The Startup Gender Gap: Men Get 6 Times More Funding than Women


NEW YORK (MainStreet) — While women-owned businesses represent nearly one-third (30%) of all U.S. companies, they struggle to land the financing for startups. On average, female startups receive just 2% of total funding from outside equity. And a just-released study by the National Women's Business Council (NWBC) on high growth women-owned businesses reveals that among the most successful firms, men launched their startups with six times more capital than women.

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"Women need money to grow their businesses, and this report gives us more data showing that the capital they are able to secure is insufficient," said NWBC council member Rose Wang. "Our research on this issue enables us to make recommendations to support the entrepreneurship ecosystem, including government, funders and non-profits. We've discovered that on average, men start their businesses with nearly twice as much capital as women – $135,000 vs. $75,000. This must change. In order to narrow the entrepreneurship gender gap and truly broaden the pathway for women entrepreneurs, access to financial capital must continue to be a priority."

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The organization plans to present its findings to Congress, the U.S. Small Business Administration (SBA) and the White House, among others. The NWBC says more initiatives are required to nurture female-owned enterprises with high growth potential, including accelerator and incubator programs, equity financing programs, business mentorships and training programs.

"Accessing capital is a great burden for all, but this research again confirms that the burden is greater for women entrepreneurs – and even among those with significant high-growth potential," said Amanda Brown, the executive director of the National Women's Business Council. "Too many women underestimate themselves and their business's growth potential even though the data confirms that they are more likely, than their male counterparts, to see growth. This is something that must be remedied, and the good news is that it can be remedied."

The analysis notes that, on average, female-owned firms generate much smaller shares of revenue (3.8%), employment (6.2%), and payroll (4.3%) and that trend has held firm – or even declined – over the past 20 years. The report goes on to say that an "increasing number of studies have examined access to capital as a possible impediment to the growth of women-owned firms."

Women-owned small businesses continue to underperform those owned by men in measures of size and growth, the report says, citing research that female enterprises were more likely to be organized as sole proprietorships and to be engaged in service industries.

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"This data demands action, and really a cultural shift, to better support and enable women business owners," Brown added. "Think if there were more women on the financing and investing side, as angel investors or members of a venture capital screening committee, or investors doing more to find, and then fund, women entrepreneurs with investment-ready firms. That would change some things, I'm sure of it."

--Written by Hal M. Bundrick for MainStreet

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