With the ever-increasing rate of female entrepreneurship, investing in women-owned businesses is becoming more important than ever. Female entrepreneurs have more than doubled the number of their male counterparts in recent years and are starting businesses that offer a wide range of products and services, many of which are geared toward women. While their numbers may be on the rise, one of the biggest obstacles that many women-owned startups face is access to the funding needed to start or grow the business.
The problem with funding
Even though female-owned and female-run businesses continue to be on the rise, much of the funding is secured through family, friends and other bootstrap methods to obtain financing goals. Statistics have shown that not only are women less likely to obtain collateral from banks but also are significantly less likely to secure funds from venture capitalists without establishing a higher proof of concept than their male counterparts. While women-owned businesses tend to raise more in their crowd-funding campaigns, women are less likely to start a crowd-funding campaign than male business owners.
What is the value of investing in women-owned businesses?
While the fact that women-owned businesses are increasing each year is proof enough that investing in a female-owned business is valuable, there are many other reasons that investing in these companies is a good idea.
- Capital can help increase the company’s chance of success — Even though more investment dollars are going toward women-owned businesses than have in the past, women still have a significantly harder time securing business capital. Those who have been able to get the capital they need to grow their business have shown an increased risk of long-term success.
- Women-owned companies help promote economic growth — Investing in women-owned businesses contributes to improving the economy by increasing sales and revenue as well as creating jobs.
- Female business owners are incredibly ambitious — Whether it is because women still feel the need to prove themselves in a world that has been male dominated, or simply the drive to succeed, female business owners will continually work to exceed expectations.
- Women can help identify and relate to the needs of an ever-growing market base — Women now account for the largest consumer market in many countries worldwide. Women-owned businesses can not only address needs that are unique to this target audience, but are also able to come up with the solutions to problems that women face in everyday life.
- Female-owned companies perform stronger financially — Even though women-owned companies tend to secure less capital, many of their businesses tend to be in healthier financial shape. Women-owned startups tend to have higher overall four-year survival rates as well as an increased return on assets.
- Women in leadership positions can lead to more innovation — Since women can bring a different perspective to products and services that may have been male dominated for years, this helps to spur more innovation and increases the knowledge base for a company.
- Female entrepreneurs provide excellent mentorship for other startup companies — One of the biggest values in investing in women-owned businesses is that women from successful companies are excellent mentors for other women who may be starting a business. It is this type of mentorship that will help women get past the hurdles they face when starting a business as well as guide them on ways to be successful.
The Golden Age of the woman-owned company is here; take advantage of the current economic swing by supporting women-owned businesses, either through investing, networking or as a consumer. At the National Association of Professional Women, we help provide female professionals with the tools they need to establish a business or continue down their chosen career path through networking, discount programs and educational advancement tools. Join us today to connect with other professionals or take advantage of the unique benefits we have to offer.