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Start-Ups

Gender Discrimination and Financing

By Barbara Beauregard   |    December 7, 2016   |    12:38 PM

 

Is There a Gender Bias in Lending?

The research findings are contradictory — some studies suggest that there’s no gender discrimination in business financing, while others crunch the numbers and see an obvious gap in funding and loan consideration.

Simply put, it’s a bias that female entrepreneurs certainly could experience in their lives, and many have lived through this gender discrimination first-hand.

What options do you have to overcome this bias, though? As it turns out, you have several empowering courses of action.

Seek funding from financial backers with women on their team

A University of Michigan study didn’t find any difference in investments between male-led and female-led companies. However, the researcher did discover something very interesting: women-led ventures that were backed by venture capitalists with women as partners (even just one) performed better than those that were funded and advised by male-dominated teams.

For women-led firms, the rate of exit was also 25% to 30% lower. The gap completely disappeared for startups that received financing from venture capital firms with at least one woman partner.

So, if you’re looking to get funding for your business from the VC world, look for firms with women as partners. Their counsel could be a key ingredient to your future success, too.

Come prepared, and highlight other successful women entrepreneurs

Unfortunately, there’s still a gender bias in the business world. Some financial lenders will see a woman as unprepared, weak, less intelligent than a man, and a variety of other untrue and negative stereotypes. It doesn’t help that the media tends to focus on successful male entrepreneurs.

That’s why you need to anticipate these biases. Diligently prepare for all potential lender meetings, making sure you’re clear on your messaging, the value of your business, and other important factors.

Another tactic is to weave in stories of other successful women entrepreneurs. If you can do this in a natural-sounding way that’s succinct and concise, you’ll also be helping dispel gender myths for other women in business. There’s no point in name-dropping needlessly, so be sure to weave in these pieces of information into your conversation or presentation very carefully.

Try to identify a few female business leaders you can relate to. This list from Investopedia should be a good kickstart for your brainstorming.

Focus on networking and building connections with investors

People tend to support people that they know or have something in common with, and it’s the same in financing. Because the world (business and otherwise) is largely dominated by men, it’s easy to see how that leads to bias (whether intentional or unintentional). In fact, fewer companies are led by women than by men named John.

With that in mind, get out there and grow your network.

Explore alternative sources of funding

Big banks and venture capital firms aren’t your only options for receiving funding for your next business endeavor.

The Small Business Administration, like the name suggests, specializes in helping small businesses succeed. They can even help you get a loan. The SBA is an excellent resource for all small businesses, and you might even want to consider using their resources first, before approaching banks and VCs.

To learn more about the SBA and what it can do for you, check out some of Intelligent Office’s resources on how to leverage the SBA for entrepreneurial success.