The business world is primarily dominated by men. As much as we push for equality, women still face barriers when it comes to accessing capital to start and grow their businesses. In fact, only 2.3 percent of the total capital invested in venture-backed startups in the U.S were companies founded by women.
However, female founders and entrepreneurs are gaining ground in venture capital and making strides to create an equal playing ground in the industry.
Where Females Are Gaining Ground in Venture Capital
Larger cities and metropolitan areas are home to some of the most successful startups in the world. This is because these areas hold opportunities and resources that smaller cities wouldn’t be able to offer — for instance, venture capitalists with deep pockets looking to invest.
Based on Pitchbook data, here is the top three metropolitan cities for female founders:
- San Francisco
- New York
- Boston
The Gender Gap
With all that being said, the gender gap is still significant across the U.S and each of its major metropolitan areas. There are many reasons why the funding gap for women continues to be wide. For instance, venture capital partnerships have historically been built by men as well as the fact that there is a significant lack of female venture capitalists.
How Female Entrepreneurs Are Proving Themselves
However, there is actually a great financial incentive to close this gender gap. According to a study by Boston Consulting Group, for every dollar of funding, female-founded startups generated 78 cents compared to male-founded startups which generated 31 cents despite receiving less funding.
Not only that, but data collected by First Round Capital found that female-founded companies they had funded performed 65 percent better than the male founded companies they had funded. This goes to show that women-founded startup companies are the ones venture capitalists should be paying attention to and investing in.
Advice for Female Entrepreneurs Looking to Be Successful in the Startup World
The data is a valuable insight for startup businesses, but so is advice from those who have been in that position. Here are just a few tips from female entrepreneurs and leaders to make it in the startup world. For more details, check out Embroker’s in-depth guide on female founders.
- Seek funding from female venture capitalists – Women usually tend to solve problems important to women compared to male funders.
- Understand your financials – Numbers speak for themselves and having a full understanding of those financials will help you lead your company to growth and set you apart for investors.
- Be yourself – Female leaders should not have to conform to a certain stereotype to make it in the business world. Be yourself and you will attract like-minded individuals.
- Network within your industry – Participate in the ecosystem within your industry by being engaging, following up with others and remaining persistent. Make a name for yourself!
- Confidence is key – It’s not only okay, but encouraged to toot your own horn! Be confident in yourself and your work and others, like potential investors, will notice.
Females are starting to close the gender gap and prove themselves to be strong and independent entrepreneurs. However, there is still room for improvement and recognition. If you are a woman who owns your own business, check out some of these resources to help fund your business.
