Women-owned businesses have been the fastest growing segment in the American economy over the past two decades, adding more than a half a million jobs. By 2013, there were roughly 8.6 million women-owned businesses and that number continues to climb.
All that success aside, there’s another story behind the numbers. Women-owned enterprises lag behind in access to capital and in the ability to find mentors. In fact, women-owned businesses are frequently left out of traditional funding opportunities available to male entrepreneurs. The “21st Century Barriers to Women’s Entrepreneurship,” a Majority Report of the U.S. Senate Committee on Small Business and Entrepreneurship delivered in 2014, notes major barriers to success for women-owned businesses: access to capital, business training, and mentorship, among other things.
That report notes that only $1 out of every $23 in conventional small business loans go to woman-owned businesses. The picture for equity financing is even grimmer: Women now receive just 7 percent of venture funds – and the percentage of female venture capitalists has actually declined from previous years. Studies indicate that women entrepreneurs raise less money than their male counterparts, and are more likely to bootstrap their businesses using personal savings and credit card debt. Worse still, a Ewing Marion Kauffman Foundation study found that women seeking first-year financing to get their companies off the ground receive about 80 percent less capital than their male counterparts.
But why? Another study conducted by Sarah Thebaud, assistant professor of sociology at University of California, Santa Barbara, writing in Newsweek, found that women face cultural bias when looking for business funding. To oversimplify it, Thebaud’s research reveals that men continue to be more comfortable lending money to men, even when they presented the exact same business idea. The stereotypical entrepreneur is a lone wolf figure, going it alone, aggressive, blustery and masculine, writes Thebaud.
Yet women succeed despite the obstacles. For Albuquerque entrepreneur Sarah Biondi, a severance package from a corporate layoff helped her to pursue her passion for art. Biondi launched oacgallery.com, an online, curated art gallery two years ago. Biondi’s creative take was to choose artists' work that was high quality, yet affordably-priced work not well represented in galleries. Other online art galleries tend to be like big-box stores—selling everything and anything to everyone. As a former corporate marketing executive, there was much Biondi didn’t know about running a start-up business, she says. A stint in the ABQiD business accelerator helped her further hone her skills and provided a strong community of startup business owners she could turn to for support. “They matched me with a mentor who was great,” she says. “He was somebody who had experience in the online space and was generous with his time.”
In addition to the accelerator, Biondi, in true entrepreneurial fashion, started a women business owners group that meets in her home monthly to brainstorm solutions to business problems. Four of those who participate in the group have also been involved in the accelerator. The community at the accelerator really bonded, she says.
Still, although it would be nice to think that women startups are on equal footing when asking for financing and mentoring, they clearly aren’t. Organizations such as The Women Startup Challenge 2016, which provides ten selected women the opportunity to pitch their companies in front of investors, are one way to help women gain experience,funding, and equal footing. Women entrepreneurs can also take advantage of the SBA’s Women Business Centers, a national network of 100 educational centers that offer financial and training help.
For women becoming creative startup entrepreneurs, crowdfunding and interpersonal relationships, as well as saving and increased bootstrapping may be better options than conventional loans or equity financing. Thedbaud writes, “One ‘survival strategy’ for women entrepreneurs: They may be able to mitigate the disadvantaging effects of gender bias by explicitly promoting the novelty of their venture.” This is where creative startup entrepreneurs, regardless of gender,have a deep advantage, for they can tell their unique stories and missions with a level of passion and creativity that set them apart from conventional businesses.