It’s long been conventional wisdom that women entrepreneurs have more trouble than male business owners obtaining venture capital for their businesses—especially in the high-tech world, where VCs, mentors and influencers tend to be male. But are the tides turning for women business owners seeking financing? Inc. says hope is on the horizon.
While only a decade ago, fewer than 5 percent of venture capital funding went to women-owned businesses, Inc. cites new data that this year, 14 percent of venture capital investments in the United States have gone to companies founded or co-founded by women.
In fact, contrary to that conventional wisdom I mentioned earlier, the growth in VC funding for women is especially promising in the ecommerce world. According to Inc., some 40 percent of ecommerce startups receiving VC funding were founded or co-founded by women—a whopping increase from less than 20 percent just five years ago.
Why is ecommerce such a hot spot for women founders getting VC?
One reason is that there is still lots of room for new startups in the industry. While it may seem as if there are a bajillion ecommerce businesses already, fewer than 10 percent of U.S. retail purchases are made online.
Another possibility: Women consumers are major online shoppers, which may have some VC investors thinking women entrepreneurs possess special insight into that market.
Overall, however, if you’re hoping to land VC, keep these three tips in mind:
- Focus on the financials. VC investors care less about your gender than your idea’s potential to make money—lots of it.
- Show scalability. Venture capitalists want to see that your business model allows for rapid growth without a huge investment.
- Make it a million or more. If you’re looking for less than $1 million, don’t play in the VC pool. Try pitching to angel investors, friends or family members instead.
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Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at email@example.com, follow her on Google+ and Twitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.