women

There’s good and bad news for women in the venture capital space. On the one hand, women-led businesses have increased by 21%. But on the other hand, less than 3% of venture capital investment is funding women-led businesses. Moving into 2020, it’s time for women to turn the tides and take advantage of everything the venture capital world has to offer.

Antiquated venture capital dynamics leave women out of the club 

Rarely does funding just fall into the lap of any entrepreneur, male or female. However, age-old biases that run the male-dominated venture capital club make securing funds significantly more challenging for women than for their male counterparts. In order to beat the challenge and come out on top (fully funded), women must make an effort to understand the specific dynamics of the space and how they can find success among them.

Disparate gender dynamics can show their colors most vividly during business presentations. When women present, they tend to be more conservative, projecting realistic business goals. Men are more likely to skew big-picture and present exciting, hopeful estimates. Women: Stop underestimating the possibilities of your business and steer clear of presenting overly safe projections.

Another major dynamic is trust. Venture capitalists are human beings and as such tend to trust people that are similar to them — based on ethnicity, gender or even where they grew up. As more than 90% of venture capitalists are men, this puts women at a disadvantage. Women may have to work harder than their male counterparts to build trust in their vision until representation in the space is more equally spread across all genders.

Shifting the space to favor business ideas regardless of gender 

Dynamics are already shifting and the number of female investors is climbing. With more representation in the field and more women-led investment groups created to specifically support female entrepreneurs, there is more than just a glimmer of hope.

However, with such a strong focus on providing women representation and support, it would be dangerous to lean into a homogenous, women-only space. It’s proven that more diverse executive teams make better decisions and that gender-diverse organizations are 21% more likely to surpass the financial performance of a competitor with only male executives.

If anything, this fact should serve as a reassurance to female business owners. Just because a business has more of an advantage from a funding or gender standpoint at the outset, doesn’t mean it will be more successful in the long-term. Business success develops from many angles, like taking advantage of all available resources. For example, while initial capital is important, so is leveraging all available payment solutions that can give women-run businesses a financial advantage. A healthy cash flow created from offering Net30 terms to customers, exclusive lines of credit and managed collections can go a long way in ensuring the future success of a business.

In general, men are more likely to start businesses than women, and a lot of this disparity stems from fear — women’s fear of failure and their perceived lack of business expertise even if they are more than fully qualified. Understanding this is the first step in overcoming the roadblocks to funding. While there are plenty of women who do not lack confidence, many are quick to discount themselves. To gain trust and sufficient funding, it is critical for every entrepreneur, both men and especially women, to start with confidence and exude it all the way through.

Martha Salinas, is the Chief Customer Officer at MSTS, a global FinTech company in the B2B payment space based in Kansas City with operations around the world. She is also an Angel Investor and a member of both Mid-America Angel Investors and the Women’s Capital Connection.

Business stock photo by fizkes/Shutterstock