Though female entrepreneurs have made tremendous gains over the years, there’s still is an absence of investment opportunities for the companies they build.
Jaclyn Johnson, the CEO and founder of Create & Cultivate and a 2015 Forbes 30 Under 30 alum, joined The Final Round on Wednesday to discuss how her company supports young businesswomen and how the investment community needs to evolve to support female business owners.
Data compiled by PitchBook found that, as of November 2019, companies founded solely by women garnered only 2.9% of the total capital invested in venture-backed startups in the U.S.
According to Johnson, the challenge is two-fold: While female founders are scrutinized more than their male counterparts and consequently raise less capital, women are often forced to fund their projects themselves or seek out female VCs.
“There's so many different [venture capital firms] now that are specifically just focused on women-owned businesses, which I think is great,” explains Johnson. “It gives [women] that access, gets you that seat at the table and also gets you an environment of people who understand your business, usually. So I think sometimes you're going into a room. There's a lot of — no offense — white men around the table. But they don't understand a company that's built by women for women. You know, they're not the marketplace. So I think having those women in the room who can understand and would invest in your product, per se, is a good place to start.”
Why WeWork may be ‘the beginning of the end’ of high valuations
Johnson added that the demise of a company like WeWork may also signal the end of an investment mindset that has largely benefitted male-run businesses: that a company is good based upon its funding, rather than its long-term performance.
“I think at the end of the day, you can raise money successfully if you have the long game, and you have the strategy there,” says Johnson. “But I think also, we're going to stop seeing people raising $50 million, $75 million...[people] don't need $50 million right now. So, I think people are going to be a little bit more strategic and smart in the amounts that they're raising.”
The value of investing in female-led businesses
As investors shift their interests away from the WeWork funding model, Johnson sees an opportunity for female business leaders to choose investors who respect their companies' missions.
“The question is, how do we sort of navigate that equal pay conversation? Because [women] think there is that sort of systemic issue that it's still going on in companies [many] are trying to catch up to,” explains Johnson. “But having that conversation with their counterparts and understanding: How do I negotiate for myself? Whether that's money, whether that's perks and benefits, or whether it's work from home or maternity leave — whatever it might be, I think women are getting more vocal about those kind of things and not thinking [that] if I stand up and ask for these things, I might get reprimanded.”
Olivia Balsamo is a writer and producer at Yahoo Finance. Follow her on Twitter: @BalsamoOlivia.
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