This two-part series explores coaching women entrepreneurs. Part One: Setting the scene. Angel investor and coach Bridget Connell reports
By Bridget Connell
The World Bank 2020 Goal of Universal Financial Access recognises that financial inclusion is a critical tool to promote economic growth. Yet universal access to finance has a huge gender gap. Women find it harder than men to raise capital to grow a business and are half as likely as men to start their own. Access to finance is one of the key reasons given.
Research by the consultancy firm, Development Economics, estimates that 2.7m women in the UK are thinking about starting a business. If a fifth of these women started one today, they could create 425,000 additional jobs by the end of 2020, and contribute £10.1bn to the UK economy. 1
Why is it happening?
On International Women’s Day (8 March), I spoke as part of a panel at Thomson Reuters in London’s Canary Wharf to a group of investors and entrepreneurs on the challenges women face when raising investment to grow their business. My view is that coaching and mentoring is key to addressing these challenges. In my experience as an angel investor, business mentor and leadership coach, there are three key themes: unconscious bias, access to the right networks and confidence.
Unconscious bias
The number one thing investors look for is the quality of the team. People invest in what they feel comfortable with, and invest in people like them. Harvard Business School and MIT research in 2014 found that 70% of investors were more likely to invest in entrepreneurial ventures pitched by a man than identical ventures pitched by a woman.2 This is a shocking statistic.
In the UK, 86% of angel investors are men, 14% are women3 and in the US only 6% of partners in venture capital firms are women.4 This means that the majority of available investment capital is held by men, and statistics show that unconscious bias negatively impacts women trying to secure investment to build and grow their own businesses.
Access to the right networks
Access to the right networks is critical when looking to raise investment capital. In her TEDTalk, Anne Ravanona, founder of Global Invest Her, jokes that women entrepreneurs have to go for 500 cups of coffee with the wrong people before they find the right investors. Men have to go for three.5
Being very deliberate about making time to develop new network contacts and gaining access to the right people is critical to being able to find investors. My observation is that women entrepreneurs can be very focused on running and growing their business rather than making time to deliberately network.
Confidence
Recent research from YouGov found that women cited lack of confidence as one of the key factors holding them back. One in three women didn’t feel ready to start a business, and one in five didn’t feel they had the right skills.1 This compares to 45% of men who did feel confident to start a business.6
The Diversity Task Force at the US’s National Venture Capital Association found that the pattern recognition is much higher for a male-to-male conversation than it is for a female-to-male conversation and, faced with this, women may find it more difficult to come across as self-assured when presenting their business idea to venture capitalists.4 In my experience of coaching women entrepreneurs, having the confidence to ask for enough money is also key.
Why should we care?
Funding women entrepreneurs is one of the biggest untapped resources to ignite our economy. Last year in the UK a total of 762 women-led businesses made between £1m and £250m in revenue, adding £2bn in economic growth across sectors.8 Evidence shows that diverse teams deliver better results. First Round Capital (early investors in Uber) found that companies with a female founder performed 63% better than its investments with all-male founding teams. Research from Chile shows that women are a safe bet for investors and banks as they save differently than men: they hold more savings accounts, pay back loans faster, default less often, and bounce cheques less frequently.7
As coaches and mentors how can we support our clients?
There is an urgent need for business mentoring and coaching to tackle financial inclusion issues and to support more women to start and then grow their own businesses. As an investor I look to see that business leaders are self-aware, and have surrounded themselves with good mentors and advisors.
The most critical success factor for women entrepreneurs is their ability to demonstrate a mastery of the business they want to start and to convey that with confidence and passion.
Key topics for coaching are:
- building confidence
- leadership skills
- personal resilience and stamina.
Successfully raising investment is a process that can be learnt. Access to experienced business mentors can help with this and help develop confidence around financial literacy. Mentors have an important role to play in helping develop networks by sharing their network contacts.
A final point for me is the importance of role models – women business owners who have successfully started a business and raised capital to expand. People like Martha Lane Fox, co-founder of Lastminute.com, Sarah Wood, co-founder of Unruly, the leading video ad tech business, who successfully raised investment to scale and last year sold the business for £114m to News Corp, and Pip Jamieson, co-founder of creative industries network The Dots who last year raised £1.5m of investment. And if you or a client are looking for more inspiration read the Founders4Schools Inspiring Women Insight Summary, which shows 814 of Britain’s most inspiring women who are running growing businesses with more than £1m in revenue.8
Funding women entrepreneurs is one of the biggest untapped resources to re-fuel our economy – coaching and mentoring is key to this.
- Next issue: In practice – themes and stories from supporting female entrepreneurs
- Bridget Connell is an executive coach, business mentor and angel investor concentrating on technology-based startups. @bridget_connell
FACT FILE:
| 50% Women are half as likely as men to start their own business. |
| 33% of women feel ready to start their own business, yet only one in five feel they have the right skills to get going. |
| 70% of investors were more likely to invest in entrepreneurial ventures pitched by a man than in identical ventures pitched by a woman. |
| 2.7m women in the UK are thinking about starting a business. If a fifth of these started one today, they could create 425,000 additional jobs by the end of 2020, and contribute £10.1bn to the UK economy. |
| 63% Companies with a female founder performed 63% better than companies with all-male founding teams. |
Top tips for coaching and mentoring women who are starting a business
- Encourage clients to be deliberate about making time to develop new, relevant network contacts
- Encourage clients to seek advisors and mentors to cover specific skill or sector experience to help build experts
References
1 Sunday Times, 29.5.16, Sheryl Sandberg “Take a leaf out of Grandpa’s book, ladies, and start up that business” http://bit.ly/2cVW4dY
2 Harvard Business School and MIT research, March 2014,“Investors prefer entrepreneurial ventures pitched by attractive men” http://bit.ly/2dUue7Z
3 UK Business Angels Association 2016 www.ukbusinessangelsassociation.org.uk
4 Financial Times, 9.2.16, Sarah Murray, “How confidence can help attract funding for women” http://on.ft.com/2dh66ro
5 Anne Ravanona, “Spread your talent to the world”, TEDxBarceolonaWomen http://bit.ly/2e55t8l
6 Women’s Business Council Report 20012/3 http://bit.ly/2dN8rde
7 Council on Foreign Relations presents women around the world, 2.3.16, Rachel Vogelstein, “Financial inclusion for women” http://on.cfr.org/2d5Bs6J
8 Founders4Schools, Inspiring Women Insight Summary http://bit.ly/2cW2mut