More women than ever are starting their own business, but they are still raising less capital than their male counterparts. Why is this so and what can we do to fix it? Let’s take a Deep Dive.
💰 All entrepreneurs face the challenge of raising capital to grow their business, but women seem to be having a harder time. Research has found that globally, businesses started and led by women are less likely to receive funding than male-founded companies.
☁️ The impact of the gender funding gap is more far-reaching than losing out on funding. Having access to venture capital also means access to a valuable network of mentors, potential business partners and customers. But times may be changing. Some say technologies like cloud computing and machine learning are helping to level the playing field, as financial firms can more quickly obtain and analyse the performance data of a business.
“Whilst entrepreneurship has been flourishing... female entrepreneurs represent only 3 percent of deal flow. While the proportion of women-led startups continues to grow, female entrepreneurs are statistically still playing catch-up.”
According to a global EY survey, what percentage of female entrepreneurs reported that they had no plans to raise capital?
A. 5 percent
B. 10 percent
C. 20 percent
Scroll to the bottom of the email for the answer.
DID YOU KNOW?
In Southeast Asia, venture capital is still very much a male-dominated world. Some 73 percent of VCs with presence in this region have no female partners at all, according to a 2020 report by DealStreetAsia.
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Research suggests that the types of questions asked to female entrepreneurs could be causing the funding discrepancy, says Dana Kanze, who is an assistant professor of organisational behavior at London Business School.
THE FULL PICTURE
According to Crunchbase News’ Q2 2019 Diversity Report, the global percentage of funding raised by female-founded startups per quarter didn’t exceed 3 percent. The only exception is when the number reached an unprecedented 22 percent in Q2 2018, after China’s Ant Financial raised US$14 billion in Series C funding. At that time, Ant Financial was run by its female founder, Peng Lei.
Arlan Hamilton is the founder and managing partner of Backstage Capital, which announced the launch of a US$36 million fund to invest exclusively in businesses by women of colour. Prior to this, the US-based VC exhausted three seed funds, which invested in 100 startups that all had at least one founder who is a woman, person of colour or someone who identifies as LGBTQ.
An honouree to know
Formerly the chief marketing officer of e-commerce platform Orami, which she co-founded, Shannon Kalayanamitr is now a partner at Gobi Partners. In 2018, she led the venture capital firm to pledge to invest US$50 million in businesses started by women. READ MORE
FROM THE ARCHIVES
Did you miss our Deep Dive on The Power Of Saying No? Read it here
ONE FINAL THING
The struggle to raise capital is not the only problem female founders face. Many also recount the inappropriate behaviours of investors during meetings.
The Deep Dive is a weekly close-up look at an idea, issue or trend that’s shaping Asia’s future. This issue was written by Chong Seow Wei, with editing and production by Samantha Topp and Lee Williamson.
We’d love to know what you think of this issue, and future topics you’d like us to cover. Please send your comments to email@example.com. And if you missed it, don’t forget to check out last week’s Deep Dive, on The Power Of Saying No.