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How female founders can find funding for their businesses

How female founders can find funding for their businesses

Posted: Mon 1st May 2023

It's fantastic to see more female founders in Ireland winning investment for their businesses. In 2021, 55 female-led tech start-ups and scale-up businesses raised €230 million via various forms of funding. And that figure was up 120% on 2020 (€105 million), according to a report by TechIreland.

However, funding that goes to all female-founded businesses is still extremely low. In 2021, it accounted for just 2% or $64 billion of venture-capital funding.

If you're not sure how to go about growing your business, or are struggling to raise funding, you're not alone.

What funding is available?

  • Venture capital (VC). A private-equity pool of investment funds for businesses showing long-term growth potential. High-risk, so VCs take a significant share of company equity.

  • Angel investment. A high-net-worth individual uses their own money to support small start-ups, in exchange for ownership equity in the company.

  • Loans. A lump sum from a bank repaid with added interest, from €1,000 to several million. Terms vary from a one-month repayment up to 15 years.

  • Grants. Often awarded by the government, there's no need to repay. Apply with a business grant proposal backed up with a realistic business plan, sales projections and cash-flow forecasts.

  • Crowdfunding. A large number of people who each contribute a relatively small amount, typically via the internet from platforms such as Seedrs, Kickstarter and Crowdcube.

The challenges around winning investment

Lack of gender diversity

Founders are often presenting pitches to a male-investor-only room. The 2022 European Women in VC report states that in western Europe, 81% of general partners at VC firms are male.

Dr Zara Nanu decided to go down the traditional investment route to fund her business GapSquare, a tech company that helps to build truly inclusive workplaces. She says:

"People are confusing me for the waitress, making pitching very uncomfortable…to investors that are a lot of times male, white, middle-class men who would challenge the existence of the gender pay gap to begin with."

A study of the TechCrunch annual startup-funding competition found that VCs also posed different types of questions to male (gains, promotion questions) versus female founders (losses, prevention questions) – which had substantial consequences for funding.

Certain sectors are seen as higher-risk. Healthcare (making up nearly 50%), education and social services are more "risky" than technology or manufacturing, and lack networking and mentorship opportunities.

Sarah Turner, co-founder of Angel Academe, is combating this issue with her female-focused investment network. She says:

"If you're a female founder presenting a non-traditional business, we don't have the successful role models of women. All the stereotypes point to Mark Zuckerberg and Bill Gates and people like that."

Doing everything, all at once

The 2022 Global Gender Gap Report found women spend more time (55%) on unpaid work as a proportion of their total work, compared to 19% for men.

Sharmadean Reid, founder of The Stack World and WAH Nails, recognises an expectation to be the face of the business "which is actually a marketing job". She adds:

"People don't realise how time-consuming it is to also be the marketing lead influence of your business. Whereas I feel like male founders are allowed to just spend money on paid ads."

What needs to change to get investments?

The investment culture within VC firms needs to be more female-inclusive. Sarah Turner believes:

"We've got to give speakers the confidence to perform their best. Having more women in the room is just a vital component of that."

Having more women signing off on investment decisions is an important step, too. Michelle Kennedy is the co-founder of tech company, Peanut, a safe community for women to share advice and support on fertility, pregnancy, motherhood and menopause. She says:

"Within VC funds, even if you've got women associates and partners, unless you have women on the investment committee who can say yes or no to deals, then deals will fall off there."

In response, entrepreneur and angel investor Emmie Faust set up the network Female Founders Rise. She says:

"We have so much insight, expertise, and value to share, and we can do that in a space that feels safe.

"We know that warm intros work much better, so it's really important that as female founders we can widen our networks."

What female founders can do now

Reach out to your current network

Michelle You, co-founder of Songkick, decided she wanted half of her fundraising for her second company Supercritical to come from women. She says:

"I asked women in my network who had never invested before. I just told them: 'I want you to invest in my company.'"

Don't be afraid to reach out to your current network, even if they haven't invested before.

Search online for investors

Non-traditional routes can help prove your concept. Rushina Shah used social media, and says:

"Initially, I reached out to my Instagram followers, which sounds ridiculous, as I only had about 1,000 followers. I got four people to respond to me on Instagram, and they ended up all being investors.

"It got the business off the ground, and I was able to prove the concept."

Find angel investors in unexpected places, search online, or contact people you know via social media.

Join accelerator programmes and pitch-practice events

Sarah Norford-Jones, co-founder of private messaging app Yeo, took part in a rewarding cyber-security accelerator. She says:

"We got to bounce ideas off from that experience, and we completely pivoted our business."

A successful pitch sells the benefits of your product, but it helps to think outside the box if you're pitching a female-focused product to men.

Rushina Shah remembers the way two female founders pitched their lingerie company. She says:

"All of the VCs in the room were men. They were trying to pitch lingerie and these men didn't understand the problem they were trying to solve.

"They said, 'OK, put those shoes on.' And the men said, 'Well, this is a size too small for our feet.'

"And they said, 'Well, put them on for the duration of the pitch because that's how women feel when they're wearing the wrong bra.'"

When you're practising your pitch, experiment with answering prevention-style questions.

Get support from female-focused organisations

Find investors who can help you grow. Look for female-focused investment firms such as Angel Academe and members of the Investing in Women Code, who are committed to supporting female entrepreneurs.

Gain valuable founder wisdom by joining a free network such as Female Founders Rise with Emmie Faust. Emmie says: "We provide resources such as masterclasses on funding, and pitch deck reviews."

Final thoughts on getting funding

Getting funding is a process, but your options don't have to be limited. Make sure you have the latest financial data for your business to show potential investors.

To guarantee you can pull out the details whenever you need them, choose software that grows with your business.

Get started with Sage Accounting

Sage Accounting helps you make sure your financial information is always accessible to you, your investors, and anyone you meet in an elevator! Find out more

Enterprise Nation has helped thousands of people start and grow their businesses. Led by founder, Emma Jones CBE, Enterprise Nation connects you to the resources and expertise to help you succeed.

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