When Women Invest in Women-Owned Businesses, It’s a Win-Win

Throughout March’s Women’s History Month, we’ve been celebrating female entrepreneurs. We’ve highlighted the tremendous growth of woman-owned businesses in the last two decades (up 114%!) and profiled some amazing female go-getters. While there’s no doubt women entrepreneurs have come a long way, baby, there are still plenty of obstacles on the road to achieving equal representation and opportunity - but these strategies can help. 

Mind the funding gap

The 2016 Small Business Credit Survey published by the New York Federal Reserve Bank found big gaps in how women’s and men’s businesses are funded and scaled:

• Only 22% of women-owned firms had scaled to $1 million or more in annual revenues in 2016, compared to 36% of men-owned firms
• Women-owned firms tend to start small and stay small
• Women-owned firms are more likely to experience financial challenges and growth limits than firms owned by men
• 90% of women-owned firms relied on the owner’s personal credit score to obtain financing 

How can women in business counter these significant gaps in funding, credit and growth? Two ways: First, female investors can make a point to fund female entrepreneurs. Second, they can help encourage better access to greater funds for women.

The power of collaboration

Geri Stengel writes in Forbes.com that in 2018 she sees “a rising tide” of women funding women, with a surge in the number of female angel investors helping to fund women-owned business. That swell may be due in part to efforts by Stephanie Newby’s Golden Seeds, Silvia Mah’s Hera Angels, Kristina Montague’s The Jump Fund, Natalia Oberti Noguera’s Pipeline Angels and Alicia Robb’s Next Wave, all organizations intent on educating women with money how to invest and connecting angels with projects.

Small investments count -- a lot

You needn’t be a wealthy angel to support women-owned businesses. Here are other ways to contribute as little as $25 through crowdfunding campaigns. Fun fact: Crowdfunding is one area where women-owned businesses outperform men-owned business. Why? Successful campaigns require compelling storytelling. Since women tend to use “inclusive language” filled with “positive emotion,” their pitches resonate with potential funders.

There are many micro-lending and crowdfunding-type platforms, but here are three standouts when it comes to crowdsourcing funds for supporting women in business:

• Kiva originally was an online forum for investors to support small businesses in developing countries. In 2009, it brought micro-lending to the U.S. Female entrepreneurs can raise up to $10,000 as an interest-free loan.
• SheEO’s Radical Generosity offers loans from successful women “activators,” as well as providing mentorship and networking opportunities with such activators.
• Investibule operates like a clearinghouse for investment opportunities across 20+ crowdfunding sites. You can select the “women” label on their site to find a range of investment opportunities.

Finally, seek out and “matronize” women-owned businesses. At the end of the day, a solid, growing customer base is the key to every business’s success. If you have the bucks, join the rising tide by giving to organizations that help women and girls. And take a time-out for a hit of inspiration from forward-thinking women entrepreneurs like innkeeper Monique Greenwood, artist Gopi Shah and trucker Desiree Wood.

Of course, if you’re on the way to starting your own business, we say, go for it. Here in the QB Community, we’ll always have your back!

Before you go

QB Community members, what experience do you have with supporting women-owned businesses?