97%. That is the proportion of venture capital funding that goes to companies with a male CEO. According to a recent study called “The gender gap in venture capital – progress, problems and perspectives,” women remain much less likely to attract venture capital funding for their start-up business than male entrepreneurs. We will look closer at this study and share some resources that are available to women entrepreneurs.
What the Research Shows
Researchers at Babson College compared the amount of venture capital funding received by female and male entrepreneurs between 2011 and 2013. They analyzed variation across region, sector, outcome, and investment stage. They found that businesses with even just one woman on their team were four times less likely to receive venture capital funding than all-male teams. And, despite there being little difference in the performance of female and male CEOs at companies backed by venture capital investors, only three percent of venture capital funding went to organizations with a woman CEO.
Two of the main restrictions in the way of female participation are well-established institutional ties and entrenched networks dominated by men in the venture capital industry. The venture capital model is just another way in which women in the US face difficulties in pursuing their entrepreneurial dreams. This could have growing economic implications as fewer women bother to enter entrepreneurial careers because they know that they will not have the access to venture capital.
However, the researchers stopped short of explaining what caused the gender gap. Instead, the first author of the study, Candida Brush, said that there needs to be more research to really understand it. This could include determining if teams with women must go through a tougher screen in order to be successful.
What Resources Are Available to Women
A number of organizations have recognized the barriers in the way of women gaining startup funding for a new business. One of the most powerful resources is the National Women’s Business Council, which advises Congress, the Small Business Administration (SBA), and the President. They list a number of resources on their site, including:
- OnlineMBAPage– Outlines what you need to do to prepare to apply for a small-business loan.
- 37 Angels– Connects angel investors with female entrepreneurs. They also have a comprehensive list of programs and organizations that serve women.
- Office of Women’s Business Ownership– This is a part of the SBA, and they offer information on everything from finding government contracting opportunities to applying for a business loan.
