The past year has seen the Federal Reserve increase interest rates. The tech industry witnessed massive layoffs. Thus, 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 desired to support women entrepreneurs. Reports suggest that women who established or co-founded companies generated 105 percent more cumulative revenue. Women entrepreneurs tend to provide unique solutions to the market. Consequently, they face less competition due to a lack of funding.
Eight ways Venture Capitalists can help women establish startups
1. Provide equivalent valuations depending on true corporate value.
The company’s valuation is considered to be a crucial market signal. Research conducted in 2018 shows that women-established companies derive lower valuations when compared to male-operated firms. However, this disparity highlights the need for increased awareness and efforts toward gender equality in valuation processes. Hence, as a limited partner or VC, you can provide unbiased and fair valuations. Moreover, this approach enhances transparency in the investment process. Furthermore, a different team can review the variation metrics by setting them up and following clear guidance.
2. Champion women pitching:
Investors generally get to hear countless pitches. Consequently, standing out and making a memorable impression is crucial for entrepreneurs. Make other decision-makers aware of gender differences arising from such pitches. Women, for example, might present more conservative pictures than men. Nonetheless, this should not overshadow their potential contributions. Often, men and women ask different questions as they pitch. Hence, when creating systems, decision-making should be devoid of any bias. Consequently, fostering a fair and inclusive environment becomes paramount. 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’s pitching. Diverse voices can help you understand and evaluate potential deals from different angles. Additionally, it also enables them to provide their own examples. Take into consideration a niche market. Add those with adequate experience in the subject to the decision team. It helps streamline the goods that are viable. The due diligence process needs nothing major.
4. Explore innovative solutions:
Moreover, women generally deal in products or services to solve issues that they have experienced first-hand. Somebody’s financial problems might have led to the establishment of 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 have not experienced or seen such solutions before. Nevertheless, they offer unique opportunities for consideration. Such businesses might have 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 ventures. 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 with those running such groups. It allows them to develop a strong social impact.
6. Enhance diversity in 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 you make better decisions. It also significantly 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. This has been accomplished by increasing funding opportunities for female-led businesses. Access should also be provided to essential resources and networks to help secure venture capital.
8. Improved mentorship programs:
Moreover, 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.
