Female entrepreneurs suffering funding shortfall: Report

A lack of risk-taking and a preference for service-based industries has been blamed for a shortfall in start-up investment secured by women, after US research revealed female-created ventures receive 8% less funding than men.

The research, presented as an infographic titled Investing in Women, was published by US-based entrepreneurial network Women 2.0.

According to the research, women in the US make up 46% of the civilian workforce but account for only 35% of the people who get involved in starting businesses.

Furthermore, female entrepreneurs in the US start ventures with 8% less funding than men, with 41.1% relying on outsider debt to start their business.

In 2009, more than 20% of US-based female entrepreneurs sought angel capital, but only 9.4% of those females were successful.

Only 11% of US companies that received venture backing in 2009 had a female founder or chief executive.

However, female chief executives delivered 12% higher revenues using 33% less capital than those by men, the research found.

While there are no similar figures available for female entrepreneurs here, the Australian Women Chamber of Commerce & Industry says there is hesitancy among women to seek funding.

AWCCI chief executive Yolanda Vega says the industries that female start-ups enter often aren’t appealing to investors.

“Women are economically disadvantaged because they are drawn toward service industries,” Vega says.

“It is difficult for women to access capital as service industries don’t attract investors; not angels, nor VCs, nor lending institutions.”

“The reality is, however, that without their services many communities would not survive.”

Vega also points out many women are less willing to “put their home on the line for the sake of an entrepreneurial adventure”.

“Men, by nature, take more risks and have [greater] access to capital – entrepreneurs are said to be risk-takers, but women by nature are not like this,” she says.

The news comes after a separate report revealed start-up investments in the US totaled $6.49 billion in the third quarter, down from $7.34 billion a year earlier.

The report, conducted by PricewaterhouseCoopers and the National Venture Capital Association, is based on data from Thomson Reuters.

There were 890 deals completed during the quarter, down 10% from 992 a year earlier. Companies in software, biotech and information technology received the most funding, with software far outpacing the others.