Why do female Entrepreneurs get less funding for startups?

Compared to men entrepreneurs female entrepreneurs face more challenges when getting approved for business funding. Since access to business capital is necessary for business growth, this is a severe problem.

Male entrepreneurs are known to raise higher levels of funding than their female counterparts, but the underlying mechanism for this funding disparity remains contested. Drawing upon regulatory focus theory, we propose that the gap originates with a gender bias in the question that investors pose to entrepreneurs.

There are successful male and female entrepreneurs all over the world. Research has found that some characteristics are found in both men and women. Some distinct differences do exist between the two. The underlying themes are their decision-making styles, risk, tolerance, goals for the business, financing of the company, management styles, networking ability, motivations.

Research has shown that there are some differences between men and women when it comes to entrepreneurship. Male and female entrepreneurs may be similar demographically and psychologically. They tend to be married and the first born child. Female entrepreneurs tend to pursue degrees in liberal arts rather than engineering or more technical disciplines. It is a much more difficult decision for a woman to become an entrepreneur than men. Women are more sensitive to men when it comes to non-financial issues. Both men and women have experienced before starting a business. They also may have role models and mentors who help them make their decisions to become entrepreneurs.

There is a difference between men and women when it comes to business goals and management styles. Male and female entrepreneurs often start a business to have more autonomy and control. They also want the income and the personal satisfaction a company can give them. Men tend to focus on the economic reason for business ownership whereas women also seek to make some social contribution. Women also may become entrepreneurs to achieve their own or their spouse dream.

Generally, women close their businesses due to fewer resources to start their business. Women used innovative strategies to overcome the shortages they faced. Women focused more on product quality than men who focused more on customize and be cost effective. In managing, women empowered their employees and focused on relationships, team building, and perseverance. Women often chose to have a similar retail operation or service business instead of construction, technology or manufacturing operation.

All entrepreneurs are risk takers. Men have different attitudes towards risk. Men are much more willing to take a financial risk than women. Women have a different attitude towards risk and are less risk tolerant, and also men were less concerned about hazards than women. Men are more willing to take a risk and fail than women. Women are more detailed oriented and are more aware of the cues that indicate risk. Male and female entrepreneurs may have similar characteristics however when it comes to risk there is a difference.

All entrepreneurs have a set of social and human capital. The social structures of women are different than men, and this creates a different context for women than for their male counterparts. These differences influence their attitudes towards risk. Women try to ensure that they have the proper social support before they start their business. Many women start up their business with the aid of their families and friends who may have helped them in the past.

Women get approved for business loans less often as compared to men. Women only get 80% of the capital men to do. This means to make new products, hire employees and expand their business; women have 20% less capital to use.

 

Lower credit scores:

The average credit score for men is 630, and for women, it is 621. There is even a more significant difference between credit scores received by men and female entrepreneurs. Credit scores of nearly 1/5 of male entrepreneurs don’t exceed 620, which is true of almost 1/3 of female business owners. When it comes to small owners on average men, have a credit score of 645 and women have 629.

 

Lower revenue:

On average women make 30% less in annual revenue than men business owners. The number of men business owners making $1 million is almost double the number of women businesses owners with the same income.

Comment(1)

Top 10 venture capital firms from around the globe – Killerlaunch
8th February 2019 At 4:21 am

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