When Canva co-founder Melanie Perkins secured her first major investment in 2013, little did the world know that her design platform would eventually be valued at $40 billion. Stories like Perkins’ are becoming more common, yet they’re still the exception rather than the rule in the startup world when it comes to startup investment for female founders.
As we witness a surge in female entrepreneurship across Asia, it’s crucial to address the elephant in the room: despite their growing numbers, female founders face unique challenges in securing investment, creating hurdles in the path to a more equitable startup ecosystem.
Highlights
The Rise of Female Entrepreneurship: A Brief History
Remember the days when women in business were a rarity? Well, those days are long gone. Female entrepreneurship has come a long way since the early 20th century when women were often relegated to small-scale, home-based businesses. Fast forward to today, and we’re seeing a revolution. In Asia alone, women-owned SMEs are growing at an unprecedented rate, contributing significantly to economic growth and job creation.
But here’s the kicker: despite this progress, female founders are still swimming against the tide when it comes to startup investment.
The Trifecta of Challenges: Bias, Networks, and Confidence
Gender Bias: The Invisible Barrier
Let’s talk numbers for a moment. A study by Boston Consulting Group found that businesses founded by women ultimately deliver higher revenue—more than twice as much per dollar invested—than those founded by men. Yet, female-led startups received just 2.3% of VC funding globally in 2020. In Asia, the picture isn’t much brighter.
Take the case of Sarah Chen, co-founder of Beyond The Billion, who recalls being asked about her marital status and plans for children during investor meetings. It’s 2024, folks, and we’re still dealing with this?
Network Gaps: It’s Not What You Know, It’s Who You Know
We’ve all heard the saying, “Your network is your net worth.” Well, for female founders, this can be a double-edged sword. Traditional VC networks have been predominantly male, making it challenging for women to break in and build the relationships crucial for securing investment.
Jenny Xia, co-CEO of FreeWill, puts it bluntly: “The boys’ club is real, and it’s exclusive.” But here’s the good news: things are changing, albeit slowly.
The Confidence Conundrum
Here’s a mind-bender for you: studies show that women are more likely to underestimate their abilities compared to men. This “confidence gap” can translate into more conservative pitches and ask amounts, potentially leaving money on the table.
But let’s be clear: this isn’t about women needing to “lean in” more. It’s about creating an environment where their ideas and capabilities are recognized and valued equally.
Turning the Tide: Solutions and Best Practices
Now, before you think it’s all doom and gloom, let’s talk solutions. Because guess what? The landscape is changing, and smart investors are taking notice.
Female-Focused VC Funds: Putting Money Where It Matters
Enter the era of female-focused VC funding. Firms like SoGal Ventures in Singapore and Teja Ventures in Indonesia are leading the charge, specifically targeting investments in female-led startups. These funds aren’t just talking the talk; they’re walking the walk and seeing impressive returns.
Government and Corporate Initiatives: Leveling the Playing Field
Governments and corporations across Asia are waking up to the potential of female entrepreneurship. Singapore’s SheStartsAsia program and Japan’s Womenomics initiative are just a couple of examples of how policy can drive change.
Building Inclusive Investment Communities
It’s not just about the money; it’s about the ecosystem. Initiatives like Female Founders Fund and Women Who Tech are creating spaces where female entrepreneurs can network, learn, and grow together.
A Call to Action for Asian Investors
Here’s the bottom line: investing in female founders isn’t just the right thing to do; it’s the smart thing to do. The numbers don’t lie – female-led startups are outperforming their male counterparts in many metrics.
So, to all the investors out there, especially those in the early stages, here’s your wake-up call:
- Check your biases at the door. When evaluating pitches, focus on the idea, the market potential, and the founder’s capabilities – not their gender.
- Diversify your networks. Actively seek out and attend events that showcase female founders.
- Consider the untapped potential. Female founders often bring unique perspectives and solutions to the table, addressing markets that male-dominated VC firms might overlook.
Remember, the next unicorn might just be led by a woman. Don’t miss out because of outdated biases or limited networks.
As we navigate this evolving landscape, one thing is clear: supporting female founders isn’t just about equality – it’s about unleashing a wave of innovation and economic growth that benefits everyone. So, are you ready to be part of the change?
The future of startup investment is female. The question is, are you smart enough to see it?
Highlights
For the Chinese version of this article, click here.
