New research by US venture capital firm Illuminate Ventures has reiterated the problems female entrepreneurs face compared to men in getting better access to capital to scale their businesses.
The report titled “Gender Differences in Entrepreneurship: Voices of Founders and Funders” surveyed around 600 entrepreneurs and 600 VC investors on their opinions about what attitudes make for a successful entrepreneur and what the most significant barriers are to entrepreneurial success. The research was conducted in partnership with the Carnegie Mellon University Tepper School of Business.
Some of the key findings of the research include:
- male and female founders shared more similarities in their attitudes toward success and barriers than is commonly assumed, especially by VC investors;
- many investors still had a stereotypical idea of what a tech founder “looks like”; and
- access to funding and team talent remain significant issues for female tech founders.
Interestingly, both male and female entrepreneurs identified the same two factors as their main barriers to success, though in a reversed order. While 58% of women identified access to capital as their top barrier (versus 37% of men), 49% of men ranked financial security as their number one concern (versus 42% of women).
One of the main conclusions from the report is that women need to build and nurture the right kind of networks if they want to improve their chances of gaining access to capital and talent to help grow their businesses.
“Women entrepreneurs should focus on network-building opportunities that will allow them better access to capital and ease the process of building great teams. Investors and advisors can help enable this,” the report says.
The report also reiterates the gender funding gap faced by female entrepreneurs in accessing capital through VC partnerships. Men dominate the VC industry and, according to the survey, they are less likely than female VC investors to meet with female entrepreneurs.
“We learned that nearly half of male investing partners meet with 10 or fewer companies a year that include any woman co-founder (versus 18% of women VCs), and 61% of males invested in fewer than two of these opportunities (versus 30% for women VCs) in the past three years.”
This finding reinforces other studies that have also identified the biases at play for women seeking to gain access to VC finance.
In my blog last week, I used the example of an admittedly limited and unscientific straw poll, which I based off 15 company funding rounds announced on Crunchbase on one day: July 26. Out of the 15 companies, there are 23 founders, two of whom were female.
The report by Illuminate Ventures delves deeper into the attitudes and realities behind such paltry figures for female entrepreneurs. Many of the findings in the report make for sober reading and remind us all there is still much work to be done yet for women to get a fair go at starting and building great businesses.
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