Funding entrepreneurial women

We need a new approach to capital to make sure talented women get a slice of the financing pie

These are depressing figures, particularly because enterprises run by women are just as likely to be successful as those run by men. So why are female entrepreneurs so often overlooked and underfunded?

Unconscious bias goes some way toward explaining the funding gap. But it’s not the only problem for women seeking to get their enterprises off the ground.

Venture capitalists typically look for ‟hockey stick” growth: exponential growth in revenue, sales or users. Many of the women I meet are launching organizations that have a positive social or environmental impact — in addition to providing a valuable product or service — and these ventures tend to have a sustainable but more gradual growth curve. That means they often lose out, even if they have a greater potential to deliver value in the long term.

Despite the huge potential of women-led enterprises, very few investors are actively trying to close the funding gap. A handful of women-led VC firms support female entrepreneurs, but, given the chasm between the amount of funding going to women and the amount going to men, we need to do much more.

We are collaborating with a pioneering impact investor who pledged $1 million to kick off the Women’s Capital Collaborative (and who wishes to remain anonymous). We also received a $1 million donation from a generous mother-daughter pair, and we are raising an additional $2 million. We will begin deploying integrated capital to support female entrepreneurs in the coming months.

We are committed to diversity and inclusion, and have a strong pipeline of diverse, women-led social enterprises that could be a fit for the Collaborative. We’re looking for entrepreneurs who have proven they can leverage their enterprise to solve an environmental or social problem or to empower women and girls, and who have an inclusive leadership and management approach.

Veritable Vegetable needed more space to meet growing demand for their services. They found a warehouse rental, but it needed $4 million in renovations — and because they reinvest all revenues back into the company, they lacked the down payment required for a loan. RSF pulled together a combination of grants, a loan from our Local Food Collaborative, and loans from our funder network to provide the cash needed. We then made a $1.6 million term loan to the company and brought in one of our banking partners to do the same.

As a result, Veritable Vegetable is able to continue to grow while maintaining quality and pursuing initiatives such as a program to better serve smaller customers, many located in food deserts.

As our lead donor has said, “Women are not equally invited to the discussion table. Their knowledge is not engaged, and that is a real loss to our society.”

We can’t afford to wait for venture capitalists to wake up and start funding women-run enterprises, so it’s encouraging to see others also stepping forward with efforts to support women entrepreneurs. We are collaborating with as many people as possible to create a more balanced economy that works for everyone. Solutions such as the Women’s Capital Collaborative can ensure that women get the funding they need and deserve. That will be good not only for them, but also for our communities and the economy as a whole.

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