There’s a clear inequality of financial support for female founders

I started out my internship last summer with Cincy Women in Tech (CWIT), a group dedicated to the growth of technology leaders in the Cincinnati area, by diving into the VC landscape, and checking out company portfolios to get a lay of the land.

But as I explored various VC firms and their respective portfolio companies, I noticed a lack of female leadership both at the firms themselves and at the founder level of the startups they funded.

I wasn’t the only one coming to this realization. In the past year, there have been dozens of articles published regarding the gender gap in venture capital funding. Amongst the opinion pieces and extensive data, one idea has remained constant: female entrepreneurs are not seeing their fair share of funding.

Why, I wondered? Is it because most VC firms are predominantly or all-male managed? Or are female founders just not asking for funding?

To find the answers, I spent the summer meeting with venture capitalists in my hometown of Chicago and by phone with others located across the United States.

I also researched the growth of female dominated startups, women in leadership, and all the available traditional and non-traditional funding outlets for female founders.

Encouraging facts:

  • Women are making their own opportunities and becoming their own bosses. The number of women-owned firms has grown 68% since 2007. Women now make up 40% of new entrepreneurs in the United States.
  • As of 2012, there were nearly 10 million (36.2%) women-owned businesses, and that is only increasing. Women-owned companies represent 30% of all small businesses.
  • Women also represent 55% of job holders in the fastest growing areas of the economy where social and analytical skills are important. (Professional and business services, Educational services, Healthcare and social assistance)
  • And as of 2016, women held 51.5% of management, professional, and related positions.

Discouraging facts:

  • Currently, women represent only 5.4% of Fortune 500 CEOs and 20.2% of Fortune 500 board members.
  • In 2016, 5,839 male-founded companies received venture capital compared to just 359 female-founded companies.
  • Globally, women only receive 10% of venture funding and 15% of seed funding.
  • Only 8% of partners at the top 100 venture firms are women. While venture capital firms with women partners are 3x more likely to invest in companies with women CEOs.
  • Women start companies with 50% less capital than their male counterparts.
  • Women entrepreneurs are more likely to self-fund, get grants, and secure loans over getting venture capital. Less than 1% of female founders have used VC to fund their business.

While the gender gap in venture capital is a result of a number of variables, it is critical that we remain proactive in response to this data. To support this, we packaged up the findings – “Funding Sources for Female Entrepreneurs” – to highlight these stats as well as those VCs, angel groups, accelerators and more who are tackling this problem head on.

The dawn of female-specific VCs has arrived in response to this gender gap.

It is vital that they become known and that we make female founders aware of resources they can use to aid their ability to launch and grow.

I’m a student at Miami University pursuing a degree in Marketing and Entrepreneurship. At Miami, I serve as the Marketing Director for our student-led venture capital organization, Redhawk Ventures. In addition to this position, I have had the unique opportunity to serve as an intern for Cincy Women in Tech (CWIT). Both of these opportunities initially sparked my interest in venture capital. I found that the more I learned, the more engaged I became. I was intrigued by the idea that applications, products and technology that I use every day began with VC.

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