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Women entrepreneurs are offered venture capital far less than men

On Behalf of | Feb 15, 2019 | Business Organizations |

A researcher with the University of Utah’s Department of Entrepreneurship and Strategy noticed a gender gap when she looked at how many women business owners there are compared with male ones in the state. She set out learn why that’s the case by conducting a detailed study on the topic.

What she ultimately found is that a female entrepreneur’s experience in finding a venture capitalist willing to invest in her start-up or a banks willing to extend her loans is much different from what men have to deal with.

The researcher and professor found that it’s likely that women’s inability to find funders has to do, in part, with there being too few women being in a decision-making role to extend such funding.

She argues that this explains why researchers at Babson College in 2014 found that only 15 percent of start-ups who have a woman on the executive team received venture capital funding. Less than 3 percent of these companies were led by a female chief executive officer (CEO).

It also may explain why data published by Fortune just last year showed that a staggering 79 percent of venture capital funding went to those companies led by all-male executive boards. At least 12 percent of the remaining capital went to start-ups with mixed-gender teams. A meager 2 percent of funding was earmarked for female-led companies.

Although it seems like funding for female-led start-ups has reached a critical level, it hasn’t according to researchers at Techcrunch. Their researchers also found that only 2.2 percent of venture capital money is committed to female-led start-ups, but this marks a small, yet steady increase over prior years. The University of Utah researcher spearheading this latest study notes that this is a promising sign that progress is being made.

As you may imagine, there’s a lot that goes into determining how to incorporate your business, in negotiating the terms of your venture capital agreement and in creating an Initial Public Offer (IPO), or making your company’s shares available to the public for the first time. A business organizations attorney can guide you as you look to take these steps and grow your start-up it into a profitable St. George company.