TECH UP THOUGHTS BY MEG HATTON, TECH UP FOR WOMEN TEAM
Following the blow that the COVID-19 pandemic made to the American economy, the U.S saw a boom in entrepreneurial activity. In 2020, it was reported that nearly 4.4 million new businesses were opened, followed by 5.4 million in 2021. Out of those new businesses in 2021, nearly half were opened by women, which is double the number of women-run businesses that were started in 2019. However, despite these promising numbers, women still own only one third of businesses worldwide, and continue to face challenges when it comes to funding and starting those businesses.
Currently, only two percent of venture capital goes towards women-led startups. This is a reflection of one of the main obstacles that female entrepreneurs run into: funding. When venture capitalists look to invest into businesses, like most decisions, the tendency is to “stick to what you know” and invest in businesses run by entrepreneurs with similar backgrounds, whether it be the same alma mater, home town, or other. So, when only 6% of venture capital firms in the US have female partners, this tendency sets women-run businesses up for failure. Intentionally investing in female entrepreneurs is a step in the right direction to help bridge this gap.
The uphill battle for female entrepreneurs does not stop there. One of the biggest pieces of advice often lent to entrepreneurs is to build a support network and have a reliable mentor. Here is where the cycle repeats itself: with a lack of female CEOs and business leaders, “48% of female founders report that a lack of available advisors and mentors limits their professional growth” according to businessnewdaily.com. Women struggle with unequal access to professional networks and mentors, and when compounded with a struggle to obtain funding and investors, it is easy to see how female entrepreneurs have a harder time than their male counterparts when striving for success.
On top of this, many cultural pressures and psychological barriers deter women from starting businesses. Deep-rooted gender inequalities still permeate the business world, political realm, and many religious and cultural beliefs. In an environment that is favorably swung towards men, women struggle to defy social expectations and overcome psychological barriers to remain confident in their own success.
So, how can we fuel the increase in female entrepreneurs and strive to have more women-owned businesses? Shopping and support. Buy from women-owned businesses, invest in local female entrepreneurs, and encourage friends and neighbors to do the same. Moreover, invest in funds that in turn invest in women-led businesses, that aim to serve the untapped $15tn female economy on the continent (Reuters Events). If you have the resources and skills available, support and mentor women starting their own ventures, and take extra time to uplift and promote them via social media. Greater gender diversity leads to higher returns, and the more support female entrepreneurs receive, the closer we can get to having equal business ownership worldwide.