The past year saw the Federal Reserve increase interest rates. The tech industry witnessed massive layoffs. So investors are eager to know what 2024 will offer. Economists predict that earnings-per-share growth will rebound in the coming year. However, a real strategy is needed to support women entrepreneurs. Reports suggest that women-established or co-founded companies generate 105 more cumulative revenues. Women-established companies tend to provide unique solutions to the market. They face less competition due to a lack of funding, highlighting the critical role venture capitalists must play in supporting their growth.
Eight Ways Venture Capitalists Can Help Women Established Startups
1. Provide equivalent valuations based on true corporate value:
Company valuation is termed to be a crucial market signal. Research conducted in 2018 shows that established companies derived lower valuations when compared to male-operated firms. Hence, as a limited partner or VC, you can provide unbiased and fair valuations. A different team can review the variation metrics by setting up and following clear guidance.
2. Venture Capitalists Should Champion Women Entrepreneurs Pitching:
Investors, including venture capitalists, generally hear countless pitches. Make other decision-makers aware of gender differences arising in such pitches. Women entrepreneurs, for example, might present more conservative pictures than men. Often, men and women are asked different questions as they pitch. Hence, when creating systems, decision-making should be devoid of any bias. All pitch sessions should involve a minimum of three women. Make investments by determining the business and not the presenter.
3. Women should be part of the decision-making team:
It helps champion women pitching. Diverse voices can help you understand and evaluate potential deals from different angles. It also enables them to provide their own examples. Take into consideration a niche market. Add those with adequate experience in the subject onto the decision team. It helps streamline the viable goods. Nothing major is required to be changed in the due diligence process.
4. Venture Capitalists Should Explore Innovative Solutions by Women Entrepreneurs:
Women generally deal in products or services to solve issues that they had experienced first hand. The financial problems faced might have led to establishing financial products and solutions. The objective is to help others face similar problems and provide appropriate solutions for them. It could have a positive social impact. As an investor, perhaps you might not have experienced or seen such solutions before. Such businesses might present a high ROI.
5. Encourage invested founders to be part of peer-to-peer networks:
Such networks motivate women to establish higher aspirations to succeed in their new venture. It helps them embrace, innovate, and grow. Your task as a fund manager or an investor is to enable women to move in the correct direction. Prepare a list of a couple of peer-to-peer groups that are relevant to your sector or industry. Connect entrepreneurs to those running such groups. It allows them to develop a strong social impact.
6. Enhance diversity on teams:
It is another important step taken to achieve gender parity. A more diverse team enables enterprising women entrepreneurs to get opportunities that are inclusive of diverse perspectives and are more welcoming. A diverse team can help make better decisions. It also boosts industry innovation.
7. Female founders to be provided with more access to capital:
An effective way to enhance gender parity in this segment will be to provide female founders with easy access to capital. It is achieved by offering female-led companies more funding opportunities. Access should also be provided to essential resources and networks to help secure venture capital.
8. Improve Mentorship Programs for Women Entrepreneurs with Venture Capitalists Support:
It is another way venture capitalists can improve gender parity. Mentorship opportunities provided to women entrepreneurs will enable them to develop desired knowledge and skills. They can achieve success in their objectives and reach milestones.
Thus, implementing the above tips can help women entrepreneurs achieve success.
