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The number one concern for female entrepreneurs prior to COVID-19 was funding, but now it’s simply business survival, reports a new international study, Future Females 2020: Changing Landscape of Entrepreneurship Survey.
Within the first month of the pandemic, 59 per cent of the Future Females community had experienced a negative financial impact on their business, and “fear of the unknown/instability” rose by 18 per cent.
The report identifies three primary concerns for female business owners over recent months: lack of finances, lack of time and fear of the unknown.
The main forms of support that female entrepreneurs say they currently need are business guidance (40 per cent), financial support (38 per cent) and sources of motivation (11 per cent).
But it’s not all bad news: while the global economy has been hit hard by the pandemic, respondents believe there are opportunities for innovation, creativity and growth.
The report says, “There has been a spike in the number of people interested in starting their own business, and in those who are looking for new ways to diversify their income, and to solve the new problems that have come to light as a result of COVID-19.”
In the face of current economic uncertainty, Future Female members are capitalizing on their strong customer relationships and using direct, conscious communication to build trust and provide support to their customers.
“Forty-four per cent of Future Females business owners say having a positive social impact is part of what success looks like for them, and many are looking to modify their product offering in order to meet the new market needs and help society to weather this global storm,” the report explains.
Online migration on the rise
The study reveals that a secondary effect of the pandemic is it’s acted as an accelerator to the migration into the online space, with women across all industries taking advantage of digital assets and tools.
A Future Females survey conducted in March 2020, early in the pandemic, showed a clear shift towards starting and growing online businesses, with 38 per cent of the community growing “solely or primarily” online businesses, and another 30 per cent growing “partially online” businesses.
“As the entire landscape becomes more digitally focused, online funding platforms, payment solutions and marketing resources such as social media are proving to be game-changers,” the March report concluded.
Funding challenges remain
Lack of adequate funding has been a perennial challenge facing female entrepreneurs for decades, and this continues.
According to the International Finance Corporation, women business owners face an estimated $1.5 trillion annual credit gap worldwide, only seven per cent of private equity and venture capital is invested in female-led businesses, and median female-led businesses have received only 65 per cent of the funding received by median male-led businesses.
Future Female posits that one contributing factor, also reported by the International Finance Corporation, is that there are far fewer women in positions of seniority at influential firms, with women holding only 10 per cent of all senior positions in private equity and VC firms globally. The women partners invest in almost twice the number of female entrepreneurs than male partners.
The apparent gender bias in funding remains despite a 2018 Boston Consulting Group (BCG) study showing that women typically require less capital to generate revenue. The study showed for every dollar invested, businesses founded by women generate almost twice the revenue of those founded by men.
The BCG report also revealed that the benefits of female-founded businesses can also be seen by comparing the return for investors, with gender-balanced founding teams achieving 20 per cent higher net IRR.
However, just 15 per cent of the investments made by VCs in 2017, were companies with gender-balanced founding teams according to the Moving Toward Gender Balance in Private Equity and Venture Capital Report.
Connection and community remain vital
Previous studies by Future Females examined the needs of female entrepreneurs. The four key areas that were identified are skills development (both soft-skills and hard-skills), access to experts (through an influential network and the opportunity to learn from experienced mentors), access to funding and, finally, connection with peers and the building of community.