Show Me the Money: Funding Your New BusinessMay 13, 2022
If you are a woman thinking about starting a business, you're in good company. Recent studies show that women own 31% of the small businesses in the nation - that’s just over 12 million start-ups. In fact, over 1,200 new businesses are started by female entrepreneurs EVERY DAY. Globally, women account for over 250 million of the 580 million entrepreneurs around the world. That’s a lot of motivated women looking to grow and succeed. And all of these women, regardless of their industry, have one thing in common – they all need money to get their business off the ground.
Whether you are looking to start a tech company, a consulting business, or a home-based baking concept out of your home – you need some level of funding to start your business. You may have the idea, the passion, and the drive to successfully grow your business - but you may not get far (or anywhere) without money. So, how do you get the funding you need for your business?
If you research “best funding options for startups”, you are likely to find multiple articles/websites offering similar information. There are some good “generic” ideas that could work for any new business, as well as funding options specific for female entrepreneurs.
Standard Funding Options
(1) Self-funding: This is your money from a savings account or a 401k, or wherever you have money invested that you decide to withdraw and put towards your business. Most new business owners are also their own investors – studies show that at least 75% of new startups are funded by the founder. And more specifically, most new businesses started by women are self-funded.
(2) Family/friends/acquaintances: This is money capital from family, friends, and acquaintances who want to help you get your business off the ground. This type of funding may be considered an investment, a loan, or “help” from loved ones. According to statistics, at least 20% of new businesses rely on funding from friends and family.
(3) Crowdfunding: This particular funding option is gaining in popularity. In fact, over 20% of new business funding in 2021 was sourced through crowdfunding projects. While this particular avenue may bring in capital for your new business, an average of 20% of crowdfunding projects are actually successful. The average campaign earns about $5,200. It’s worth noting that female-owned businesses are almost 70% more successful in crowdfunding than male businesses.
(4) Small business loans: Funding a new business with the help of a loan is another popular standard option for entrepreneurs. More than 50,000 small business loans were issued in the United States in 2021, totaling $36.5 billion. However, only 30% of female entrepreneurs are approved for business loans. Surprisingly, women typically ask for over $35,000 less than men, but often pay higher interest rates.
Other general funding options for new startups include venture capital firms and Angel Investors. Unfortunately, only 2% of women-owned businesses secured any funds through the venture capital avenue. The bright side is/are the investment firms, angel investors, and non-profit organizations who are willing/eager to fund business ventures founded by women:
- The Tory Burch Foundation (non-profit organization that helps female entrepreneurs)
- The Red Backpack Fund (funded by the Sara Blakely Foundation & Global Giving)
- 37 Angels (investment firm that wants to close the gender gap in start-up investment)
- The Amber Grant Foundation (non-profit that helps new women-owned businesses)
- Cartier Women’s Initiative (global entrepreneurship program that awards funds to female entrepreneurs)
Starting a new business is challenging enough without having to stress about the money to start and run your dream. There are multiple avenues and options for female entrepreneurs to get the capital they need for their startup, especially now. It’s time to stop daydreaming about that business idea and make it happen! Get in touch with me.
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