While I was in college, one of my entrepreneurship professors gave each student a face-down article and told us to read it. Once we flipped it over, we realized that the article was about funding NEXTGEN JANE, a women’s healthcare company that sold tampon products. The room was shocked to silence about a male professor addressing such a “taboo” topic. Then our professor said, “You might have felt shocked, disgusted, and awkward. Now imagine having to pitch to investors who had the same reactions that you had. Imagine having to pitch to investors who don’t believe in your product because you are only capturing half of the market. That’s over 100 million users.”
Investing in women is not just a social good cause, but an investment in our communities and a smart business move. According to a study by the Boston Consulting Group, if women and men participated equally as entrepreneurs, global GDP could rise by 3-6%, boosting the global economy by $2.5 trillion to $5 trillion. Furthermore, according to Forbes, women-owned startups deliver a significantly higher return on investment, earning about twice as much per dollar invested.
The numbers make sense. So why did Juul, an e-cigarette company, receive more funding in 2018 than all of the venture capital (VC) offered to women-owned enterprises combined that year?
Challenges for Women Entrepreneurs
Systemic Biases, especially in funding: I believe one of the root causes of this imbalance are systemic biases against women, particularly women from minority backgrounds, as well as taboos about certain products and industries, similar to the views my class had expressed with NEXTGEN JANE. When confronted with the figures for start-ups founded by women of color, the need for action is even more evident. In 2017, there were 6,791 start-ups with at least one woman founder, but less than 2% of these were led by Latinx women, despite Latinx women making up 17.6% of the U.S. population. Similarly, Black women-led startups only received .06% of the total tech venture funding raised from 2009-2017. We need to address these systemic biases through training and support more minority founders.
Lack of Support: Another root cause is the lack of role models and mentors to develop a strong network of professional support. The entrepreneurial funding landscape is incredibly personal as funding pitches tend to be invite-only. This can leave women out of the conversation because, often, our networks tend to be similar to us. In 2018, only 9 out of 100 top VC partners worldwide were women.
The Impact of COVID-19 on Working Women
According to McKinsey, the COVID-19 crisis could set women back half a decade. With the pandemic compounding challenges women already face, and creating pressures for them to be available for work at all hours and maintain flexibility, we now need to find new ways to support women at work. Besides the pressures of formal employment, COVID-19 has also impacted the caring labor duties of women: one in three mothers has considered leaving the workforce or downshifting their careers because of COVID-19.
While the McKinsey report primarily focuses on women in industry, I believe that some of these trends are also applicable to small business owners. Small businesses have suffered during the coronavirus pandemic, and thousands have closed. After analyzing WomanStats’ ERBG-DATA-6 variable values, we can conclude this drastically impacts women. From Polish women owning 20% of small to medium sized businesses (from 5-50 employees) to the fact that most women-owned businesses in Cape Verde are small enterprises, it becomes clear that the impact of COVID-19 on business will continue to be felt disproportionately by women.
So what do we do?
While this isn’t a comprehensive list and not ranked in any order, here are three things that come to mind:
- Buy from woman-owned and minority-owned businesses this holiday season
- Urge schools and organizations to create and support women in entrepreneurship programs such as Kendra Scott Women’s Entrepreneurial Leadership Institute (this helps build community and support early on)
- Enable access and share resources for entrepreneurs such as January Ventures
Closing the Entrepreneurship Gap: https://www.bcg.com/publications/2019/boost-global-economy-5-trillion-dollar-support-women-entrepreneurs