Women are financially discriminated. 35% of women globally do not have a bank account. 80% of women-owned businesses in the developing world have limited access to finance. And women only receive about 3% of the global venture capital invested in US dollars.
The untapped business potential that women represent could possibly unlock USD330 billion in annual global revenue. The finance gap - the difference between funding available and funding needed - has been estimated at USD 1.7 trillion globally by the World Bank.
Despite the mountain of evidence highlighting women as a good investment; women are strong savers, responsible borrowers and calculated risk-takers. Women entrepreneurs achieve higher rates of return, and if allowed to grow, enterprises led by women perform better in the stock market.
Join us in closing the financial gender gap!Financial community
As a part of the financial sector, you are uniquely positioned to create positive change.
Whether you are an , , , or even , there are a number of tools and practices to use if you want to address the barriers facing women.
This might require different approaches and solutions depending not only on what role you play in the financial eco-system, but also where in the world, in what market and in what stage you operate and have an impact.
Regardless of position or role, anyone working within the financial and business sectors should consider these general strategies for financial inclusion:
Listen to them, understand their needs, support their ideas, hire more women and involve them in decision-making processes. By doing so, your organization will have a better chance of addressing potential gender-lens biases from within.
Understand how women equal good business
Women-owned companies, on average, perform better than those with all male founders with lower risks, higher returns and better financial efficiency. Moreover, the financing gap means that there is less competition for women-owned companies.
Embrace female perspectives
Because much of the financial sector and business world traditionally has been inhabited by men, the needs of women have continually been overlooked. Their needs and perspectives may be different and that may open doors to new groups of customers and markets, if understood and supported appropriately.
In this section we have compiled a number of tips, recommendations and insights from experts also dedicated to address the financing and gender gaps in business: BNY Mellon, United Nations Foundation, Boston Consulting Group and CARE International. We have also included experiences from the work H&M Foundation has done so far to support equal opportunities in business.
You are the one writing the checks. This means you have great power to make a change. You need to be aware of structural biases and social norms built into funding decisions such as:
Be aware of the fact that you are more likely to invest in people and ideas that are familiar to yourself. 92% of partners at the biggest VC firms in the US are men. If you’re male, you’re more likely to invest in other male investees.
Include women in investment decisions. Investment firms tend to have a male dominated culture. By including more women in the organization and into your decision making you open up for a more creative and unconventional thinking.
Don’t just assume women to have less technical skills than men. Think about who you are turning to with all the technical questions.
Responding to feedback
Some founders are more direct in responding to feedback in pitches. Others more often hesitate to respond directly to criticism and need time to rethink and reflect over the feedback before responding. There’s no better way, only different strategies that neither of them will directly affect the business idea itself.
Some founders make bold projections and assumptions in their pitches. Others by contrast are more conservative in their projections. This may look like the founders that are more conservative are asking for less than the bold ones. Look for realistic projections in pitches. Don’t just assume that the bold pitches are the best ones. More often realistic projections are a far better investment than some bold idea that maybe will make it, or not.
Share this report
Information is everything. Share this report on your next weekly meeting with your organization and ask everybody to read this. Discuss it on your next meeting and try to start working with these tips actively during pitches.
You have a significant role to play in giving women access to finance and closing the investment gap.
You can’t be what you can’t see
If you do not have a balanced field of applicants, start actively recruiting women entrepreneurs. Also, ensure you have sufficient numbers of women across industries. In this way women experts can act as role models and mentors to other women regardless of industry.
Seize the opportunity
Be aware of the fact that current market forces make women-owned companies very promising opportunities. The financing gap and none existing funding means that there is less competition for women-owned companies. Also, women-owned companies, on average, perform better than those with all male founders.
Coach female entrepreneurs
Be open to coach other women entrepreneurs on the realities of the market and be able to guide them through all the startup challenges and the most common problems during the first critical period.
Create a community to create a case for change
Connect women founders to external resources. External resources could be: women-led, startup-friendly investors, incubators or partnerships. It could also be networking opportunities that can help women grow their businesses. You can share data on successful women-led businesses. You can be the spokesperson who cultivates a network within the financial community that female entrepreneurs can tap into.
There’s another dimension to this that comes in before investing in a female-led business, and even before the business idea is born – the basic financial system and related services.
Hire the right staff
Start training and employing more women in customer-facing roles within the industry. Deploy field agents who can reach women in marginalized communities. There is increasing evidence that employing women as banking and network agents in their own communities may be especially effective for commercial banks or mobile network operators seeking to expand access to and know-ledge about financial services to underserved women.
Educate your staff
Improve training for male staff on working with women, listening to and interpreting their needs.
Stop pink washing
Making your business or products seem to be more women friendly without doing something about it for real is bad will.
Stop asking for collateral
Many lenders ask for collateral, such as land or a house. In many cultures, it is men who traditionally own the land or the house, which excludes women.
Develop your products
Involve women in the development of products and services, including marketing and financial management materials.
Add alternative products
Offer alternative solutions to collateral requirements for women who need loans.
Alternative solutions could be:
(Legal) assistance in securing property rights
Loans to buy land
Loans based on cash flow, savings group history, mobile phone transaction history or track record of enterprise performance
Group guarantee (approach similar to Villages Savings and Loans Associations)
Accepting moveable assets (like jewelry)
Introduce loans with more flexible repayment terms, for example; delaying repayment until a business is more established; recognizing cycles of income e.g. in agriculture; and maternity leave on loans. Evidence from India shows that more flexible repayment schedules can benefit clients and significantly lower transaction costs without increasing default rates.
Offer low or no-cost savings and credit products.
Introduce mobile money/digital financial services bespoke to women to improve access.
Provide non-financial services e.g. financial literacy training, business mentoring/coaching and legal aid.
Make your distribution more including
Introduce more flexible opening hours that fit with the multiple tasks and limited time of women.
Look to women's needs
When reviewing data to better understand women and their bespoke needs, separate men and women.
Partner with development organizations (who specialize in enterprise and financial training for women) to design products tailored to the bespoke needs of marginalized and low-income women.
There are certain steps you could use to get even closer to investors and increase your chance of getting an investment.
Seek a coach
Ideally, find a coach with VC experience, who is able to assess practice runs and provide feedback.
During your pitch, ask for more money than you first intended to. There’s no need to brag, but focus more on the positives than the risks or negatives. Just bring the objective data and let that guide you into responding to unwarranted criticism from the investors.
Prioritize female led VC firms
Be aware of which VC firms are led by women or have a great female culture or track record of investing in females. If you prioritize these firms, eventually other VC firms and investors will also go by their example.
Real change starts with financial stakeholders. But even as an individual, there are certain things you could do to contribute.
Share Unfounded Ltd.
Awareness is the first step towards making a difference and put pressure on the financial stakeholders. By sharing this initiative on social media, you help us educate the general public about the financial gap.
Send a gift to CARE’s programme
H&M Foundation’s partner CARE International is running a programme called Women in Enterprise. The programme supports women living in poverty to set up and run their own businesses. With your gift you help us work towards empowering even more women.Donate now!