Are female entrepreneurs set up to fail?
Friday, June 12, 2015/
It’s no secret that men and women are treated differently. Studies show that in the classroom, teachers acknowledge and reward boys more, while in the workplace, males are promoted 15% more than women (as well as that pesky 18.8% pay gap).
Meanwhile, in Australia’s startup ecosystem, only 4.3% of startups are owned by women. Despite the fact that companies owned by women bring in 12% higher revenue on average, only 3-5% of female owned businesses receive venture capital.
It seems that everyone’s got an opinion on the root cause of why Aussie women are not pursuing high-growth companies at an equal rate as their male counterparts. As one of StartUp Victoria’s Female Founders committee members, here’s my take on the most popular reasons:
Women self-sabotage more than men
Whether it’s having a low perception of yourself (or your business) buying into your niggling self-doubts, or falling prey to your poor negotiation skills, female entrepreneurs can often fall into patterns of self-sabotage.
Research shows that men apply for jobs when they meet 60% of the qualifications, whereas women only apply if they meet 100% of them. The same goes for funding: men often prepare their pitches by talking about everything they have done to date, whereas women explain what they’re going to do (waiting until they’re at the 100% mark).
The Global Entrepreneurship Monitor reported that only 25% of women were considering growing their businesses to over five employees, and only 6% were aiming to seek international markets. Much lower ambitions than their male counterparts.
Many businesses are not high-growth because they simply don’t know their worth. They don’t trust their valuations and feel like they’re asking for too much. Women need to overcome the same hesitation in relation to pitching for funding.
The world of capital is inherently gendered and there’s a lack of role models
In 2014, Harvard Business School and MIT published a study titled ‘Investors Prefer Entrepreneurial Ventures Pitched by Attractive Men’, which provided concrete proof that gender discrimination exists in the investment industry. In fact, male-owned businesses receive 95% of Venture Capital awarded to startups. Some have even dubbed this rise of gender-capitalism as going ‘men-stream’.
There aren’t many female leaders right now in Australia. There will be, eventually. But at the moment it’s harder to believe it can be done when there’s only a small cohort of role-models.
Australia needs more women to lead high growth companies
Australia needs to create 7.5 million new jobs over the next 40 years, according to government forecasts. Women need to be equal drivers of this change. We need a significant change in mindset to ensure female entrepreneurs are given equal opportunity, even a boost, to grow their businesses.
How do we get there?
1. Be bold and brave… tall poppy who?!
Boldness and bravery begin when you trust in your own abilities and taking risks on yourself. If you have a great idea, step away from the corporate desk and get ready to step out on stage. When I left my role at World Vision, people told me I was crazy to start a marketing agency in a market where 95% of agencies are owned by two global conglomerates. Two years later we have 15 staff across two continents and over $1.1 million in revenue. I can’t imagine where I’d be if I didn’t back myself.
Do not wait for someone to push you out the door – you need to push yourself. Demonstrate that you know your business, understand your financials, have ambitious goals and get out there and make things happen. Inspire people with what you will achieve rather than looking at what you don’t have yet. Business is a game of mental perseverance, it’s not about having a formula for success.
2. Ask for help
A great entrepreneur will pick up the phone and ask experts for help.
Guidance should come from a variety of people. Don’t underestimate the connections in your networks; as you get more momentum and more runs on the board, you will attract different advisors.
You may outgrow your mentors. When this happens, thank them for everything they’ve taught you and then seek out the next one.
3. Upskill to seek funding
All entrepreneurs struggle. Growth and achievement come hand in hand with anxiety, fear and frustration. It is vital to seek funding to unlock your business’s growth potential, but put yourself in a strong negotiation position by being mentally and emotionally prepared, knowing your finances back-to-front and practice, practice, practice!
The change has begun
We have the building blocks of an ecosystem supporting women to succeed. There are many groups pushing women’s entrepreneurial success to become visible. Some leaders you need to know about:
Female Founders – StartUp Victoria
The Female Founders Series run by not-for-profit Startup Victoria offers practical learning to propel female founders in to high growth businesses. Next Tuesday’s Financing Bootcamp sees the top echelon of Melbourne’s funding providers walking through diverse financing options. On July 14th, they go beyond the numbers with a workshop on Emotional and Business Growth to prepare female founders for the mental perseverance of high-growth business.
Global startup accelerator Springboard has opened its doors in Australia. They recognise our untapped talent pool, and will use their programs to create a stronger pipeline of female entrepreneurial talent and build platforms to showcase it.
Scale Investors is leading the way in investment, they will only invest in companies that have female co-founders. It’s not just a diversity choice for them – it’s smart investing as women co-founded business generate higher returns.
With more female leaders in business, disparity will disappear. Women will no longer think it’s hard to succeed as an entrepreneur, because it won’t be. Gender disparity in business is a global phenomenon, but the Australian ecosystem can propel Australia to be the change maker.