Powering female led companies should be an imperative for broader economic recovery and growth



Women mean business

During the past couple of decades, women-owned businesses not only prevailed but dominated the market. They’re customer focused, creative and well-performing. According to the Center for Women’s Business Research, female founded companies generate $2.3 trillion to the American economy and employ more than 18 million people.

In general, female entrepreneurs are the fastest-growing segment of business owners in many developed countries, including the U.S. and we’ve all witnessed many incredible success stories across geos and industries.


When Crisis Derails Plans

However, now with COVID-19 creating a challenging economic climate right now, a recent poll from the U.S. Chamber of Commerce showed that 24% of small businesses are less than two months away from closing permanently, and 11% are less than one month away. And according to American Express, many women-owned businesses work within industries most vulnerable post pandemic.

It’s true that there is a lot of uncertainty about how this pandemic will change the startup investment climate and how this slowing in growth will impact female led companies in general, especially as capital is drying up and investors become more conservative.


The Gender Bias

Trendwise in the banking industry, “women tend to have less of a track record with banks,” Laurie Fabiano, president of the Tory Burch Foundation, explains, “because women tend to borrow less than men. Most of them don’t have a banker on speed dial.”

In the startup investing world, women are already more likely to be asked prevention-oriented questions in venture meetings, compared with the promotion-oriented-questions their male counterparts receive. A 2017 Harvard Business School study found that VCs tend to ask men questions about the potential for gains and women about the potential for losses, which also creates a bias towards overall funding opportunities.

As a result, despite female founders outperforming all-male founding teams, female founders receive less funding than their male counterparts at every stage of investment.


What’s Next

The economic consequences due to the coronavirus outbreak are already visible and significant, and entrepreneurs and business owners from all over the world are experiencing them first hand. Apart from the fact that fundraising is getting a lot tougher these days, founders also have to worry short term about their daily costs, cash flow and how to pay their employees beyond they have the luxury to focus on long term success.

Especially now during the crisis, many venture capital and commercial firms like Google are also offering resources and guidance to startups during these tumultuous times. When asked what advice investors are giving to startups to navigate the current situation, the most common recommendation was that startups should aim to reduce cash burn and increase runway as quickly as possible. Also, they are recommending that startups prioritize customer retention and closing any open deals in the short term.

Also, founders should expect investors to be more actively involved and exert more guidance in their investments — they’ll participate in the strategy and decision making behind their investments and entrepreneurs will be expected to do more with less.


The Way Back to Success

The current reality is that many businesses are going to struggle due to the pandemic and subsequent recession, so it’s important to have a growth mindset.

But also this environment calls for a need to reorient mindsets and business models for the future. Now is the time to hone in your customers’ needs, evaluate and re-pivot your business model and funding strategies as needed, and reach out to your community of other female entrepreneurs to share best practices and resources.

Even with the current slow economy, investors will continue to align themselves with the new generation of companies that are ready to meet consumers’ and businesses’ needs and expectations. So, there is an opportunity to change behavior, do things differently, and level the playing field for female entrepreneurs.


At WE Global, we represent a diverse team of female founders and funders. We also believe that it’s in our hands and in the strength of this community to make a difference in how capital is deployed, looking beyond potential biases and toward the next generation of amazing startups with new products and services that will change the world.

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© 2020 by WE Global