Did you know that today, women own 40% of businesses in the US, which amounts to 12 million businesses? One way of looking at this is to say, wow, 12 million is a lot of businesses. But I am tempted to look at it another way. Why only 40%? Along the same lines, only 20% of funded companies have women founders, according to a 2019 EoY Diversity Report. Again, I question why only 20%? What is holding women back from founding companies? To try to get at some answers, I talked about all this and more when I was recently interviewed by Authority magazine for its interview series, “Why We Need More Women Founders.” You can find the interview here.
Why do men get funded so much easier than women? Maybe it’s all in the pitch.
As I say in the interview, part of the challenge women face as they start and grow companies is that getting access to venture capital is very difficult, and the percentage of women who do manage to acquire it is very small. In 2019, only 2.8% of funding went to women-led startups. In 2020, that number fell to 2.3%, as Crunchbase figures show. So are women no good at pitching investors? Hardly. Rather, as research suggests, investors are more likely to give money to people who look like them, and 90% of the VC decision-makers are male. “Men entrepreneurs are preferred by male investors, and those investors often penalize women entrepreneurs if they display stereotypical feminine behavior,” I state in the interview.
But even though it seems that the deck is unfairly stacked against women entrepreneurs (and it is), there is good news to share: investment-savvy women are forming venture capital funds to help other women get the capital they need. Golden Seeds, Merian Ventures, JumpStart Focus Fund and Female Founders Fund are just a few examples of firms focused specifically on funding women-owned businesses. Although more of these funds are needed, I love to see that women are coming together and providing the resources to help other women succeed.
After I was asked what could be done to level the playing field for women entrepreneurs to obtain funding, what are some reasons why more women should become founders, the “myths” I would like to dispel about being a founder, and which specific traits increase the likelihood that a person will be a successful founder, the question I most enjoyed answering was this one: What are my “5 Things I Wish Someone Told Me Before I Started” and why. Here are my answers:
5 things I wish someone had told me before I started my business
1. WHAT’S YOUR STORY? The first thing I wish someone had told me is the importance of my story. Buyers of my services are buying my story and how well it meshes with their own.
2. PEOPLE BUY WHAT THEY NEED, NOT WHAT I DO. The fact that I’m a corporate anthropologist is almost irrelevant to potential clients. (Most of them don’t know what a corporate anthropologist is or does.) What really matters is that I can help them change, and reignite their growth.
3. WHAT’S YOUR PURPOSE? Third is the need to have a purpose beyond the practical nuts and bolts of the business. My purpose is to help people do something they hate to do: change.
4. BE A FUTURIST! CREATE, DON’T COMPETE. I’ve always been an explorer, and also a futurist, and I wish someone had told me that as I launched my business. It would have helped me understand that I need to be fast and agile, and to try new ways of solving old problems. Essentially, these are the same traits all entrepreneurs need to have: balancing new ideas with a proven structure for delivering desired results to clients.
5. HAVE FUN! I have always had fun since the day I started Simon Associates. Yes, it’s been a lot of hard work but it’s also been a great journey. I do love what I do, how I do it, and how my clients enjoy our time together. If I had to give advice to someone starting out on a new venture, I would say, just smile along the way!
From Observation to Innovation,
Andi Simon, Ph.D.
Corporate Anthropologist | Author | CEO Simon Associates Management Consultants