The Importance Of Supporting Female-Led Businesses

The rate of female entrepreneurs is growing in the U.S., fueling the economy and creating millions of jobs. In 2024, female-owned businesses employ over 12 million workers and generate $2.7 trillion in revenue, according to a report from Wells Fargo. The same report found that female-owned businesses grew by 13.6% from 2019-2023, and their growth rate increased 4.5 times more than that of male-owned businesses.

Of these millions of businesses, many are in similar industries, including professional services, administrative services, healthcare, and real estate. However, these are just a few pieces of the overall industry pie. Many female entrepreneurs face significant challenges, particularly in traditionally male-dominated industries, including technology, engineering, manufacturing, and construction. These underserved industries present unique opportunities and challenges for female-led businesses. To drive inclusive economic growth, creating and nurturing opportunities for female entrepreneurs in these fields is crucial.

Strengths Of Female-Led Businesses

Female-led businesses bring diversity of thought, innovation, and economic growth. If men and women participated in entrepreneurship equally, the global economy could see a boost of $2.5 trillion to $5 trillion, according to research from Boston Consulting Group.

“Female entrepreneurs often introduce unique perspectives and solutions, driving innovation and addressing unmet needs in a market traditionally led by men. In these underserved industries, where innovation and fresh approaches are critical, female-led businesses can offer new insights and drive competitive advantage. By supporting these businesses, we not only promote gender equality but also enhance economic resilience and growth,” says Kortney Murray, CEO of Coastal Kapital, a financing service provider in commercial equipment and asset-based lending.

Challenges Facing Female Entrepreneurs In Underserved Industries

Despite their potential, female-led businesses in underserved industries face numerous challenges. First, there is the problem with accessing capital. Female entrepreneurs often struggle to secure funding, with all-female startup teams getting less than 2% of venture capital funding, according to TechCrunch. “Venture capital and other funding sources have traditionally favored male-led businesses, leading to a significant gender funding gap. We’re trying to remedy this with a fast approval process that considers the person behind the business, not just the numbers on a credit score,” says Murray.

“Female-led businesses face significant challenges when accessing venture capital compared to their male counterparts. Research from the World Economic Forum reveals that companies founded solely by women received only 2% of all venture capital investment in 2022. This stark disparity highlights the bias within the investment community, where male entrepreneurs are often favored. Additionally, only about 15% of venture capital decision-makers are women, which further skews the investment landscape towards male-led startups,” says Zahra Yarahmadi, Founding Manager of BG Financial Consulting Group, fundraising services for SAAS.

And the challenges continue even post- funding. “Even after securing funds, female entrepreneurs continue to face hurdles. They often encounter more stringent conditions on how they can utilize their funds, and the due diligence process is typically more exhaustive. This increased scrutiny means female-led businesses must allocate more resources to compliance and investor relations, diverting valuable time and energy away from core business activities. The need for extensive follow-up with investors is significantly higher for female entrepreneurs compared to their male counterparts,” adds Yarahmadi.

Women in underserved industries also often lack access to networks and mentors that can provide guidance, support, and opportunities. These connections are crucial for business growth and development. “In many parts of the world, female-led small businesses are a significant element in global supply chains, whether as distributors, retailers, or suppliers. Companies can foster networks that help those female entrepreneurs gain insight and advice on everything from how to finance their operations to how to manage inventory,” say Shalini Unnikrishnan and Roy Hanna for The Harvard Business Review.

These challenges may be exacerbated by the deep-rooted gender biases and stereotypes that can deter female from pursuing entrepreneurial ventures in male-dominated fields. “While start-up investors, particularly in VC, are making high-risk, high-growth bets, their decisions are predicated on historical-pattern matching when deciding which companies may be relatively lower risk. This can be a difficult barrier to cross for underrepresented founders, whose ideas, solutions, or business models – by nature of being on the cusp of innovation – don’t align with historical precedent,” explains McKinsey and Company. “Gender biases can impact the perception of a woman’s businesses by investors, customers, and industry peers. This is a really difficult hurdle to overcome and puts the onus on the woman founder to prove her worth when it should already be apparent to anyone who is talking to her with an open mind,” adds Murray. ​​

Long-Term Implications For Women In Business

Sometimes, the hurdles are too significant, leaving women to abandon their pursuit of entrepreneurship in an underserved industry. The absence of visible role models in underserved industries can discourage women from pursuing entrepreneurship in these fields. This leads to a vicious cycle where women unsuccessfully attempt to found businesses in traditionally underserved industries, leaving few role models for other women to follow. There is a need to break this cycle by opening pathways for female entrepreneurs to get more access to financing, networks, and conversations with decision-makers.

Creating opportunities for female-led businesses in underserved industries is about more than promoting gender equality; it is about harnessing our economy’s full potential. In doing so, we empower female and drive innovation, economic growth, and societal progress. The journey towards gender equality in entrepreneurship is ongoing. Still, with dedicated efforts and a collective commitment, we can create a future where female-led businesses flourish in every industry, including those traditionally dominated by men.