It’s time to invest in women, who hold up half the sky
A single mother walks into a bank hoping to get a loan for the small business she wants to start as a caregiver. Her business will add value to her community, but she doesn’t have enough collateral to secure the loan. The projected returns in her business plan also don’t meet the bank’s requirements. She walks out without the financing she needs. This would-be entrepreneur’s story is far from…
Women hold up half the sky, and their potential as entrepreneurs is vast, yet a significant funding gap persists. Despite progress in health, education, and employment, women entrepreneurs in the United States and globally still face a financing gap of $1.7 trillion annually. This gap is not a reflection of women's entrepreneurial capabilities, but rather a manifestation of structural barriers they encounter when establishing and expanding their businesses.
These barriers often hinder their ability to access the financial products that best suit their needs and limit their networks for capital, mentorship, and market access.
Research indicates that women-founded startups generate substantial returns, with women-owned businesses producing 78 cents of revenue for every dollar raised, compared to 31 cents for male-founded businesses. Moreover, women entrepreneurs can generate substantial economic ripple effects within their communities, driving job creation and promoting positive economic impacts.
However, these benefits are often overlooked or underestimated. Traditional investment practices may also overlook the broader value that women entrepreneurs bring to the table beyond mere revenues and profits.
Philanthropy can play a critical role in addressing this funding gap by supporting women entrepreneurs who are underserved by the investment landscape. In addition to providing capital, philanthropy can offer capacity-building support, such as financial readiness, business growth, leadership development, and mentoring. The Cherie Blair Foundation for Women, for example, recognizes the importance of addressing the gender gap in entrepreneurship beyond just capital.
They provide programs focused on financial readiness, business growth, leadership, and mentoring to help women entrepreneurs build the skills and networks needed for success.
Businesses, too, have a role to play. The United Nations Global Compact encourages the private sector to expand women's access to capital, markets, and leadership opportunities, while striving to integrate women-led businesses into global supply chains and financial ecosystems. Recognizing the diverse challenges women entrepreneurs face, organizations like The Acceleration Project (TAP) provide tailored support for businesses owned by single mothers.
TAP offers free programs, mentorship, and guidance to help these entrepreneurs navigate the unique challenges they encounter.
However, the existing systems are not designed with women entrepreneurs in mind. Addressing the funding gap for women entrepreneurs requires the private sector to reimagine the supports needed for these individuals to thrive. Only by working together can we unlock the significant returns that come from investing in women entrepreneurs, ultimately benefiting families, communities, and economies worldwide.
Michelle Armstrong, president of the Ares Charitable Foundation, emphasizes the importance of bringing the private sector to the table to create lasting change for women entrepreneurs.
Written by urgent.news from Fast Company's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
