Women are starting businesses at a rate never seen before, with an estimated 11 million women-owned businesses in the United States alone. But that doesn't come without its challenges—despite owning roughly 38 percent of all U.S. businesses, women only receive 2-6 percent of venture capital funding, which may leave many having to dip into savings to fund their small business. This doesn’t just take away from the bottom line, but it also adds unwanted stress.
Luckily, there are options available for women who are looking to fund their new or existing business. Here’s what you need to know moving forward:
- On average, women ask for $35,000 less funding than men do. It’s great to be humble, but don’t be shy about asking for the true amount you think your business needs (or maybe a little more).
- Of the top 100 venture firms globally, only 7 percent of the partners (54 of 755) were women, according to the 2016 CrunchBase Women in Venture report.
- Between 2010 and 2015, 10 percent of venture dollars globally ($31.5 billion) funded startups that reported at least one female founder.
Crowdfunding is changing the game
With crowdfunding, you don’t need to seek out wealthy investors to put money into your business. This innovative approach to funding allows you to keep control of your business without breaking the bank. Websites like iFundWomen and Women You Should Fund are specifically for women-led startups and small businesses looking to jumpstart their company. One-on-one crowdfunding coaching is also offered by iFundWomen to help teach you the ins-and-outs of getting funded.
Utilize your connections
The importance of networking cannot be overstated. Both new and experienced women business owners should regularly keep tabs on old classmates and coworkers, social media followers and friends to see if they are in a position to help fund your business.
Seek out angel investors
Angel investors, also called informal investors or seed investors, help inject valuable capital for startups usually in exchange for ownership equity or convertible debt. In 2014, women made up 36 percent of small business owners who sought funding from an angel investor. Creating a vast network will help the process of finding angel investors interested in helping fund your business.
Save, save, save
It’s never too early to start building your startup capital. Put aside a portion of your earnings each month so that you have some wiggle room while you figure out your best plan of attack. The more money you have piled up, the more likely your business is to jump out to investors.
Ready for expansion?
For small businesses that have been in operation for a minimum of three years and have not exceeded $1 million in the year prior to applying, the Eileen Fisher Women-Owned Business Grant could take your business to the next level. The grant not only awards $100,000 for up to 10 recipients each year but also invites winners to New York City for a two-day learning and celebration event.
Female-Focused Venture Funds
There are still plenty of venture funds dedicated to helping fund a variety of women-owned businesses. For a complete list, visit here.