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June 2, 2014

Filling the Funding Gap for Women Entrepreneurs

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Photo Credit: Victor1558 via flickr

Women-led businesses are on the rise, yet these firms have traditionally been under-served by venture capital, angel investing and other sources of growth capital. Women receive less than 15 percent of all early stage capital, and even those fortunate few raise significantly less than their male counterparts, notes Deborah Jackson, a former investment banker turned angel investor.

To help change that, Jackson last fall launched Plum Alley, a crowdfunding, e-commerce and networking site for women entrepreneurs. In its first couple of months, the site has helped a dozen women raise more than $200,000 for their ventures.

Plum Alley is just one of a growing network of women-focused angel groups, accelerators and crowdfunding platforms arising to tackle that funding gap.

Angel networks such as Golden Seeds, 37 Angels, Launch Angels and NapTime have sprung up in the past several months to invest in female entrepreneurs, while established investors, such as 500 Startups, a Silicon Valley-based angel network led by Dave McClure, are upping their investment in women. Women’s investment groups are popping up far from money centers as well, including the The Jump Fund in Chattanooga and the Women’s Fund in southwest Florida.

Many of the founders of these groups—including Jackson of Plum Alley and Angela Lee of 37 Angels —are alumni of the Pipeline Fellowship, an angel investing bootcamp for women launched in 2011.

Building a base of female investors is important: more women investors means more women-led companies funded. According to the Kauffman Foundation, venture funds with women on their teams invest in women founders 70 percent of the time. And the investment pays off: women entrepreneurs bring in 20 percent more revenue with 50 percent less money invested, according to Kauffmann. And studies by the Center for Talent Innovation and others demonstrate that diversity at leadership levels increases performance and innovation.

But there’s more to it than that. Women often infuse their businesses with a social mission or purpose, for example. Zipcar and TaskRabbit—two sharing economy trailblazers—were founded by women. And Kiva, the pioneering microlending site, was conceived by Jessica Jackley in response to the challenges she witnessed on a trip to Africa.

On the global stage, it is widely recognized that girls and women are more effective at lifting themselves and their families out of poverty, so investing in them can have a multiplier effect within their communities and even nations.

If more women had more access to capital, says Jackson, “it would absolutely change the economy.”

In addition to funding, a whole ecosystem is arising to support female entrepreneurs. This includes training and support programs such as Girls Who Code, a non-profit that works to close the gender gap in technology, and digitalundivided, for women entrepreneurs of color. There are also bootcamps, such as one run by Springboard Enterprises—think of it as a Y Combinator for the X chromosome set.  Since it was founded in 2000, 545 female entrepreneurs have participated in the Springboard program, spawning success stories including Zipcar, iRobot, TheGrommet and Crowdnetic. (In contrast, sought after tech accelerators such as Y Combinator are notorious for their male-dominated programs).

The latest entry was launched, fittingly, with help from Plum Alley. As the founder of the NYTechWomen Meetup  Jenn Shaw witnessed sexism and ageism in the tech world firsthand. So she decided to create an educational program that would teach tech skills to women outside of key metro areas. On Plum Alley, she was able to raise $25,000 to jumpstart the venture, called Bella Minds. In February, Bella Minds held its first weeklong training program in Shaw’s hometown of Alliance, Nebraska.


Amy Cortese is an award-winning journalist and the author of Locavesting (Wiley, 2011), about the local investing movement and its potential to rebuild the economy, one community at a time. Her coverage of business, technology and social/environmental issues has appeared in Business Week, The New York Times, The New York Times Magazine, Mother Jones, Plenty, Wired, The Daily Beast, and many other publications. Used with the permission of ‘The Network, Cisco’s Technology News Site.’