Creating opportunities for women-led businesses in underserved industries
The percentage of female entrepreneurs in the United States is on the rise, fueling the economy and creating millions of jobs. According to a Wells Fargo report, women-owned businesses will employ more than 12 million workers and generate $2.7 trillion in revenue in 2024. According to the same report, women-owned businesses will grow 13.6% from 2019 to 2023, 4.5 times faster than male-owned businesses.
Of the millions of businesses, many are in similar industries, such as professional services, management services, healthcare, and real estate. However, these represent only a small portion of the total industry. Many women entrepreneurs face significant challenges, especially in traditionally male-dominated industries such as technology, engineering, manufacturing, and construction. These underserved industries pose unique opportunities and challenges for women-led businesses. Creating and nurturing opportunities for women entrepreneurs in these sectors is critical to driving inclusive economic growth.
The strength of women-led businesses
Women-led businesses bring diversity of thinking, innovation, and economic growth: According to a study by the Boston Consulting Group, the global economy could grow by $2.5 trillion to $5 trillion if men and women participated equally in entrepreneurship.
“Women entrepreneurs often bring unique perspectives and solutions, driving innovation and addressing unmet needs in traditionally male-dominated markets. In underserved industries where innovation and fresh approaches are essential, women-led businesses can provide new insights and drive a competitive advantage. Supporting these businesses not only advances gender equality, but also strengthens economic resilience and growth,” said Courtney Murray, CEO of Coastal Kapital, a financial services provider of commercial equipment and asset-backed lending.
Challenges faced by women entrepreneurs in underserved industries
Despite the potential, women-led businesses in underserved industries face many challenges. First, there's the issue of access to capital. Female entrepreneurs often struggle to secure funding, with all-female startup teams receiving less than 2% of venture capital funding, according to TechCrunch. “Venture capital and other funding sources have traditionally favored male-led companies, leading to a large gender funding gap. We're trying to solve this problem with an accelerated approval process that takes into account the person behind the company, not just a credit score number,” says Murray.
“Women-led businesses face greater challenges in accessing venture capital compared to their male counterparts. According to a World Economic Forum study, women-founded businesses received just 2% of total venture capital investment in 2022. This stark disparity highlights bias within the investment community, which often favors male entrepreneurs. Additionally, only around 15% of venture capital decision makers are women, further skewing the investment environment towards male-led startups,” says Zahra Yaramadi, founding manager at BG Financial Consulting Group, a fundraising service for SAAS.
And the challenges continue after funding is secured. “Even after securing funding, women entrepreneurs continue to face hurdles. They often face stricter conditions on how the funds can be utilized, and the due diligence process is usually more thorough. This increased scrutiny means that women-led companies must allocate more resources to compliance and investor relations, taking valuable time and energy away from core business activities. Women entrepreneurs are much more likely to need intensive follow-up with investors than their male counterparts,” Yaramadi added.
Women in underserved industries also often lack access to networks and mentors who can provide guidance, support, and opportunities. These connections are vital for business growth and development. “In many parts of the world, women-led small businesses are vital components of global supply chains, including distributors, retailers, and suppliers. Companies can foster networks where women entrepreneurs can get insights and advice on everything from how to finance their business to how to manage inventory,” write Shalini Unnikrishnan and Roy Hanna of Harvard Business Review.
These challenges can be exacerbated by deep-rooted gender biases and stereotypes that can prevent women from starting companies in male-dominated fields. “Startup investors, especially venture capitalists, invest in high-risk, high-growth companies, but when determining which companies are relatively low risk, they make decisions based on matching historical patterns. This can be a difficult barrier to overcome for minority founders whose ideas, solutions, and business models don't match historical precedents, by the very nature of being on the cusp of innovation,” McKinsey & Company explains. “Gender bias can affect how women's businesses are perceived by investors, customers, and industry peers. This is a really difficult hurdle to overcome, putting the onus on female founders to prove their value when it should already be obvious to anyone who talks to them with an open mind,” Murray adds.
Long-term impacts on women in business
Sometimes the hurdles are too high, causing women to give up on starting businesses in underserved industries. A lack of visible role models in underserved industries can discourage women from starting businesses in these sectors. This leads to a vicious cycle where women try and start businesses in traditionally underserved industries, fail, and have few role models for other women to follow. We need to break this cycle by paving the way for women entrepreneurs to have greater access to capital, networks, and dialogue with decision-makers.
Creating opportunities for women-led businesses in underserved industries not only advances gender equality, it also unlocks the full potential of our economy. In doing so, we empower women and drive innovation, economic growth, and societal progress. The journey to gender parity in entrepreneurship is ongoing. But with dedicated effort and collective commitment, we can create a future where women-led businesses thrive in every industry, including those traditionally dominated by men.
