Technology, networking groups, mentoring and a shift in gender attitudes have accelerated the rate of businesses now being started by women – at a rate of twice that of men globally. And yet compared to our male counterparts, women are still lacking one vital component for start-up success: capital.
It was an issue raised during a roundtable discussion with Women’s Agenda on some of the challenges and opportunities for women entrepreneurs in Australia. The discussion followed a Sydney networking seminar at Ernst & Young where 50 or so women shared thoughts on why we tend to self-fund our businesses, rather than seek funding from elsewhere, among other things.
During the roundtable, Sasha deBretton shared her story on just how tough it is starting out. She explained how as a single mother unable to get finance when she opened her Million Dollar Makeovers business during the GFC, she had to continue working her full-time corporate job for 12 months while building the business.
“I was the project manager, the interior designer, everything, because I couldn’t afford to get staff. I had to work a whole year on the business, getting my daughter up for school, going to see my clients, going to my day job, getting her to bed, then working while she was asleep.
“I could see the money was rolling in quickly, so I went back to the bank and said ‘this is what I’ve done’. And they said, ‘you need to give us two years of financial information!'”
Meanwhile, charmHealth founder Janine Garrett shared a different take on the GFC during the roundtable – preferring to use the acronym CCC for the “continued cashflow crisis”. “It’s difficult to get money from the banks,” she said. “You’re turning around a lot of money in business and you want more to grow it but you can’t because you don’t have the assets. It’s always a challenge.”
The result is a vicious cycle for women. “If females aren’t actually getting money and going on that journey, then by the time we do get a bit of cash we’re probably going to hold onto it as long as we can.
“From my perspective, it always seemed too hard. So I just struggled through. In hindsight, that was probably a stupid approach and we could have gotten there quicker if we had investment early.”
So how can women help?
Women outside the entrepreneur community – particularly those in professional services – can help, according to Ernst & Young Melbourne managing partner Annette Kimmitt. “There are high net-worth individuals in professional services, but typically these women are not investing at the same rate as their male peers,” she said.
Kimmitt said a lack of female investors in start-ups is an issue she’s been exploring with like-minded colleagues in Melbourne. She wants to determine what’s preventing women from investing and to find better ways to connect with and share the opportunities of start-ups led by women.
“Women tend to be more risk adverse and not as avid capitalists and investors in those businesses,” she said.
Australian women are not alone. Recently, prominent angel investor Dave McClure put out a blunt (and rather brave) call to women to stop talking about the problem and to become part of the solution, by investing.
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“I’d like to challenge every woman in tech who’s a) got a nice car, b) owns a nice house, or c) is making over $125K a year to start thinking of themselves as the next Ron Conway or Esther Dyson in the making, and commit to investing in start-ups… some of which might even be run or founded by women,” he wrote.
He was talking specifically about tech. But you never know; it’s a challenge that could provide the ultimate game-changer for women-led start-ups generally too.
This article first appeared on Women’s Agenda.