Access to Capital as a Woman Entrepreneur
Updated: Nov 11, 2022
Women-owned and women-run businesses are essential for communities across the nation. Women provide communities with good places to work as they outscore men in leadership skills like team working and problem-solving (Harvard Business Review). Women often create businesses in industries that focus on helping others, such as healthcare and education. Last but not least, women-owned and women-run companies are crucial to local and national economies. This can be shown by the 10.1 million jobs they provide in the United States (United States Census Bureau). Despite all of the benefits, women entrepreneurs still experience a significant number of obstacles when starting their businesses compared to men. One of the biggest challenges women entrepreneurs have faced for decades is access to capital.
The number of women entrepreneurs has increased significantly over the past 20 years, however, women still tend to receive less investment capital than men. According to an analysis done by Boston Consulting Group, women tend to receive over $1 million dollars less than men in investment capital. This is in spite of the fact that startups founded by women tend to earn double the amount of money per dollar of funding compared to business startups founded by men (Washington State University). Meaning, women entrepreneurs receive less investment capital even though their return per dollar of funding is higher than male startups. The lack of investment capital often leads to women being more reliant on self-financing, such as personal savings.
Different analyses suggested that if the number of female entrepreneurs matched the number of male entrepreneurs, the United States could increase its economy by trillions of dollars. In order to increase the number of women entrepreneurs and attain these economic benefits, we need to focus on initiatives that help lower barriers to entry. These initiatives could look like increasing and promoting further education, constructing ways to gain better support systems and mentorship programs, or implementing more public policies that provide grants, loan guarantees, and microfinancing options (Washington State University, OECD). Although there has been significant growth in opportunities for women in business over the years, there are still obstacles that need to be removed.
Sources / Harvard Business Review , OECD , United States Census Bureau , Washington State University