Funding Issues and Options for Women Entrepreneurs
Traditional Venture Capital
Problem: it is an old boy's network and access to it is
limited.
The traditional Venture Capital (VC) structure is not conducive
to women's businesses which tend to be passion-driven, and less
focused on exit strategies requiring high returns in short
periods (5 years or less). Women typically want to balance money
with fulfillment and may focus less on high returns if this
means giving up specific lifestyle characteristics.
Solution: Some venture capitalists that "think out of the
box" and focus on funding women owned companies are alternatives
to consider.
Some of these VC firms include: - Boldcap, www.boldcapventures.com
, is funded by women for women. Ladies Who Launch featured Amy Wildstein who runs the fund.
- Solera Capital, www.soleracapital.com.
- Mixcreative, www.mixcreative.com,
focuses on funding creative businesses and was started by two
women.
- Funk ventures, www.funkventures.com, has
a strong interest in funding women-owned companies.
- Springboard, www.springboardenter
prises.org, is a nationally recognized business plan contest
that matches venture capitalists together with women-owned
companies.
Alternatives to Venture Capital
Using One Business to Fund Another
Low overhead businesses, like service businesses, with which
women tend to have success, are great starting points that can
lead to more product-oriented businesses. These businesses often
provide launching pads for women to become familiar with an
industry, build relationships in the industry and lead to a
natural progression of growth in other areas.
For example, Ladies Who Launch feature Alison Chozen funded her
company Sterling Truffle Bar with her event company, Mosaic. See her story. Another example is Ladies Who Launch
feature Holly Bohn who used her offices services company to fund
www.seejanework.com
(stylish office products). For more on her story, click here
Franchise, Sales Rep and Independent Contracting
Opportunities
Ladies Who Launch believes this is a great model for women who
want to start their own businesses while having maximum
flexibility and low financial risks. This model allows women to
be creative, to have control and to have flexibility while
making money. There are many options out there and some are
especially great for women who may have an idea but do not
necessarily want to reinvent a wheel that may already exist. For
Ladies Who Launch recommendations of companies that offer these
opportunities, please see
Entrepreneurial Opportunities with Lower Risk and Maximum
Flexibility.
Doing It on the Side
In funding terms, this means working another job to support
oneself while launching an idea on the side. Working freelance
or independent consulting jobs offers maximum flexibility to
squeeze in start-up ventures.
Business Plan Contests
Such contests are a great way for women to not only get money
but also to validate their idea. Usually these contests will
kick off major contacts that can help new businesses move
forward at a faster pace.
Ladies Who Launch favorites include: - Springboard (www.springboardenter
prises.org) (founders also founded Boldcap Ventures
mentioned above).
- National Institute for Entrepreneurship's
Venture Bowl - Ladies Who Launch featured executive director, Suzanne Isack.
-
NY Small Business Awards
Friends and Family
Women are great at multitasking due to their non-linear thinking
instincts, so starting a business while raising a family may not
be as far-fetched as it seems, but rather a logical starting
point. For examples of women who did this, Ladies Who Launch
features include: Molly Snyder and Jane Scott Hodges. These women started businesses that
took off while starting families.
Funding through friends and family is a great alternative for
women because, unlike traditional venture capital, which
requires giving up a huge degree of control while answering to
strangers, with this option, they can garner financial support
without losing as much control or meeting stringent reporting
requirements which may hinder them from focusing on moving their
businesses forward. Some examples of Ladies Who Launch features
who used this as their primary funding means: Suzy Jurist, Lela Rose and Lizzy Flannagan.
Debt Structure
It is becoming easier for women to find and obtain loans from
different sources. Loans are a great way to minimize control
issues and also to force women to think long term and develop a
revenue plan that works. The Small Business Association is one
great way to obtain debt financing.
Starting Small, Growing Slowly This is a funding
mechanism because women can manage their growth with money
coming in and can grow slowly. Patience is a virtue. Women are
often balancing and juggling so much anyway that tempered growth
is a natural conduit to their lifestyles.