A Powerful Workforce
According to the Pew Research Center, young women in America are outpacing young men in America in the pursuit of a four-year college degree and the expectant economical and social gains often attributed to it. Simultaneously, women’s entry into the labor force has grown even as men’s participation in the labor force has seen recent declines, whether due to disillusionment with the job market, barriers to entry due to lack of educational opportunities, or other mitigating factors.
With women’s continued pursuit of education and employment opportunities, it should be apparent to investors that investing in women is paramount to future success. Yet female-led businesses continue to receive less funding than male-backed initiatives, despite research indicating that women-led startups outperform male-owned companies.
The reasons for this disparity between investment in women despite women’s return on investment are plentiful. There is, of course, inherent gender bias underscored by persistent patriarchal norms. But there’s also that many women-run businesses operate in sectors investors either haven’t heard of or have overlooked. A lack of knowledge about those sectors presents investors with a barrier to entry and forces women investors to do extra legwork in terms of getting would-be investors up-to-speed. So, how can investors better position themselves to invest in women-led businesses? And how can women-led businesses position themselves to be noticed by would-be investors?
Start With Startups
Until recently, placing your funds in a powerful tech company once seemed a surefire path to success. But as 2022 has seen a slowdown in the tech industry with tech companies like Twitter, HP, Amazon, and Meta laying off tens of thousands of workers, tech may no longer be a sure bet for the savvy investor’s financial investments. Instead, investors may be better served looking into often overlooked angel investment opportunities.
Early-stage startups have found success even during the tumultuous 2022 market. While late-stage startups saw an increase of 10% between 2021 and 2022, early-stage startups saw an increase of 33%. Investor confidence in the ability of early-stage startups highlights the resiliency of these companies in uncertain economic times (time which some economists believe may persist well into the upcoming 2023 fiscal calendar year).
Startups in this stage of their business often run lean. Garnering success while running lean in an already tight labor market can be a signal to investors that such businesses understand operational realities and won’t be sidelined by quick fixes or money grabs. A startup that can do more with little may seem less likely to overestimate their needs and blow their budget when more funding becomes available. This can be appealing to angel investors looking to invest in promising young companies that may have received less attention than more established startups.
Overcoming Challenges
Backing startup businesses comes with its own set of challenges, one set being locating businesses to invest in. But investor networks can take some of the guesswork out of this process, as many such online portals offer databases of businesses looking to be paired with the right investor.
This is where the businesses themselves can do their part to signal their intention to investors. Landing a spot on frequented online portals better positions them to be seen by would-be investors. But the effort to get onto these portals will only be worth it if investors seriously invest in the women and women-led businesses that use these services.
The opportunity for growth is ripe if investors take the time to look beyond typical business sectors. As it stands, there are 167.5 million women to 164.4 million men in the United States. If investors are to succeed in the US, they’ll need to take into the creative potential of women-led businesses. And if they’re to outpace competitors, they’ll need to act fast.