Female Entrepreneurs - Not Invited to the Boys Club
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Yesterday I hosted a panel discussion on female entrepreneurs for Singapore Committee for UN Women. And, during the discussion, the topic of funding came up.
Now, I already knew that there are a number of barriers for female entrepreneurs but I don't think I fully appreciated the severity of the situation until I heard the following statistic:
'On average 4% of VC funding goes to female run businesses'.
Umm.. Excuse me.. WHAT?!?
[Note: this statistic came from one of the panellist's. I've done some research and it seems to vary between 2-7% depending on where you look, but the general consensus is that the percentage is ridiculously low]
Okay okay, let's digest this.
So we know that there are not as many female founders out there as there are male. That is a fact. But, even if you assume that only 30% of all businesses are run by women, and conservatively estimate that less than a third of those businesses are appealing for investors, 4% is still a ridiculously low number.
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On top of that, female entrepreneurs usually have to consider some of the following: - Being conservative - female entrepreneurs are more likely to overestimate risk relative to their male counterparts. This puts them at a disadvantage when pitching for funding (Side note, I'm really interested to see some research about whether this makes female run businesses more safe to invest in?) - Being sexually harassed by VCs - so this I hear quite a bit about. With the VC space being very heavily male dominated, this is an extremely common problem - Bias - related to the above point, with so little diversity in the VC space out there, female founders often deal with unconscious and conscious bias that works against them being successful - Family/ children - (related to bias) often VCs will reconsider investment is a woman has children (she is seen as being the primary caregiver) or is of child-bearing age (incase she decides to have children & forget about the business) - The list goes on. I dare you to read more about issues that are specific to female entrepreneurs here and here. If your blood doesn't boil by the end of the articles, then there's a chance that you may need to get your empathy gland checked out. On the flip-side, you can read it from a female VC perspective via Fast Company.
Anyway, if your mind is blown right now (like mine is), then you need to stay tuned for my next blog post about unconscious bias, the merit paradox & the controversial issue of quotas because that feeds really well in to the overall challenges that women face in entrepreneurship.
BUT! It's important to note, that the news isn't all bad. Female-run businesses HAVE grown significantly over the years with more women coming in to the space. On top of that, not ALL female entrepreneurs have faced these issues, and some have gone on record saying they haven't been affected (Like Lynn Perkins co-founder & CEO of Urban Sitter, a San Francisco startup that connects users to Facebook for babysitting recommendations, which received $6 million in venture funding in 2012). But, I'm trying to keep my posts short so will do another write-up about this too (and the benefits of involving the other 50% of the population in the economy).
In the meantime, here is some extra reading material which touches on all the issues I've mentioned above from Forbes, Business Insider, Inc. Magazine, Tech in Asia & Gooogle For Entrepreneur's #40Forward Campaign.