Sjoberg & Tebelius, P.A.
Serving Minnesota & Western Wisconsin

Female-led Startups See Increases in VC Funding

Women Business.jpgSecuring funding is one of the first big hurdles that new and emerging business owners face. Many entrepreneurs never get past this step, and a business is over before it ever really begins. Because funding is so important, startup owners should stay plugged-in to funding shifts and trends.

For instance, right now is reportedly an especially good time for female-led startups to secure funding from venture capitalists (VCs).  

$46 billion in VC funding

A recent report states that between 2017 and 2018, VCs more than doubled their funding of businesses that had at least one female owner. More specifically, the total funding received was approximated at $46 billion.

While VC funding for female-led businesses still only represents less than 20 percent of VC funding overall, this is a dramatic increase and likely the result of female-led start ups have reportedly faster "exits" than male-operated businesses. The exit is that moment when the investor's money is recouped, obviously a top priority for VCs.

Assuming women's fast-exit trend continues, increasing investments in female-led startups will likely trend upward as well.

Securing VC funding

Whether your business has a female lead or not, securing funding from a VC is no easy task. 

When approaching investors, you must set yourself and your business apart from the competition. Having a personal connection can also be helpful. You should also be prepared to present financial outlooks and expectations that attract and appeal to the investor.

Finding the right funding

With all this in mind, prospective business owners should consider whether venture capital is the right option. In some cases, funding through loans, family members, or angel investors may be more appropriate.

No matter where you go for funding, it is crucial to be prepared. This means having the necessary documentation and contracts, as well as a compelling story for what you plan to do. Failure to perform this due diligence could make it all but impossible to get your business off the ground.

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