How Women Can Change Funding Bias in Venture Capital

In a world where female-founded companies not only match but often surpass their male counterparts in revenue growth and profitability, the stark reality remains: Women influence a staggering 85% of consumer spending with their annual $20 trillion expenditure, yet the funding landscape starkly contrasts this influence. Women experience a significant funding bias with most estimates indicating that less than 3% of venture capital funds are allocated to women-founded companies. Black and ethnic minority-led female businesses receive even less. 

How women can achieve gender parity in raising capital

Four years ago, I raised $2 million in funding for my creator community startup Vibely (which I later sold to Kajabi). In the years since my fundraising success, I’ve spoken with many female entrepreneurs about the fundraising process. The general consensus I hear is that raising capital is an uphill battle, where gender and racial prejudices still block great ideas from gaining funding.

Here’s the advice I give to female entrepreneurs, and what I wish more women knew; the path to true gender parity in business lies not only in navigating the fundraising landscape but in fundamentally reshaping it through inclusivity and empowerment. 

1. Cultivating community and inclusivity 

Author and psychology professor Angela Duckworth says, “Grit is living life like a marathon, not a sprint.” The narrative of entrepreneurship often glorifies the solitary fighter, yet my conviction lies in the opposite: True grit stems from the embrace of a supportive community. My family’s rise from financial hardship after emigrating to the U.S. was heavily supported by the Taiwanese American Association, exemplifying the transformative power of community. 

This lesson is vital for female entrepreneurs. In a realm where isolation often shadows the entrepreneurial journey, building a nurturing and inclusive community is indispensable for enduring success and opportunities.

Entrepreneurs are often perceived as rugged individualists. But, just like grit, the most successful entrepreneurs are formed in the community. Wiley published a study that investigated the emotional and psychological tolls of entrepreneurship. The researchers found:

“Entrepreneurs must simultaneously deal with multiple extremes including extremely high workload, hours worked, intensity of work, sense of responsibility, decision autonomy, time pressure, risk taking, job uncertainty and resource constraints when operating in complex, uncertain and dynamically changing environments. Further, empirical research has found that entrepreneurs tend to work alone and lack traditional co-worker social support from supervisors or employees.”

Founding a company as a woman has enough hardship. Loneliness and a lack of personal support shouldn’t be added to that list. Community is one of the best ways to find opportunities and stay in the game long enough to achieve success. 

1. Connect with anyone, anywhere: I founded Vibely because I believe in the power of online communities. The right community gives entrepreneurs a sense of belonging, while also connecting them to people with shared missions, values and goals. 
2. Seek supportive local networks: Even in today’s digitally connected world, you’ll find an edge in your local community. The easiest way to raise Silicon Valley funding is to live and network in Silicon Valley. No matter where you live, form an in-person community of people with aligned goals.
3. Create a support network for emotional resilience: Fundraising can be a tiresome and stressful process. Build a community of fellow female entrepreneurs who can offer emotional support, share experiences and provide encouragement during challenging times.

2. Fight bias with data

Most investors do not know the biases behind their investment decisions. They are looking for patterns of success. The problem is that the pattern many investors follow, consciously or subconsciously, is to look for startups that are led by people who look and behave like famous entrepreneurs: Elon Musk, Adam Neumann, Travis Kalanick, and Mark Zuckerberg. 

But entrepreneurship in the media does not reflect entrepreneurship in the data—or the day-to-day. Boston Consulting Group published a study finding that women-led startups most often outperform their male-led equivalent, “generating 10% more in cumulative revenue over a five-year period.” Women receive not only fewer investments but also, on average, these investments are half the dollar amount compared to those received by their male counterparts.

The standard advice is that women should change their behavior to appear more “masculine” and lean into the patterns investors are subconsciously seeking. 

I disagree. 

You aren’t going to persuade investors to look past their own biases by deepening your voice like Elizabeth Holmes at Theranos. Instead, you need to give them a new pattern to look at: 

1. Highlight key metrics: Focus on growth statistics, profit margins, revenue, customer acquisition costs, lifetime value—the sorts of business fundamentals that Warren Buffett would be proud of.
2. Tell a compelling story with data: On its own, data doesn’t have the power to move investors. The best founders use data to tell a simple yet compelling story about the customer and the business. Investors want to know how your business got to where it is today, where your business fits into larger industry trends and where it’s going in the future.
3. Prepare for counterarguments: Anticipate potential skepticism and prepare data-driven responses. When researching the differences between men and women founders, BCG learned: “More women report being asked during their presentation to establish that they understand basic technical knowledge. And often, investors simply presume that the women don’t have that knowledge.” You’ll be expected to demonstrate and defend the soundness of your numbers. 

3. Leveraging feminine strengths in leadership

In the discourse of leadership, the intrinsic qualities often associated with femininity—empathy, intuition, collaboration—are not just beneficial but essential for transformative leadership. My journey has taught me the dual-edged nature of empathy in business decision-making, highlighting the importance of balancing empathetic leadership with strategic growth objectives. 

In 2024, as we embrace the female economy’s potential, it’s crucial to recognize and harness these feminine strengths in fundraising and beyond, not as a workaround for gender and funding bias, but as a celebration of diversity and inclusivity in entrepreneurship.

The path to gender parity in entrepreneurship is not merely about navigating existing barriers but about dismantling funding bias through inclusive practices and the celebration of diversity. As we champion the cause of inspiring inclusivity, let us commit to creating spaces in conversations and boardrooms alike, where women’s voices are not just heard but are instrumental in shaping the future of business. This journey is not just about individual success; it’s about redefining the entrepreneurial landscape to be truly inclusive, where the next generation of women founders is empowered to lead with their unique strengths and vision.

Photo by Jacob Lund/Shutterstock.com

Teri Yu is the director of product at Kajabi, the all-in-one platform for knowledge creators that helps them turn what they know into sustainable online businesses. Prior to Kajabi, Teri was CEO and Co-founder of Vibely, an innovative social media platform that helps creators monetize their audience through community engagement, providing a place for creators to advertise exclusive events, lead vibrant discussions and share resources.