Research shows that women entrepreneurs face three primary challenges in the business world – lack of mentors and social capital, a financing gap, and a tendency to be more self-critical and risk-averse.
All of these challenges were intensified by the pandemic, according to a report released Dec. 7 by the Arkansas Women’s Commission. The report noted that the Bentonville-based think tank Heartland Forward ranked Arkansas 46th overall in its Entrepreneurial Capacity Index, and specifically encouraged states “lagging in support of entrepreneurs” to “prepare people, particularly women and those with diverse backgrounds, to pursue and participate in creating a more equitable economy.”
The report went on to note common barriers faced by female entrepreneurs include:
- Gender bias: Overcoming the notion that women are not suitable for professional/executive/ founder roles
- Market misperceptions: Female entrepreneurs’ competency and knowledge of the market is often disregarded, as are the market opportunities they uncover
- An unlevel playing field in accessing startup and growth capital: Investors are more likely to invest in male-owned startups than female-owned startups
- A lack of female investors: The tendency to show favoritism to people who are “similar to me” becomes a barrier when women attempt to gain venture capital funding
- Socio-cultural barriers: Women perform, and are expected to perform, in caregiving and domestic roles in addition to seeking professional advancement
- Lack of female mentors and women who have “been there” and can offer practical advice
- Lack of access to business/social networks, which means female entrepreneurs lack access to mentors, social capital, and startup capital.
- Access to quality child care
- Lack of capital for expansion, whether of the workforce or into new markets.
- Fear of failure: Women are more likely than men to fear failure when starting a new business, particularly when those around them already doubted their capabilities. As a result, some women operate from a place of fear instead of confidence.
Two priorities identified in the report — increasing equity in the labor force and increasing mentorship for women — are part of the focus of the VCWoman Achieve program. The statewide mentorship program hosted by The Venture Center, Woman Run by Wright Lindsey Jennings, and other community partners pairs up-and-coming women entrepreneurs with experienced professionals to help build their businesses and provide them with examples of success to emulate.
Supporting women-owned businesses allows our economy to innovate, grow and become more dynamic, and provides Arkansas with a competitive edge. Research by Boston Consulting Group found that the global economy could experience up to a $5 trillion boost if female entrepreneurs received as much funding as male entrepreneurs. Other research found that having women founders also increases opportunities for success for other women.
Women entrepreneurs are also a good bet. According to a study by the Kauffman Fellows Research Center, every dollar of investment raised for female-run startups generated 151% more revenue than male-run startups.