It’s a sad fact that women entrepreneurs face so many challenges in their line of work. Even though they bring a lot to the economy of their country through their small business, they still face bigger problems when it comes to financing their startup in comparison to startups led by men. Recent research showed that women ask for less financing than men do, and they also receive smaller loans, together with higher interest rates.
The reasons behind this are yet to about but, in the meantime, it’s important for women to know where to look for financing from outside sources. The first loan offer doesn’t have to be the best one, so the smartest move is to search for other options like venture capitals, grants and a couple of select loans. Here’s what types of funding are out there.
Types of Funding for Women Entrepreneurs
1. Venture capital (VC)
Venture capital firms are now present everywhere, especially the ones supporting female entrepreneurs. The important thing to know about venture capital is that venture capital firms support companies with high growth from their beginnings through equity funding. On the other side of the bargain, the entrepreneurs let them have a stake in the business, usually in the form of an equity position or shares. So, if you are planning an innovative startup, venture capital is a good solution for you.
Also, a growing number of women partners are joining these firms and take one of the leading positions. This allows them to invest in other women entrepreneurs’ startups.
Let’s just mention some of the venture capital firms around the world:
– The Women’s Venture Capital Fund – it helps women entrepreneurs in the area of digital media and sustainable products. Their belief is that women are leaders of digital platforms and sustainability.
– BBG Ventures – their condition is that companies they work with have at least one female founder. They focus on the area of consumer tech trends and consumer internet.
– XFactor – this is a unique firm, as nine of their investing partners are female founders who also got their venture capital funding.
Beside high-interest loans, there are also microloans and short-term loans. Maybe a good option for you is a microloan. It is a targeted amount of capital which is very affordable if you are planning to start a small business. There’s a great example of a microloan in America – Elizabeth Street Capital. It provides women entrepreneurs with a loan, but it also provides them with mentorship and networking support.
Another option for women entrepreneurs is short-term loans. If you need a small amount of capital, this type of loan can get you the money you need without having to spend all of your emergency funds. If you don’t have strong credit and you have just started with your small business, this could be the solution for you.
The key step here is to do your research among favorable capital loans for your business and choose the right one for your line of business. You will know more once you start studying the different conditions.
There are grants available to women entrepreneurs for almost any industry there is. There are numerous types of grants that come in various sizes and they are available in many locations around the world. If you receive a grant, you may never need to pay it back but it doesn’t mean you will get it for free. Here’s what you need to know about grants: it is very hard to get a grant, as there will be many competitors trying to get a hold on the very same grant you have set your eyes on. In other words, submitting for a grant doesn’t mean that your work is done and that the grant is yours. Before you apply for it, there are certain eligibility guidelines you will need to follow. Except for that, try to show off your creativity where possible and make it clear that your business is unique out there. Just bear in mind that there is also a big number of fake grants that ask for your bank account information – apply for a grant only when it’s a reliable one.
Let’s just take a look at some of the famous grants available:
Women-Owned Business Grant – it is reserved for businesses that have gone through the startup process and are ready to expand and leave their positive mark on the society.
Tory Burch Foundation – it is possible to get even up to $100,00 to start your business. You can also get a $10,000 grant for your business education and get in touch with successful women entrepreneurs who are ready to give you support or advice, which is as important as the grant.
Work on your funding strategy
Of course, the options listed above are not your only solutions if you need money for your small business. You should spend some time researching what the best opportunities in your specific area of work are. If you manage to connect with investors, as well as leaders in your line of work, that would be the key ingredient of your success.
It’s also important to know what you want from a specific source of funding before you actually start looking for one. In other words, decide what kind of funding would best suit you. It also means to decide to which extent you want the funding source to be involved in your business. Once you have a clear picture of which funding you want, it will be easier to narrow down your options.
Lastly, it’s important to work on your confidence. You need to truly believe in what you are doing and you need reliable documentation to prove your point. Having a detailed plan and confidence in your own idea can do wonders and really make a difference with the potential investor.
Being a female entrepreneur isn’t easy. There are many challenges from the very start but if you have the will to find financial support from outside sources and choose the right one for you, you will be able to remove a lot of setbacks and be on your way to develop a successful business.