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Show her the money! Women are the better choice :: WRAL.com

Show her the money! Women are the better choice :: WRAL.com

I recently had the opportunity to attend a few screenings of the documentary “Show Her the Money” as part of a 50-city tour sponsored by Wells Fargo. The first event was hosted by CED and xElle Ventures, the latest took place last week at the beautiful new Bandwidth campus.

Listen to Google Lab’s commentary on my Show Her the Money column

Only 2%…

Venture capital can be a powerful growth accelerator. It has financed half of all listed companies since 1979. However, according to PitchBook, since the beginning of 2016, companies with female founders have received only 4.4% of venture capital deals, and these companies have raised just 2% of total invested capital. This data is discouraging.

Double sales with half the financing

To better understand the reasons behind this data, Boston Consulting Group (BCG), in collaboration with MassChallenge, a nonprofit accelerator, examined five years of investment and revenue data from 350 startups. This gender analysis showed a clear funding gap:

Investments in companies founded or co-founded by women averaged $935,000, less than half the average $2.1 million invested in companies founded by men.

According to the study, when women entrepreneurs present their ideas to investors for early-stage capital, they receive significantly less – a difference of more than $1 million on average – than men.

Still, companies founded by women ultimately generate higher revenues—more than twice as much per dollar invested—than companies founded by men, making women-led companies better investments for funders.

What can women do differently?

Two of the causal factors I would like to point out:

Say it and sell: Women are more conservative in their forecasts and tend to stick more to facts, while men are more ambitious and often include moonshine forecasts. My advice? Women, learn to talk about the future NOW! This is what I tell listeners in my talks, that successful entrepreneurs are able to convincingly “talk about the future now” and then inspire their teams to achieve those far-off dreams. Avoid underselling! I have coached women and led workshops on the topic of self-confidence, which is essential to achieving our goals and is worryingly in short supply for women (see Why Confidence Is Contagious).

Prepare for pushback: Women get more resistance. MassChallenge found that female founders are hesitant to respond directly to criticism when pitching. When a potential backer makes negative comments, we tend to accept this as legitimate feedback. On the other hand, “Most people will come back to you in these situations,” said one investor. “They’ll say, ‘You’re wrong and here’s why.'” We must learn to back up our statements and explain calmly but forcefully why our ideas are legitimate.

Women are the better choice

The documentary provided data consistent with what I discussed about women entrepreneurs in Mr. Wonderful. I recounted my encounters with Kevin O’Leary decades ago, right after he bought my company and called me to make sure I wasn’t going anywhere.

In subsequent years, O’Leary found that almost all of his earnings came from companies run or owned by women, citing four factors for this:

  1. Better time management skills
    1. Achieve your goals more often
      1. Maintaining cultures with lower turnover
        1. Receive feedback successfully

          “Show Her The Money” repeated this and showed that female founders have a much lower failure rate. Investors mentioned an 80-90% completion rate and noted that women are more decisive, anti-fragile and efficient than men. Courage was seen as the most important quality in a founder, pushing them beyond their limits. And similar to O’Leary’s investment results, her returns were better.

          Adversity makes us stronger

          Julie Hampton from Wells Fargo interviewed Sherry Stewart Deutschmann, a successful entrepreneur who successfully sold her business and then founded BrainTrust, an organization of small groups of women who help each other grow their businesses to $1 million in sales and beyond to increase. She worked with Wells Fargo to create the documentary.

          Sherry shared how her extremely difficult upbringing – having literally no money – made her stronger and braver.

          I can understand it. I’ve always said that I was never the smartest, I just worked harder. I was the only woman in the room and the only female leader, and I had to work harder to secure my place at the table.

          The documentary also made it clear that female founders are overrated compared to men.

          Interesting to see who tries harder – those who feel like they have to.

          Today and the future

          It is encouraging to see efforts in our community and beyond to attract more women to venture funds, as limited partners and on management teams including the C-suite.

          A McKinsey study shows that investable wealth controlled by women is expected to rise to $30 trillion by the end of the decade.

          For women out there looking to raise capital, Show Her the Money offers helpful resources.

          As more women move into the entrepreneurial spotlight, it is important that we continue to advocate for equal opportunities in funding.

          Are we ready to change the narrative? What will it take for investors to fully recognize the untapped potential of female entrepreneurs? Let’s continue to advocate, speak out, and most importantly, show her the money.

          About Grace Ueng (pronounced OWN)

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          Grace Ueng is CEO of Savvy Growth, a management and marketing consultancy dedicated to helping business leaders and their companies reach their full potential. With a proven track record in strategic reviews, marketing audits and executive coaching, Grace accompanies companies on their growth journey.

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