While women have made great strides in entrepreneurship over the past decade, female entrepreneurs still lag behind their male counterparts when it comes to raising capital. While the goal remains to close any funding gap that exists in this regard, a positive upshot has been that many women business owners have proved to be resource-efficient by necessity.
This is according to Gugu Mjadu, spokesperson for the 2019 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who refers to a report published by Barclays and the Female Founders Forum, which found that men are 86% more likely to access venture capital investment than women. “Yet global research shows us that women tend to do better with the business finance they get,” says Mjadu, citing a recent US study by Boston Consulting Group (BCG), which found that while women generally receive less finance, they produce more revenue per dollar funded.
One local female entrepreneur, who has first-hand experience with the challenge of raising capital, is Phillipa Geard – the CEO and founder of RecruitMyMom, and a previous Entrepreneur of the Year® competition category winner. “There are companies and investors who have capital to invest, but the right information is hard to find – especially for women, who unfortunately tend to be less connected than men are in this regard.” Geard admits that she was unfamiliar with the whole concept of business finance at the start of her entrepreneurial journey. “I had no idea where to start looking for capital to start a business. I just had an idea and never thought about the fact that raising capital was an option. As women, we are often risk averse, so anything requiring risk, felt scary.”
To help other aspiring female entrepreneurs who may share Geard’s sentiments, Mjadu offers the following tips on how to gain access to business finance:
1. You’ll never get business finance if you don’t apply
A major contributing factor to the gender funding gap, is the mere fact that not enough women apply for capital, says Mjadu. “As Phillipa mentioned, women tend to be more risk averse than men, which is not necessarily a bad thing. However, this risk averseness often prevents female entrepreneurs from taking the first step and applying for capital, which can limit the growth of an otherwise thriving business.”
2. Explore all possible funding avenues
“Whether it be through savings, business loans, financial grants or support from family or friends, it is important to explore all of your options and identify the best funding avenue for you and your business,” says Mjadu. “There is no one-size-fits-all when it comes to financing a business, and you’ll need to do your research and talk to other entrepreneurs to find out what’s out there.”
3. Network, network, network!
As a first step, Mjadu urges female entrepreneurs to get out there and connect with other business owners and potential financiers. Echoing this sentiment, Phillipa adds that any exposure is helpful in this regard. “Start networking so that you can find out who to speak to about access to business finance, but to get the ball rolling, look for ways to gain exposure. For my business, I did this through entering competitions like Entrepreneur of the Year® to raise awareness about the business.”
“As we close off Women’s Month, it is important for female entrepreneurs to recognise the importance of their contributions to South Africa’s future economic growth. They need to challenge the status quo by approaching business financiers in their numbers with the view to start and grow their businesses and close any funding gap that may still exist,” Mjadu concludes.
The Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS aims to honour, benefit and uplift South African business owners in the SME space. Now in its 31st year, the competition celebrates excellence in entrepreneurship, serving as an inspiration to others to succeed in the world of business. Visit www.eoy.co.za for more information.