Women’s Equality Day celebrates the August 26 anniversary of the certification of the 19th Amendment granting women the right to vote. It has been 99 years since then-Secretary of State Bainbridge Colby solidified women’s suffrage. Women can thank their suffragette ancestors for paving the way to make not just voting, but female entrepreneurship, a common phenomenon.
Now, American Express research reveals that female-founded organizations contribute no less than $1.7 trillion to the U.S. economy. Plus, from 1997 to 2017, the number of women-owned companies rose by 114 percent.
This news shows that several generations can make a huge difference in the way society views an underrepresented group. However, not everything is rosy: Women leaders eager to run startups still struggle with challenges unique to their gender. The only way to address their concerns is by acknowledging them head-on and making a concerted effort to overcome these prejudices and problems.
Below are three significant barriers many female entrepreneurs face. Each complication can get in the way of wooing investors, launching brands, and staying afloat.
1. First-impression bias
Are female founders treated differently from their male counterparts? Research shows that it happens frequently and carries negative consequences. For instance, the impression an entrepreneur makes during a pitch meeting can have a major impact on his or her funding outcomes. A study headed by Dana Kanze of Columbia University scoured years of data from TechCrunch Disrupt New York City. Kanze and her fellow researchers concluded that women were two times as likely to be treated negatively when asking for money. Whereas would-be investors’ questions to female leaders tended to focus on risk, their inquiries of male leaders concentrated on reward.
Though you can't necessarily change others’ perceptions of you, you can alter your game face. For Sarah Pendley, CEO of Sarah Theresa Communications, this means switching introductory language and habits. “I’ve started to introduce myself, first and last name, and my business as I shake hands,” she explains. “This establishes authority and immediately clears up any confusion as to my role. I’ve found that conversations go further, and I’m taken more seriously as an entrepreneur.” You can also actively reframe risk-related questions about your startup to refocus investors on the opportunities your venture presents.
2. Less-than-robust support systems
Entrepreneurship can be a lonely journey, even when business is going well. Though male entrepreneurs tend to rely on supportive networks of friends and mentors, women are twice as likely to cite the absence of a strong support system as an obstacle to business ownership. A lack of people to consult or confide in becomes a barrier because mentored entrepreneurs are more apt to succeed. Fortunately, this problem hasn't gone unnoticed, and a number of organizations are making efforts to connect mentors and mentees. The National Association of Women Business Owners hosts events so founders can meet, while the Center for Women & Enterprise matches participants with consultants to serve as expert guides.
That's not to say that women founders should just surround themselves with women mentors. A report from SCORE found that having mentors of either gender resulted in positive benefits. As a woman entrepreneur, don’t be shy about utilizing social networking platforms like LinkedIn to build dynamic relationships with other business leaders. And when you’ve gotten your business off the ground, don’t forget to pay it forward by sharing your lessons learned with others.
3. Capital-raising roadblocks
In addition to biased first impressions, other barriers exist for female entrepreneurs trying to raise capital. The same SCORE report found that female founders regularly ask for outside funding less often than males do, and when they do request cash, they usually receive less than men get. This discrepancy adds up. Kanze and her co-authors discovered that each risk-related question women were asked equated to about $3.8 million less in funding. Given these sobering statistics, is it any surprise that, according to Recode, merely 10 percent of capital flows to female-run tech businesses?
Does this mean women entrepreneurs simply have to make do with their own bank accounts and credit cards? Absolutely not. Lu Zhang, founder of tech-focused venture capital firm Fusion Fund, instead recommends searching out female founder-friendly VCs and staying on top of the investing process at every stage. “Always continue to do fundraising and take meetings with investors — even after you close a funding round,” Zhang advises. By remaining in close contact with angel investors and VC firms, you can cultivate relationships that may eventually lead to dollars you’ll need tomorrow — even if you don’t need them today.
No one has the time to wait another century for full equality for women entrepreneurs. The public wants and deserves unparalleled brands, products, and services, no matter who brings them to market. Together, passionate women startup founders and venture capitalists can bring visions to life and satisfy consumer needs.