Female founders raise funds in innovative ways

Posted by Flux on 

26 October 2018

What’s trending now?
Female founders are finding ways to bypass VC funding.

Women who set up companies in the US raised just over 2% of venture capital in 2017, compared to male founders.

The traditional VC space is still largely a boys’ club. According to Venture Capital research last year, a start-up with an all-male team is four times more likely to secure venture capital than one with even one woman at the top. A study by an employment agency in Boston reveals that unconscious bias, where women are associated with family and creativity rather than working in management or technical positions, is evident in many organisations.

In response, women founders are seeking alternatives to traditional venture capital funding.

Pitch competitions have been found to be particularly effective for women and minorities.These competitions are held around the world to give people an opportunity to pitch their ideas to investors and industry experts. TechCrunch Disrupt in the US is held twice a year, the winning start-up receiving $50,000 in capital and extensive business exposure.

Crowdfunding is also increasingly being used by women founders as a successful means to raise capital. On both Kickstarter and Indiegogo, two of the more prolific crowdfunding platforms, women regularly outperform men.

Why it’s important?
The boy’s club approach to funding means that many good ideas are stillborn. Side-stepping the VC model could see companies catering to hitherto neglected demographics, bolstering both their own and governments’ bottom line.

What’s the butterfly effect
As this trend gains momentum, we will start to see increased diversity in products and services. Business ideas conceptualised by women will help create a more inclusive, less male-centric world and economy.

AnaOno makes bras and swimwear for women who have had breast reconstruction, breast surgery or mastectomies. The TODAY Show described AnaOno as the “lingerie line that brings back sexy for breast cancer survivors”. Founder and designer, Dana Donofree created the line because she believes breast cancer survivors should not have to compromise on beauty and comfort.

An increase in women founders will transform the traditional VC industry. Canadian company, SheEO is a global initiative designed to radically transform the financing and support of women entrepreneurs. Annually 500 women – called activators –  contribute $1100 each. The money is pooled and loaned at zero percent interest to five women-led ventures selected by the activators.

Pioneers and Global Hotspots
“We’re in an exciting time where women in venture capital and technology are coming together to provide opportunity and mentorship for each other,” says Meghan Cross, managing partner at Red Bear Angels. The organisation links angel investors to start-ups tied to Cornell University in the US and its alumni.

Female Founder Office Hours in the US is another such initiative – a mentoring programme designed to accelerate the success of female founders.

Melinda Gates, co-chair of the Bill & Melinda Gates Foundation, has invested in Aspect Ventures, the largest VC fund run by women. Gates is a vocal critic of the gender gap in venture capital.

Above: Women Funding Women Series

By Faeeza Khan

Image credit: Small Biz Daily
Video credit: Springboard Enterprise

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