Female entrepreneurs failing for the lack of support networks
New figures show that support networks are crucial to success, reports Harriet Alexander
BRITAIN’S female entrepreneurs are failing because they don’t have the networks they need to thrive, a report commissioned by Facebook has found.
Research by the social networking site found that female founders who were part of a business community were twice as likely to forecast growth compared to those who were not. Despite this, half of female founders said they were not part of such a network.
The research revealed that women were aware of the benefits, with 49 per cent believing the opportunity to connect with like-minded people would help their business. However, a third were unsure how to find groups, while 31 per cent said the business environment was better for male leaders.
It comes as The Telegraph’s Women Mean Business campaign has been calling for government intervention to help female entrepreneurs, with the Treasury ordering the first ever “serious review” into the funding gap preventing women from becoming business leaders. Nicola Mendelsohn, the European vice-president of Facebook, said growing a business was “particularly tough for female business leaders”. She added: “Being part of a business community can make all the difference.”
Delia Awusi’s office may not, at first glance, appear to be the beating heart of American business. On a tree-lined avenue in the pleasant residential Brooklyn district of Fort Greene, it feels a world away from Wall Street. And yet, through her doors pass hundreds of women, all seeking help to build their own enterprise.
The Women’s Business Center she runs is one of five currently operating in the New York area. They form part of a network of more than 100 such centres nationwide, which provide free workshops, training, advice and mentoring to would-be female entrepreneurs, supported by the US federal government through the Small Business Administration (SBA).
“Women have different challenges to men – access to capital, knowing how to promote ourselves, writing business plans,” says Awusi, who worked for an investment firm before moving to the non-profit role four years ago. “That’s where we step in. It’s incredibly rewarding; you have a direct impact on people.”
The first centres for female entrepreneurs were established 30 years ago, thanks to the Women’s Business Ownership Act, signed by Ronald Reagan in 1988. It scrapped outdated laws that required women to have a male relative co-sign business loans. It also saw the formation of the National Women’s Business Council (NWBC), through which a bipartisan group of women advised the president, Congress and the SBA on policy.
Simply, it made it easier for women to become entrepreneurs in their own right. The impact has been clear.
As of 2017, more than 11.6million firms in the US are owned by women, employing nine million people, and generating $1.7trillion (£1.3trillion) in sales, according to the National Association of Women Business Owners. One in five companies with a revenue of $1million or more is owned by a woman.
In the UK, the picture is rather more bleak. A new study by Facebook, published today, shows why support networks are vital to women’s entrepreneurship. The report reveals that female founders who are part of a business community are twice as likely to forecast growth, compared to those who are not. However, 50per cent are not part of such a network, despite believing the opportunity to connect with likeminded people would benefit their business, while a third (30per cent) said they wouldn’t even know where to find one, and agreed the current business environment is better set up for male leaders.
Research by the Women’s Business Council has shown that the economy is missing out on more than 1.2million new enterprises due to the untapped business potential of women.
But it’s not all bad news. Female entrepreneurship in Britain is growing. In 2017, Aston University reported that the proportion of working-age women going into business had risen by 45per cent between 2013 and 2016, compared with 2003 to 2006 (the figure was 27per cent for men). And more women currently intend on becoming business owners than men: 13per cent within the next year, compared with 9per cent of men. That’s two million British women who want to be their own boss before 2019.
Furthermore, research from the British Chamber of Commerce has suggested that women are better at spotting gaps in the market, offering innovative products and using technology than their male counterparts.
Undoubtedly, British women have the creativity and drive – so why are those in the US twice as likely to be entrepreneurially active? And why are British women achieving such low levels of funding, with male entrepreneurs 86per cent more likely to be funded by a VC (venture capitalist), and 56per cent more likely to secure angel investment?
It is not a problem they have completely solved across the pond either, with many businesswomen in the US saying they still struggle to access financing via traditional routes. But a healthy majority, including those I meet in New York, emphasise that they feel strongly backed by their city and state.
That lack of support in the UK is why the Telegraph’s Women Mean Business campaign is calling on the Government to take action to help redress the balance in financing for home-grown female founders. So could a Women’s Business Act, similar to that the US has had for three decades, help women here? Should we have business centres aimed at female entrepreneurs in cities from London to Leeds?
“It’s made a huge difference,” says Beth Goldberg, director of the SBA’S New York office – the largest of 68 outposts. “I’m a native New Yorker and experienced life before that act. My dad passed away when I was nine and my mother wanted to take over the family printing business. But there was no credit available. She couldn’t get a lease on an apartment. She wanted to order a car, yet didn’t have a male co-signature. It was a battle.”
Goldberg says her mother has been astonished at how life has changed. “I went into a bank, got credit, and was able to accomplish all these things. She couldn’t ever get a loan.”
Like Awusi, Goldberg believes the additional support given to female founders remains essential today. Only last year a Harvard study showed that women and men seeking capital were being asked different questions. While men were posed “promotion-oriented” questions about potential gains, women faced “prevention-oriented” questioning about possible losses. “We found evidence of this bias with both male and female VCS,” the academics concluded.
It tallies with the results of the Telegraph’s survey of 750 businesswomen, in which two thirds told us they were not taken seriously by investors when trying to secure funding; some 65 per cent said they had been unfairly treated by financial services.
“We saw that women were getting singled out and treated differently,” says Goldberg. “Having women’s business centres, where you can go and feel comfortable, in a secure environment, is extremely important.” The SBA also provides loan guarantees; $160million to women in the New York district since October last year. They offer micro lending, for amounts from $500 to $50,000.
Nicole Mccullum, founder of Captivate Designs, a company specialising in website creation, is both a beneficiary of SBA support, and a donor. She gives her time, for free, to hold workshops at Awusi’s centre.
“I think women by their nature are more careful,” she said. “We hold back more, and perhaps aren’t so aggressive in seeking out capital.
“So bringing together women and angel investors, or getting more mentoring support, truly makes a difference.”
Arcola Robinson runs the Brooklyn public library business and careers centre. She says one of her biggest challenges is making women aware of the array of assistance available. “I hear so often: ‘I did not know all these resources were out there’,” she sighs.
New York might be leading the way in supporting American female entrepreneurs but, nationwide, the picture is more varied. Research in March by Wallethub, a financial advice site, found that Minnesota, Wisconsin, Vermont, North Dakota and Maine are the best states for women, measured through factors like median earnings, unemployment rates, and the share of female-owned businesses. The worst were Louisiana, Arkansas, Mississippi, Oklahoma and Alabama.
“Other places can learn a lot from the way that New York puts education out there,” said Jessica Ochoa Hendrix, co-founder of games company Killer Snails and an advocate of the women’s centres. “It’s not simply about handing out grants. It’s info sharing, and access to priceless research.”
To read about the Telegraph’s Women Mean Business campaign, go to telegraph.co.uk/women/business
‘Bringing together women and angel investors truly makes a difference’