The evidence of the value of women-led businesses is overwhelming. Women-led businesses perform better in terms of profit, return on equity, and productivity. They have greater growth potential, and they grow faster than their male-led equivalents. And they are more likely to operate efficiently.
Yet when it comes to big business, there are fewer Australian companies that are run by women than by men named Peter. And women-led businesses of any size still find it tough to get funded to grow.
In Australia, women led-businesses represent around a third of SMEs yet only around 10% of applications for funding. While there is evidence that VCs are less likely to fund women led-businesses than men, there are substantive bursaries available to women-led businesses, and there are ongoing attempts from business groups and working spaces to help support women in business.
But these grants and business growth services for women-led businesses are often undersubscribed or even ignored. When Business Connector ran an event on getting women-led businesses funded in June 2015, the interest in the event was high, but actual attendance at the event was poor.
So what’s going on? Why, if the women-led business funnel is so robust, why are so few women business leaders seeking to grow their business.
The answer to these questions still need to be tested in research, but there are a number of hypotheses about the disconnect between women business leaders and funding sources.
- Women prioritise lifestyle and family
This is possibly accurate for women who wish to raise a family and are concerned that growing a business may keep them away from their families. But it’s a perspective that needs to be challenged. It’s not just that there is clear evidence of the benefits of men taking on greater responsibility for parenting, but that it can be possible to balance family and lifestyle with managing a business.
And there is increasing evidence that children who spend time in formal childcare from a young age are better adjusted socially, and perform better academically than those children who are cared for at home only by their parents. The guilt which female carers feel for ‘abandoning’ their children to childcare is almost entirely unjustified
- Women are risk averse, and prefer to bootstrap their businesses
The financial risk of borrowing money or losing equity in a business could be seen as factor in disinclining women from seeking funding. Funding may be seen as a shortcut, even a lazier method of business growth than that which is based on sales.
But again, this is an unnecessarily conservative perspective. While all debt involves some risk, it can be possible to pursue funding which does not require security in the form of family property or assets. And equity investment actually spreads risk, and can enable women leaders to tap into the expertise a
and connections of equity-oriented investors.
- Women are treated poorly by funding sources
This perspective is clearly evidentially based. There are several studies on the prejudicial manner in which VCs, angel/private equity investors and traditional funding bodies have treated women seeking investment.
But the way to change behaviours of funding organisations and investors is not to avoid the domain. Instead, greater involvement of women is more likely to shift behaviours sooner than avoiding the market.
- Women don’t want to run enterprise-sized businesses
This is perhaps a reason based on ambitions for power rather than concerns over time and complexities of staff management within a large enterprise.
But again it’s a perception which deserves interrogation. While the complexities of running a business expand as a business grows, it does not necessarily follow that a women business leader has to deal with that complexity. Delegation of responsibility for various business operations enables a woman business leader to maintain control of a company, and continue to perform preferred functions while also developing an enterprise-sized business.
- Women are more inclined to focus on quality of production than scale
Again, this perception is based in evidence; the strong performance of women-led businesses is strongly correlated with quality of products and services. But again, a focus on quality does not negate the potential for scaling a business. Indeed, scalability of a business is more likely to be dependent on timeliness and uniqueness of product experiences rather than quality.
This is not an exhasutive list of reasons for women-led businesses avoiding funding, but in our discussions on the matter at the Path to Funded event, each of these ideas was presented as a possible explanation. But, each of these hypotheses should be robustly challenged. At best they are excuses, and they are often premised on misconceptions about the possibilities for women-led businesses.
Clearly there is an education challenge that needs to be overcome in driving women to advance their careers and grow their businesses. Ideally at the next Business Connector event on funding women-led businesses we’ll have a room full of great business leaders, all willing to take the next step. If you are, or you know a woman out there who deserves a leg up to drive business growth, do us all a favour and encourage her to consider funding. It could be Australia’s next business superstar.
Further Reading: The Value of Women, Infinitas Asset Management: http://www.infinitasmgt.com.au/value-women/