Successfully accessing funding support and fundraising is a remarkable task for any Startup business, but for women entrepreneurs, the hurdles can be even greater.
The gender gap in funding has long plagued the entrepreneurial landscape, impeding the progress of female-led ventures. In this article, we delve into the challenges women entrepreneurs face during the fundraising process and explore strategies to overcome these obstacles.
By shining a light on the issue and providing actionable solutions, we aim to help Canada foster a more inclusive and equitable Startup ecosystem for all genders across the country.
The Funding Gap: Support for Women Entrepreneurs
One of the most prominent challenges faced by women entrepreneurs is the disparity in access to funding support. According to Crunchbase data referenced by the Government of Canada, female entrepreneurs received a mere 2.3% of venture capital funding in 2020 across the entire country.
This staggering gap not only stifles the growth potential of women-led Startup businesses but also perpetuates gender inequality in Canada’s entrepreneurial world.
Implicit biases among investors, limited networks, and a lack of diverse representation within venture capital firms contribute to this stark imbalance.
While funding does exist primarily to support women entrepreneurs, the funding is scarce and often available for short times. This can make it difficult for women to break through the glass ceiling that exists when working towards starting and succeeding in business.
Unconscious Bias: Navigating Stereotypes and Prejudices
Another critical hurdle encountered by women entrepreneurs during the fundraising journey is the presence of unconscious bias. Female entrepreneurs often find themselves facing gender-based stereotypes and biases that can undermine their credibility and hinder their fundraising efforts.
Research from Harvard Business Review reveals that investors tend to ask women entrepreneurs different types of questions compared to their male counterparts, focusing more on risks and prevention rather than growth and opportunity. It is vital to recognize and address these biases to create a fair and inclusive fundraising environment.
“According to the psychological theory of regulatory focus, investors adopted what’s called a promotion orientation when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals. Conversely, when questioning female entrepreneurs they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance.”
– Harvard Business Review, June 2017
Strategies for Success: Empowering Women Entrepreneurs
To overcome these challenges, women entrepreneurs can adopt various strategies to level the playing field and increase their chances of securing funding. Building robust networks and seeking out supportive communities can provide access to resources, mentorship, and potential investors.
Furthermore, honing pitch skills and crafting a compelling narrative that highlights their unique value proposition can help women founders stand out and capture investor interest.
Canadian Small Business Grants for Women Entrepreneurs
The challenges faced by women entrepreneurs in fundraising continue to be significant, but the more women that go into business, the more support there is. Breaking down barriers and going against the status quo can be difficult, even in North America where standards for gender equality are higher than the rest of the world.
Check out our article on The Top 3 Financial Resources for Women Entrepreneurs to learn more about the Canadian funding opportunities available to help female founders succeed in business.
There are other support programs in Canada such as the Community Capital Fund Women’s Business Accelerator which provide female entrepreneurs with free, online workshops to equip them with tools and resources required to launch a profitable business in Canada.
While there are still many gaps, biases, and challenges to overcome, there are several efforts towards fighting prejudices that still exist today. Register for our free weekly e-newsletter to receive updates on all types of grants, loans, and tax incentive programs that come out that may be able to support your growing business.