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BizReport : Law & Regulation : April 11, 2017

Expert: Female entrepreneurs lack access to funding

More and more women are going into business for themselves - but they aren't finding the move simple. In fact, one recent report found that female entrepreneurs have more difficulty finding funding for their businesses than men.

by Kristina Knight

Kristina: There are those who believe the gender gap is 'fake news'. Do you agree?

Sara Oberst, VP of Marketing, Manta: Access to funding remains the biggest source of disparity for women entrepreneurs - and there are numbers to back up this claim. A Bloomberg analysis found that only 7 percent of companies that received $20 million or more in funding between 2005 and 2009 were women-owned businesses. Bloomberg also found that women-owned businesses receive less funding in general - an average of $77 million compared to $100 million for male-led companies. So, not only are women business owners less likely than their male colleagues to seek funding for their businesses, they're also approved for funding at lower rates. There are women angel investors and VC funds lead by women, but the disparity in funds raised shows that this is still a major issue. I highly recommend women entreprenuers to read the CrunchBase Women in Venture report. It's the best place to find venture firms with a track record of supporting startups with at least one female co-founder. A warning: The gender disparieties are stark in the startup world, this report puts these disturbing numbers out there with no fluff.

Kristina: A recent study found that men do a better job of looking for/finding investors for their business, why is this?

Sara: It's difficult to pinpoint exactly why men tend to be stronger when it comes to identifying investors, but I do have a few theories. One explanation could be that women don't start businesses in industries typically backed by venture capital (or male venture capitalists). For instance, women-owned businesses tend to be smaller and in lower-growth sectors like restaurants or retail rather than technology. And of the women who do launch their own companies, we know that the disparieties in VC funding for women are due to inherent gender bias from the male investor community. Women founders need to do their research and seek out investors that share their values and the values of the companies they are building. There are women-friendly funds, even in the tech industry, find funds that have a portfolio of women-founded businesses and a line up of female investing partners.

Kristina: Why do female entrepreneurs find it more difficult to gain funding for their businesses?

Sara: Women experience difficulty finding funding because business owners in industries that typically award funding (like tech or politics) are still male-dominated. Whether it's intentional or not, people inherently seek out people they share a direct or indirect connection with. So it's not surprising male investors are more likely to connect with male entrepreneurs.

More from Sara and Manta later this week, including how female entrepreneurs can find better investors.

Tags: entrepreneur gender gap, female entrepreneurs, Manta, SMB gender gap, SMB trends

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