Mar. 8, 2022 "Women-led startups get much less funding than men. Female investors hope to change that": Today I found this article by Nisha Patel on CBC news:
When sisters Bunny and Taran Ghatrora launched their company Blume in 2018, they were using homemade labels and packing boxes from their parents' basement in Surrey, B.C. Four years later, they're selling their products at major retailers like Sephora.
But as young women of colour, they found that the path to building a business was littered with roadblocks. "Growing up, we never saw people who looked like us running companies," said Bunny Ghatrora.
When it came time to pitch their business idea — clean skincare and menstrual products targeted to Gen Z — finding an audience of investors who could relate proved tricky.
"Often, these personal care companies were run by men who didn't have a tie to the product the same way we do," Ghatrora said.
Though Blume eventually found a number of investors, the Ghatrora sisters aren't alone when it comes to facing obstacles related to gender while building a business — and some women with the means to change that are taking notice and making moves.
Angel investors share the wealth
In Canada, some high-profile women from the country's tech sector are trying to close the funding gap.
A group of 10 women who have held senior roles at Canadian e-commerce company Shopify launched a collective called Backbone Angels in 2021.
The collective of angel investors — people who uses their own money to fund startups at the early stages of the business — decided to fund businesses started by women and non-binary founders, with a focus on companies led by individuals who are Black, Indigenous and people of colour (BIPOC).
Co-founder Arati Sharma says the group came together when they saw that their male colleagues were making angel investments at much higher rates than they were.
"We felt the biggest impact we could make was to invest in women entrepreneurs really early on," Sharma said.
Many women who want to start businesses have told Sharma they don't have enough money saved, but she says collectives like hers are an option, and she wants women to know the money is out there.
And the collective isn't just investing money — she says they can also offer business or financial advice and moral support.
"Beyond just the check, Backbone is, how can we bring our individual expertise to this entrepreneur?"
Facing down biases
It's still mostly men deciding who gets funding for startups.
According to a study by Deloitte looking at diversity and inclusion in the venture capitalist industry, just 14 per cent of investment professionals in venture capital in the U.S. are women.
And while billions of dollars in global venture capital funds were doled out in 2020, female founders received just 2.3 per cent of the pot, according to Crunchbase, which tracks data about the tech industry.
A big reason for the funding gap are the various biases women face when they go into pitch meetings with venture capitalists, according to Kim de Laat, a postdoctoral research fellow in the Department of Sociology at Brock University.
As part of her studies into how women entrepreneurs are funded, de Laat spoke with a number of women who shared their experiences, including one who said a venture capitalist told her "she looked like she might be getting married soon and be popping out a couple of kids," and he wasn't interested in investing in a mompreneur.
"So there are these kinds of very egregious, explicit forms of discrimination that continue to happen to women in these spaces," de Laat said.
According to a study published by the Harvard Business Review, venture capitalists also ask male and female entrepreneurs very different questions that demonstrate implicit bias.
The study found that during TechCrunch Disrupt New York, an annual startup funding competition, venture capitalists asked entrepreneurs different questions depending on their gender.
When it came to questions about a potential customer base, for example,
the study noted that men were asked how they would acquire customers,
while women were asked how they would retain them.
De Laat says those types of questions are "not necessarily explicit discrimination, but it's nevertheless something that that prevents [women entrepreneurs] from receiving the same level of care and consideration that that other folks might be getting."
Collectives moving the needle
Sharma and Backbone Angels invested in 42 companies last year — one of them was Blume.
Another was called Koble, an evidence-based health-care app for pregnant people and new parents. When Koble CEO Swati Matta went to pitch investors, she faced some challenges.
"[It] was really hard to explain and get buy-in from investors who are mainly male … and as a first-time founder, you're high risk for [venture capitalists.] It's a general reality. And as such, when you bring these two together, that's when the funding starts to get tough."
Matta says increasing access to funding for underrepresented entrepreneurs is critical.
"Collectives are helpful because they're willing to take that risk early on to help move the needle."
Other female-focused investor collectives and funds such as The51 and StandupVentures are also making waves in Canada's venture capital scene, so there are growing opportunities for women to access funding.
Sharma says this is just the beginning.
"We want more women entrepreneurs, we want more women in tech and we want more women in leadership positions."
With more funding for women, there will be more opportunities for entrepreneurs like Ghatrora, a prospect she finds exciting.
"It's really creating the next generation of companies that are going to be the ones that we all refer to on a daily basis and become those household names."
Women-led startups get much less funding than men. Female investors hope to change that | CBC News
May 14, 2023"How women can access the funds they need to grow their businesses": Today I found this article by Colleen O’Connell-Campbell on the Financial Post:
Here’s a framework I use as a guide when the statistics are not in our favour even though women entrepreneurs are a significant piece of the Canadian economic equation: awareness, reframing and community.
Awareness
Let’s begin by becoming aware of the problem. The No. 1 barrier to growth for women entrepreneurs is access to the very fuel of entrepreneurship: capital.
Women are four times less likely to access funds than men, therefore, women are more likely to rely on personal sources of financing, such as savings or a personal credit card, retained earnings from previous businesses and government support.
If you are relying on personal sources of financing to fund growth in your business, you can apply for loans suited for your stage of business.
If you are declined at first, continue to ask for more information about what you need to do to get approval and then focus on making the necessary changes to reapply successfully.
Reframing
Your pitch for funding is very important because research suggests that bias exists in the interview process. Present your business idea from a promotional standard and ask for what you need by presenting your best-case-scenario numbers.
Always have your average figures at the ready, but don’t lead with those. Leave them in the parking lot just in case you need an alternative ride back home.
Also, reframe risk mitigation questions that come up into growth prospect discussions. Your finesse will develop as you continue stepping into your entrepreneurial power.
Community
Surround yourself with a network of mentors, fellow business owners and professionals who can provide advice and support. I encourage business owners to define their budgets clearly and engage with paid professionals who can support them in the borrowing process such as an accountant or bookkeeper, and a banker.
A network of mentors and peers that you can lean on is invaluable in the business building process.
As a long-time runner, here is one piece of life advice I believe to be a universal truth:
If you leave yourself out of a race, you’ll never win.
Even in today’s current market, it’s a good time to take action to get the support you need to succeed.
Colleen O’Connell-Campbell is a wealth advisor with RBC Dominion Securities Inc. and creator of the I’m a Millionaire. So, now what? podcast.
Hey Ladies, here is a novel idea of you are one of the women who can't seem to borrow from the banks or investors no matter how much you please your diversity and equity case. If that doesn't work...try this. It's a sure fire winner.
1. Have an idea, provide a service, or create a product that adds value to a potential customer's life. One that he or she is willing to pay money for.
2. Have the means to provide the aforementioned service or product mentioned above. Your idea must be a good one, and one that is easily understood by people who hear it.
3. Have some type of collateral (may involve some risk.....but a lot of very successful people are also the same people who risk everything to be successful) that a potential lender can access if your venture fails. This is part of the process. Banks aren't in the business of giving out freebies just because you are diverse or female.
4. If you get a few shocks during your venture and have doubts about your company succeeding; double down and keep trying. Quitting gets you nothing.
And finally, if you do these things, and are STILL NOT SUCCESSFUL.....you need to reassess the idea, the service, or the product that was the hallmark of your business. If after this reassessment you see room for improvements, make them; and try again.
What you DON"T want to do as a failed businesswoman, is blame sexism, racism, or misogyny. Sometimes women fail for the same reason men fail in business. No one wants what you are selling, or the Government has regulations that are too onerous or controlling for you to succeed.
And for investors......If anyone says you need to give them money to start or improve their business JUST BECAUSE THEY ARE WOMEN OR DIVERSE.........don't let them anywhere near your money.
