2017 will be the year of women entrepreneurs – just watch.
It would appear that 2017 would be the beginning of the Gold Age of women entrepreneurs. In recent years, the percentage of new women entrepreneurs has been almost double compared to that of men. Thanks in part to a robust ecosystem that is churning out female entrepreneurs that have the expertise, funding, and the inspiration.
A good example of this trend is the first Upstart 25 list; women in industries ranging from finance to neuroscience, and retail, founded 10 of those fledglings. Some of the companies also have a social mission to them. For instance, an upstart by women caters to the needs of plus-sized women who are seeking fashionable clothing from the comfort of their home.
More examples are given by the Women’s Business Enterprise National Council, the country’s largest third-party certifier of businesses owned, controlled, and operated by women. The WBENC grants certificates to organizations that are committed to diversity and are owned, operated and controlled by women.
The phenomenon is not unique to the United States. All around the world, more women are becoming entrepreneurs. In America, women own almost 40 percent of all new startups. It is the highest it has been since 2016. Additionally, a recent global survey of 40 economies showed that the rates of women entrepreneurs grew by about 13 percent compared to that of men, which was at five percent.
Why the Sudden Rise?
Some of the factors that have caused the change include market trends, expanding options for financing, greater access to role models and mentors. All of these factors are working together in a positive manner according to experts. Elizabeth Ames, a senior VP at the Anita Borg Institute says there are more financiers who are willing to hear what women have to say.
Another reason is that there are successful women who are willing to spur on women through motivational talks and just by their success. Additionally, the use of crowdfunding has also proven quite beneficial for women entrepreneurs. Although women use crowdfunding less often than men do, they raise about 10.75 more money according to the latest data.
In spite of the positive progress that women have made, there are still many challenges that are unique to female entrepreneurs. For instance, businesses owned by women are still quite small compared to those owned by men. In fact, only 3 percent of female-owned businesses generate $500,000 or more in revenue. In comparison, 9 percent of male-owned businesses generate over half a million in revenue.
Funding is Still a Challenge
Although women entrepreneurs are working hard to break the barriers, funding is still quite hard to get. In a survey, over 72 percent of female entrepreneurs said that lack of funding was a major challenge. The challenge is particularly so when seeking venture capital. The data shows that women got only 10 percent of venture capital globally between 2010 and 2015. According to Polli, co-founder of Pymetrics, it is because of both stereotyping and male investors who do not relate to ideas that women pitch.
One method female investors could use to circumvent the funding problem is to start a proof of concept business. After they succeed, they can then ask investors to give them the capital they need to expand.
A good example of this model of success is Foodstirs, co-founded by Galit Laibow, who is also the CEO. The startup sells GMO-free pastries online. Initially, they had to self-finance the entire business before they could get investors to be interested in it.