Why do female entrepreneurs receive less funding than their male counterparts? In this solo episode, Marcia focuses in on the various factors contributing to the lack of funding for women, including biased questions during the fundraising process and the perception that women start slower-growing, less scalable businesses. She also explores the importance of diversifying the pool of investors and expanding networks to create more opportunities for women in the startup world. Marcia highlights research findings and shares insights on how female entrepreneurs can navigate the funding landscape more effectively. She also discusses the upcoming documentary "Show Her the Money" and its mission to raise awareness and spark change. With a focus on creating a more equitable startup ecosystem, Marcia emphasizes the need for ongoing conversation, networking, and collective action to move beyond the current 3% mark and empower women to secure the funding they deserve.
Why do female entrepreneurs receive less funding than their male counterparts? In this solo episode, Marcia focuses in on the various factors contributing to the lack of funding for women, including biased questions during the fundraising process and the perception that women start slower-growing, less scalable businesses. She also explores the importance of diversifying the pool of investors and expanding networks to create more opportunities for women in the startup world.
Marcia highlights research findings and shares insights on how female entrepreneurs can navigate the funding landscape more effectively. She also discusses the upcoming documentary "Show Her the Money" and its mission to raise awareness and spark change. With a focus on creating a more equitable startup ecosystem, Marcia emphasizes the need for ongoing conversation, networking, and collective action to move beyond the current 3% mark and empower women to secure the funding they deserve.
Show Her the Money movie trailer: https://showherthemoneymovie.com
Get tickets for Opening Night in Philly here: https://www.tickettailor.com/events/thewomensfilmfestival/993793#
Connect with Catherine Gray on LinkedIn: https://www.linkedin.com/in/catherinelgray/
Read more from Dana Kanze here: https://hbr.org/2017/06/male-and-female-entrepreneurs-get-asked-different-questions-by-vcs-and-it-affects-how-much-funding-they-get
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Marcia Dawood:
Hi everyone. Marcia here. I wanted to bring you this short solo episode today, September 21, because tonight is the US. Premiere of the documentary Show Her the Money at the Women's Film Festival in Philadelphia. This film has set out to bring awareness to the unbelievable lack of funding going to female entrepreneurs, which is not a new topic for this podcast. Unfortunately, even though this has been a topic of conversation for a while, the needle really has moved much past the 3% mark. And while the film is premiering in September of 2023, there will be a 50 city tour showcasing the film throughout 2024. So be sure to follow me and the podcast for all the details as those dates are released.
Marcia Dawood:
So women are roughly half of the population. You can't tell me that they only have 3% of the good ideas, not when their entrepreneurial ventures contribute so significantly to economic growth. So why is this happening? Well, there's several factors at play. One major issue lies in the biased questions and expectations that female founders often face during the fundraising process. We've talked on the show before about the research that was done by Dana Kanzey, which was published in the Harvard Business Review, and it shows that women founders are more likely to be asked prevention focused questions, which can put them on the defensive and hinder their chances of securing funding. On the other hand, male founders tend to receive promotion focused questions which highlight growth potential and can lead to more significant investments. The good news is that if women tend to answer the questions with promotion focused answers, even though their prevention focused questions were asked, they can secure more money. So let's unpack that a little bit more about promotion focused questions and prevention focused questions.
Marcia Dawood:
So for example, somebody could be asked a promotion focused question like, how are you going to increase your revenues this year? And that is more promotion focused, something that's more positive. And a prevention focused question could be something like, how are you going to mitigate the risk of being able to make sure that you can still generate revenue? Same basic question they're asking about how your revenue is going to be for the year, but it's a little bit different in how it's phrased. So that's what they mean by a promotion versus a prevention focused question. Interestingly enough, in the study, it was found that both women and men who were asking the questions, the potential investors in the audience were actually asking prevention focused questions to women equally. This wasn't like, oh, men are so bad and they're the ones who are asking the prevention focused questions. This is really across the board of a biases in all humans. So interestingly enough, we just have to start to be more conscious about how we're talking to each other. And then also entrepreneurs need to know that how they answer those questions, they can flip that around to answer with more promotion focused answers so that they can get better outcomes.
Marcia Dawood:
So what are some of the other reasons why women get less funding? Well, we need more check writers that look like them. We're not going to change the amount of funding going to underrepresented founders of any kind until we change the people who are writing the checks. We need more people to get in the game and we need more people to be backing the types of entrepreneurs that they want to see succeed. Another reason why women get less funding is because there's a perception that exists that women start slow growing, less scalable or what we call lifestyle businesses that are not attractive to venture capitalists or angel investors who are seeking significant financial returns. Now sure, there's lots of local businesses that are owned by women that probably aren't in the realm of what venture capitalist or an angel investor might look for as far as scalability. But that doesn't mean that there aren't plenty of women out there who are working on different businesses, different inventions, different amazing technologies, amazing medical breakthroughs that really need venture capital and angel backing and they're not getting it because of this preconceived notion of some kind of a lifestyle or non scalable business. And another reason I'll mention before wrapping up is the network limitations. So access to capital is often closely related to pre-existing personal and professional networks and connections.
Marcia Dawood:
So men have generational networks out there. They've been doing golfing and country clubs and different alumni associations for just a lot longer than women have. This is nothing against men and it's not like we're trying to say that that's bad, it's actually great and women are getting there but we just haven't been in the workforce and we haven't been going to college and getting graduate degrees and all of those things for as long as men have. So we need to catch up and we're working on that. But that is one of the limitations because usually when people are going to fundraise, they are going out to their network, they're talking to whoever they know who can introduce them to the next person, then the next person. And that just doesn't happen as easily for women right now as it does for men. So we need to find our own golf course as I call it. We need to find our networking places where we can help each other and we can network with people of all genders.
Marcia Dawood:
This isn't like oh, women need to be networking and men need to be different. No, we need to network together but we just need to increase the networks and the access to capital that women can get to. This is an important topic and we need to keep talking about it so that we can make a change and get that number to move past the 3% mark where it's been for way too long. So if you go to my website Marshadawood.com. You can get a free handout outlining the reasons why women do get less funding when you sign up for the mailing list. And being on the mailing list will get you all the information that you will need for the Show Her the Money film tour, which is going to be happening in 2024 because the film is really aiming to do just that. Help us to create the change the solutions that are needed just by bringing awareness to the problem. Catherine Gray is the amazing executive producer on the film and this is not the first time that she's made a documentary in order to bring awareness to a significant problem.
Marcia Dawood:
She is actually a master at bringing awareness to problems. The documentary that she made several years ago helped to make sure that gay marriage was legalized in many of the states that it is today. The bottom line is we need to get more people involved in the early stage investing game and you can get in the game too. If you haven't seen my TEDx Talk Do Good while Doing Well, which I did at TEDx Charlotte in October of 2022, please go to my website and check that out. You will see that I talk a lot about how anyone can invest in change, especially since the SEC has changed the rules to allow people to do equity crowdfunding for as little as a $50 investment. But I also do talk about the lack of funding that goes to women. So you can check that out on my website marshadawood.com. So please follow me and the podcast on social media links will be in the show notes to find out all the cities and dates where this film Show Her the Money will be shown throughout 2024.
Marcia Dawood:
And of course, all of the interesting things that we're going to be talking about on the podcast throughout the rest of 2023 and into 2024. Now that we are having weekly episodes, thanks for listening.