulty women have of finding funding not only from banks but from venture capitalist as well. Women have a much harder time finding financial support because they receive less opportunities due to various factors one being that they receive fewer funding support from venture capitalist who are predominantly men because venture capitalist tend to support businesses that they feel they have a connection with. This might be because they came from the same school, state or know someone that they’re mutually acquainted with. It might be difficult for a women to relate to venture capitalist especially considering that 89% of them are men. Women business owners have a better chance of getting funded by women venture capitalist since odds are they have more in common with each other and probably would be more sympathetic to one another. For women who happen to be minorities this can be even more challenging as black women for example own 1.5 million small businesses in America but get 0.2 % of investment from venture capitalist.
Men and women have uneven credit scores a portion of it is due to income inequality with men having on average a score of 630 and women 621. For entrepreneurs though the difference is even more staggering with 20% of all male male entrepreneurs having a credit score of less then 620 while nearly 33% of women entrepreneurs have the same score. A report found that women entrepreneurs have credit scores that are 40 points less than their male counterparts making in evident as to why they’re having more trouble qualifying for funding from banks. With all of these challenges in the way for women entrepreneurs fortunately there is a bright side to it all.
There are many answers that women business owners can turn to when it comes to finding funding and it isn’t all bleak for women who want to become entrepreneurs in the future. According to a report the number of women owned businesses has climbed up to 68% compared to the national average of 47% and it seems to be only getting better. The best thing women business owners seeking funding can do is search all viable options when it comes to funding which happens to be a lot one example being options available for female entrepreneurs helping them like the SBA which has funding programs geared towards helping women and angel investment firms and grant options that exist for them too. Golden Seeds is one such investment firm that is specifically focused on helping women business owners get the funding they need for their business. Also in this day and age people are no longer limited to just relying on alternative lenders for financial assistance as they can use other methods such as peer-to-peer lending sites, crowdfunding and networking which is convenient for those that are not too keen business financing from banks.
It is still hard for women to find success not only in the world of business but in other occupations as well but that does not mean that it is impossible for them to achieve success in those fields. There are many solutions that exist for women today then there ever were in the past and as times are changing we’re seeing more of them taking positions that were never open to them in the past. The path to achieving success however is not a short one but if they’re resourceful enough they can get the funding they need to build their business and achieve the same amount of success as their male counterparts.