Do Women Have a Harder Time Securing Funding?

Capital One’s latest Small Business Growth Index shows women business owners feel confident they can raise the funding they need

Women-owned businesses are the fastest-growing labor sector in the U.S. As of 2018, there were 12.3 million women-owned small businesses in the U.S., a 58% increase since 2007. Even more encouraging, businesses owned by women of color grew by 163% between 2007 and 2018. During the same period, the number of small businesses overall increased by just 12%.

However, when it comes to female founders getting funding, the headlines can feel discouraging. But it turns out that many women running small businesses feel confident in their ability to secure the funds necessary to build their companies. 

The latest Capital One Small Business Growth Index, a study of 500 small business owners in the U.S., found that 67% of female small business owners who have already raised capital— including loans, lines of credit, and private investment—believe it was easy to do so. In general, just 18% of women owners say being female makes it more difficult to raise capital for their businesses, though that number rises to 32% when it comes to minority women.

Of course, it is critical to know your company’s finances inside and out before setting out to secure funding, and thankfully, the vast majority of female business owners are in that position. According to the Small Business Growth Index, 94% of women feel confident when it comes to understanding their companies’ finances. 

However, despite many women entrepreneurs feeling confident they could raise capital if needed, some are realistic that they could face more hurdles than their male counterparts. 

“I have been fortunate in that I have not yet been in a position to need to secure capital for my business, but I am closely connected to many female entrepreneurs who have been working to secure capital for their businesses and it is hard,” said Christine Andrukonis, founder and senior partner for Notion Consulting. “Capital-raising is still a man's world built around a lot of male-oriented assumptions and norms, so breaking in as an outsider requires confidence, fortitude and patience.”

So, what are some strategies women business owners can use to improve their chances during the fundraising process? 

Build your network: Make sure to form or renew connections to local entrepreneurs, investors, bank managers, and friends and family who may be a good fit to invest in or help fund your business. Research incubators and accelerators, as well as local business associations. Reach out to everyone in your network to tell them about your company and your goals.

Nail your elevator pitch: You should have your elevator pitch down pat. Be able to describe what your company does and where it’s headed in 30 seconds. Tell everyone about your business and its successes. You never know who may invest in the future. 

Don’t give up: Raising money isn’t easy for any entrepreneur, and you may need to get creative when it comes to funding. Venture capital investment may be the most talked about approach, but don’t forget about SBA loans, lines of credit and other ways to get the funds you need to drive your business forward.

When it comes to running a small business, securing funding can be one of the more challenging steps you’ll face. But women owners are taking this challenge in stride, confidently finding the funding they need to grow their companies. 

For more information on how women entrepreneurs view the challenges and opportunities ahead for small businesses, please see Capital One's Small Business Growth Index.