Female business owners seeking investment to support their growth plans are said to find capital raising considerably harder when being faced with a male-dominated industry. The Venture Capital industry is still one which is largely managed by and focussed around male industry professionals. Therefore, when female-owned start-up business are entering into the conversation, there is often a barrier to entry due to this simple, unsolicited factor.
This has had knock-on effects for industries which are centred around a female audience and led by female founders. For example, companies which have a focus around female health are not so easily recognised as enticing investment opportunities when pitching the business idea and plan to a panel of men. For female entrepreneurs seeking investment backing, it has proven more successful to pitch to female investors to avoid any bias. This is not to disregard that there should not be a positive bias towards women for this initiative, rather that should be considering the investment and the individual as a business owner, regardless of gender.
Having considered the implications that investor gender can have on female founders, this can also be said for all other facets of gender and diversity, once again highlighting the importance of ensuring that diversity should be an industry wide consideration.
This means that female founders end up pitching to male investors –usually with little success. In 2020, less than three percent of VC funds went to female-led startups, while female entrepreneurs are 63 percent less likely than men to obtain venture capital financing. Many investors rely on “pattern-matching” and invest in companies that resemble the ones they have funded in the past, which usually means companies led by men. Some have suggested that to break into the club, female founders should reach out to female investors. Indeed, research shows that women venture capitalists are twice as likely to fund female-led start-ups compared to male venture capitalists.