How To Access Funding As A Woman Entrepreneur In South Africa
Funding is the second biggest hurdle entrepreneurs face, and women struggle to secure funding even more than men.
Women in South Africa earn 27% less than men – that's R55 earned for every R100 their male counterparts earn, according to global market research firm Ipsos.
The gender pay gap is wide. It's not surprising then to see an increase in the number of female entrepreneurs looking to boost their income by becoming entrepreneurs or business owners.
It's unclear whether women are earning more or less than they might have in the corporate world but what we do know is that raising funds remains one of their biggest challenges.
The Real State of Entrepreneurship Survey (the largest annual entrepreneur survey carried out annually by Seed Academy) tells us that funding is the second biggest hurdle entrepreneurs face, right after finding customers. While government has prioritised the advancement of women-owned businesses, there is still a long way to go when it comes to funding them.
Women are judged on their performance, not their potential
It's a well-known phenomenon that women struggle more to get funding than men, who are perceived to make better entrepreneurs. Studies reveal that female entrepreneurs receive less than 3% of all venture capital funding.
In part, this may be owing to the reality that very few women are actually at the helm of start-ups but mostly, research suggests that women tend to be judged on their performance while men are rated on their potential.
Men are believed to be able to create more influential networks, hold higher-ranking positions and of course, command more money, which is intrinsically linked to higher value. Basically, women end up asking for more but receiving less.
Demonstrating your worth is what will make you money
Venture capitalists tend to be mostly male for the same reasons. Those with money to invest pick projects that they can relate to.
The good news is that funders are ultimately focused on making money, so if women can break through cultural limitations and tangibly demonstrate their worth, venture capitalists may just sit up and realise that discrimination only gets in the way of opportunity.
Business traction will pique investor interest
Women need to focus on business traction to pique investor interest. The ability to show an increase in incoming orders and that their business is bigger than just one person is vital. Of course, what is also key to showing growth is being clear about the key financial drivers of their business and talking comfortably about them. In my experience, this is an area of weakness for many women.
Focused marketing will go a long way too, as will a clear understanding of target markets and key business differentiators.
It is not always possible to wait until everything is perfect before looking for funding. Women tend to be perfectionists so I always advise them to work at being confident and avoid holding back until everything is perfect.
It will take time before we see the pay gap close and female entrepreneurs flourish at the same rates as their male colleagues.
Venture capitalists need to step up their game too when it comes to diversifying their portfolios. In my view, women should support other women, applications should not require the disclosure of gender and partner voting should be unanimous.