Funding Her Future: A Woman’s Guide to Raising Capital
Raising capital is among the most particular segments of business that woman finds quite challenging. Indeed, this moment marks a shift in the global landscape of female entrepreneurs, as women business owners have been frequently confronted with a number of investment specific barriers that range from structural and or network gender biases to lack of access to capital. However, even with these barriers, women are able to more and more, meet the challenge, finding resourceful means to raise funds and access capital which traditionally supposed to be inaccessible to them. With a well-defined strategic plan, an unshakable belief in one’s vision, and the courage to sell conducting fundraising becomes easier, financing becomes accessible.
It is possible only if she understands funding ecosystem – what is on offer to her and what is capital market reality today, how to comprehend the existing world of private sources of funding, which in the past were mainly VC or angel funded. In fact, studies have shown that only a small percentage of venture capital funding goes to women-led startups.
The documentary identifies a number of reasons behind this gap, such us unconscious biases of investors, the fact that there are very few women in investment companies and the low numbers of women in leadership positions. On the other hand, there has been an increased concern of the gender funding gap, which has paved the way for the rise of new women investment funds, crowdfunding sources, and a stronger presence of networks assisting women-owned businesses. So, while these alternatives are encouraging, it is also very important for women entrepreneurs to seek out a wide range of sources of financing in order to find the one that best meets the needs of their companies.
One of the first and most natural sources of finance that most entrepreneurs have is these entrepreneurs’ own savings or finance from relatives and friends. Even though this choice may work for some people at the beginning, it is not devoid of specific complications, especially for women. Women are often socialized as the primary caregivers in a household and such outlook increases their chances of having a harder time accumulating savings to start a business. Also, it can undermine family relations in the event a business does not succeed, and where funds have been borrowed from relatives or friends. Therefore, women should combat this urge and go for this source of funding with a business idea backed by extensive statistics and market research.
Moreover, it is possible to prevent misinterpretations by clearly communicating the limits and the obligations to people intending to offer financial assistance.
The next level following the provision of seed capital in attempting to grow the business is a venture capital (VC) investment. It is a prominent source of funding but like most sources of financing, it is hard to get, especially for women business owners. The venture capital industry has over the years been male-dominated and so women investors face a lot of doubts regarding their capability to succeed in their business, especially when they are trying to get funding for an innovative concept such as the tech and finance fields. The process of getting VC funding is cruel, it involves pitching to investors the ideas and the plans for the business, detailed cost forecasts and timelines to break even and start making profits. Gaining investors’ confidence takes time and getting turned down is part of the process.
Nonetheless, preparing well in advance helps women secure venture funding if they assess the situation properly. If a woman plans to go to a funding meeting, make sure she has a sharp business strategy. It should first discuss the essence of the basic goals of the company, the potential target market of the business, existing competitors in the industry, expected growth plans in the near future, and the factors for which there are opportunities for the company to compete in the established markets.
A good pitch should demonstrate both the possibility of growth for the business as well as the founding skills of the leader. As such, investors need assurance that the entrepreneur knows what they are doing, is resourceful, and can actually implement the plan. Rehearsing the presentation and getting critique from mentors or fellow entrepreneurs is an understandable step in the development of the presentation. Female entrepreneurs must also ensure that they are talking with investors who have already supported women’s leadership in business or are interested in supporting diversity
For a number of women entrepreneurs, raising money through angel investor capital tends to be easier than through more traditional venture capital sources. There are a range of defining characteristics that angel investors share, including the fact that they are private individuals who invest their own money in early stage companies in exchange for equity and/or convertible debt. Such investors are often more optimistic on start-ups, especially women headed ones because they have a more hands on approach. Women entrepreneurs should look for angel investors who share the same spirit and vision them. Angel investor directories, networks, pitch contests and other online resources that help connect angel investors with start-up companies can all be useful tools in this area.
Building relationships with angel investors may require an investment in time and, in turn, entrepreneurs must show a great deal of potential not only in the business in terms of revenues and profits but also how it complements the investor’s portfolio.
Citing the best-selling self-help books, women entrepreneurs, who are launching services/products in the market are fast turning towards crowdfunding, as a means of raising funds for their businesses. Kickstarter, Indiegogo and GoFundMe are some platforms that enable the designer to advertise the concept and ask people to invest by offering some incentive or equity. For women entrepreneurs, for whom funding is always hard to get from traditional investors, crowdfunding has become a wonderful alternative because it widens the range of people willing to support women in their ideas than in their businesses. Also, the campaigns of crowdfunding serve as an engagement tool and help create a base of supporters which can be beneficial to marketing and development of the brand. On the other hand, it is worth noting that the success of any crowdfunding campaign is not guaranteed. To be successful, entrepreneurs must define and implement a marketing plan that will enable them to appeal and reach their desired target audience and potential backers. There is a considerable amount of effort needed to ensure that the campaigns are persuasive and firmly underscore why backers should invest time and resources behind their product or service. There should be an interesting video, interesting offers and high frequent feedback to the owners of shares in the project.
Other resources that can be harnessed as a means of funding as a woman entrepreneur are government grants, loans, or programs that foster small business development in women.
A lot of countries support the new businesses that are set up by offering them aid, especially if the company has to do something with innovation, creation of jobs or encouraging development. Most often, the said programs have specified requirements in regard to eligibility, which may focus on industry, geography, or developmental stage, for which entrepreneurs have to carefully apply for. While applying for government finance can indeed be time-consuming, it enables entrepreneurs to access finance without diluting their ownership in the company. Locally, regionally, and nationally facilitated aid programs for women entrepreneurs, as well as other non-profit organizations that provide grants or allowances to women-led businesses, are available for research purposes.
Fundamentally important for the proper establishing of the capital structure is networking, which is also very vital for a woman entrepreneur. Through personal contacts, introductions, and mentorship, many of the investment opportunities materialize. Networking gives women access to useful resources within professional domains. This includes participating in entrepreneurial networks, industrial conferences, and business organizations that have a focus on women, which all promote professional growth. It also allows women entrepreneurs to meet other entrepreneurs who have raised funds and assist women with the dynamics of fundraising, raising goodwill, and other political aspects of fundraising. It is even more useful that experienced people provide mentoring and assist during pitching sessions and introductory meetings with future investors.
Another important point is the ability to create one’s own brand and build one’s credibility within the business community.
As a woman entrepreneur, working towards being recognized as a thought leader or an expert in a specific area can help you nail that investment. Increasing your visibility through publishing articles, speaking at a conference and making media appearances are ways to build reputation and showcase your expertise. Trust and a strong reputation builds within the industry appealing to investors and at the same time increasing the chances of forming strategic business partnerships and collaborations.
For women entrepreneurs, raising capital is more than just getting access to funds; it is about building self-esteem, creating relationships, and developing an ecosystem that enables their businesses to flourish. There are hurdles to overcome but with the acknowledgment of the availability of female entrepreneurs and the gender disparity indicators increasing, the tides are bound to change, and more resources are allocated for female entrepreneurs. If women become strategic, smart, and have determination, they can access the funding needed to establish impactful businesses and encourage future women to do the same. Capital raising is not once off; it is a continuous cycle that requires effort, flexibility and application of knowledge from both market and finance perspective.
If done correctly, this can be an important factor in reaching long term success, allowing women to achieve their business dreams.
