While the number of women-owned businesses has increased exponentially over the past decade, we’re not raising venture capital to grow our businesses.
What is venture capital, and why should it be on your radar?
Venture capital (VC) is a type of funding designed to help small companies become big companies; it’s usually hitched to some form of “exit strategy,” such as sale to a larger company. A business owner seeking traditional venture capital has to show the potential for rapid growth and extraordinary returns.
Consider this: “In 2006, only 4% of venture capital-backed companies had female chief executives, and those companies with women as leaders received just 3% of the total dollars raised from VC.” (source)
Just 4%? Why?
- Women aren’t starting “VC-worthy” companies projecting rapid growth
and exit strategies. We want to run small
companies, and avoid the headaches
of leading large ones.
- We’re so resourceful and skilled when it comes to
bootstrapping that we think we don’t need VC.
- We struggle, more than men, when it comes
to asking for money.
Is this yet another glaring example of under-earning, or merely a reality in the innate difference between men and women?
We need to build networks
According to Amanda Clayman, a psychotherapist specializing in financial wellness, women are still limited by “trying to do it ourselves” and lack networks needed to grow our businesses. “Women, for the most part, still operate outside of the traditional power structure. It’s time we direct more energy toward establishing our own power networks. In order to grow, we need to learn how to ask for resources, support — and investment — when we need it.”
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