How female founders can find funding for growth

Women own more than 40% of America’s small businesses. They run nearly 13 million companies, employ close to 10 million people, and generate more than $1.9 trillion in revenue each year. Yet female-led companies still capture only a small percentage of the venture capital and loans that fuel growth.

Joining us on this episode of Business Trends Today is Linda Fisk, a TEDx Speaker, International Bestselling Author, and Chairwoman of LeadHERship Global, a community focused on supporting and advancing women leaders and entrepreneurs. Through LeadHERship Global, Fisk works to give women the networks, skills, and access to capital they need to reach their full potential as business leaders.

A wave of women-owned businesses

The current picture for female entrepreneurs is one of remarkable growth, Fisk said. She points to a wave of new business formation that shows no signs of slowing, much of it led by women of color.

“Women started nearly 2,000 net new businesses every single day last year, and 64% of the new women-owned businesses were started by women of color,” Fisk said.

But the reasons behind that growth are not always a sign of opportunity. Many women, Fisk said, are starting companies because they have to, not because they want to.

Fisk says that’s also led to a surge in women operating side gigs, a group she calls “sidepreneurs.” She notes that the number of women pursuing side hustles has grown at twice the rate of overall female entrepreneurship.

The capital gender gap

For all that growth, access to capital remains the single biggest hurdle women founders face. Fisk said fundraising tops the list of concerns for female business owners, even as conditions have improved over the past decade.

"Nearly 60% say they don't have the same access to capital as male business owners."

The result is that many promising companies never get the financial backing they need to launch and grow. Fisk cited a recent Columbia Business School study that found female-led ventures are 63% less likely to receive venture capital funding.

“And this is in spite of the fact that when female-led ventures do receive funding, they’re just as likely to achieve exit outcomes through IPOs or acquisitions,” Fisk said. However, the issue extends beyond venture capital. Fisk contends that loan approval rates for female entrepreneurs are more than 20% lower than those for men. 

Notably, the funding problem grows even worse for women of color. Fisk said Black women own 1.5 million businesses in America that generate about $44 billion a year, but their odds of landing venture capital are extremely small. 

Paths to funding

For women who lack access to traditional capital, Fisk said there are options worth pursuing.

First, she pointed to the Small Business Administration’s loan programs for women-owned businesses. Some owners may also qualify for grants through the U.S. Department of Commerce’s Minority Business Development Agency.

Then she asserts that private grant programs are another avenue. She mentioned the Cartier Women’s Initiative Award, the Open Meadows Foundation, and Amber Grants for Women as well-known examples.

Additionally, Fisk urged founders to look into angel investment firms that focus on women-owned businesses, such as:

• Golden Seeds
• Valor Ventures
• Funding Sage
• Pipeline Angels
• Female Founders Fund
• Springboard Enterprises

The future for female founders

Despite the obstacles, Fisk said she is optimistic about the future for female founders.

“In spite of all the obstacles women entrepreneurs face, there has never been a better time in U.S. history to be a woman entrepreneur.” She added, “The number of women-owned firms has grown 68% since 2005, much higher than the national average.”

While it can be harder for women to secure funding through traditional channels, Fisk wants women to know there are options.

“When you need inspiration to pursue your passion, you definitely have avenues available to you. And if you need guidance, you need resources, the SBA is a great place to start,” Fisk said.