Women running their own business is nothing new and the percentage of all small businesses owned primarily by women has been growing significantly since the 1970s. Even in industries that aren’t considered traditionally women-oriented, gender diversity is growing among ownership.
It’s alarming then that women only receive about 2% of all venture capital funding, a paltry amount given that firms owned by women make up about 20% of those looking at venture capital funding. Digging a bit deeper into it, there is no obvious answer as to why this is, other than the fact that the vast majority of VC funding happens in California and New York, specifically in areas where men outnumber women.
Perhaps female entrepreneurs ask for less in VC funding than their male counterparts on average, but even factoring that in, the number shouldn’t be anywhere near 2%.
As anyone who has ever given a venture capital pitch can tell you, success often hinges on the presentation. For the most part, you’re presenting your plan to older males who have probably heard hundreds of pitches, which can be intimidating for a someone walking into a VC meeting room for the first time. The more someone has in common with the decision makers, the more likely they are to relate to them. This may explain why Caucasians get more than 60% of all VC funding as well.
Financing a business is no easy task for anyone, regardless of race or gender, it just seems like the scales seem to be tipped a little bit more away from women in the VC world.