Female Founders are ready and waiting, but where is the money?

Think back to 1996 and Tom Cruise is on the big screen, yelling down the phone to his client…

“SHOW. ME. THE MONEY!” 

The line is legendary. We’ve all said it a million times. In fact, I’d wager that when you read the line above, you smiled and then did your best Cruise impersonation, yelling… Show me the money!!!!!

Yet, here we are in 2020, and female founders are not seeing the money. On average, businesses led by women are receiving approximately 2% of global VC money. 

I know right! 

Even with evidence that female founders establish, and grow businesses that are significantly better financial investments, all we get is 2%.

The Boston Consulting Group, in collaboration with Mass Challenge, determined that women-owned startups generate more revenue for every dollar received than their male counterparts. 

Their research revealed:

• The average startup that had been founded or co-founded by women received $935,000, less than half the $2.12 million that the male-founded companies had received.
• Despite that funding gap, the women-owned companies had generated more in revenue over a five-year period: $730,000 compared with $662,000.
• For every dollar of funding, the women-owned startups had generated 78 cents in revenue, while those founded by men had generated less than half that amount—just 31 cents.

Using this Mass Challenge research sample, BCG calculated, if investors had put the same amount of capital into the startups that were founded or co-founded by women as they had into those founded by men, an additional $85 million would have been generated over the five-year period of the study.

Like. WOW.

Which raises the very obvious questions... Why don’t women receive the same levels of funding as men? Why does a funding gap even exist?

Some say it’s…

• the way venture capital and private equity works, 
• the way financial institutions operate, and 
• societal norms, including
• the current mindsets and (un)conscious biases of male investors who tend to be more comfortable investing in men because of ‘pattern recognition’, and 
• the confidence level and actions of women. 

Maybe it’s all of those points blended together...

But, I propose a better question is, ‘How do female founders bridge the gap and access the funding they deserve?’

These are my Top 5 suggestions:

1. ‘Lean In’ and build networks with female VCs. They understand the power of female founders and intrinsically understand women are an untapped market.
2. Ask for more money! Women receive less than half what men receive, because they often are not asking for enough. Be diligent in calculating how much you need and ask for it!
3. Structure the business so that it is investment-friendly. Have a PTY LTD or LLC in place, with shareholder agreements, vesting schedules, and the like. Present as an investable entity ready for accelerated growth.
4. Get clear on your long-term vision. Be ready to clearly articulate where you are, where you’re going, and what funds are needed to get there.
5. Be Bold! Tap into your inner Sasha Fierce to build the belief that you are the CEO of a global empire that drives change and does good, and deserves the funding just as much as anyone else. 

Because, when women believe they can, the most amazing things happen. 

Are you ready to start the hunt for external funding?

We are inviting purpose-driven female founders to download the GrantReady Checklist. 

If you are a Female Founder:

• With a business ready for growth
• And you want to know if you're ready to secure $100,000 or more in Grant funding 

Then we invite you to Download the >> GrantReady Checklist <<

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Author Bio

Hi... my name is Lisa Erhart. I am an Author and the Founder of Funding4Growth. I help women entrepreneurs secure $100,000 or more in external capital to accelerate their business growth and magnify their impact.