The future is female and the present is fertile ground for progressive change; women-led startups in SDG implementation is worth our dedicated, coordinated attention
Guest blog: R. Bong Vergara is the founder and director for CYPHER Impact Investment Exchange (CYPHER X), a California nonprofit focused on the investment readiness of women-led startups.
Low investment flow and poor investment readiness impede the participation of women entrepreneurs in the technology field, thus, in advancing the STI framework for local Sustainable Development Goal (SDG) implementation. Only 2% of funded startups are women-led. If women startups are to fully contribute to the low-carbon transition, it is important to eliminate low investment flow and poor investment readiness as gendered and racialized barriers. Doing so requires strategies that are participatory, inclusive, and creative.
I’m part of a team of advanced practice social workers that is laser-focused on supporting women-led startups; we particularly support those working on SDGs 1, 3, and 10 because of their goodness-of-fit with social welfare issues. If all communities, no matter their background, are to benefit from and take part in the low-carbon transition, we need to face the social welfare dimension of that transition; issues of diversity, equity, and inclusion need to be organizing and developmental principles that are applied as vital tools for complex problem-solving. Since more than 80% of social work leaders, educators, and practitioners are women, supporting women entrepreneurs enables us to also promote a professional social work perspective to the low-carbon transition.
To support social impact startups, particularly those that are women-led, we tackle two problems: low investment flow and poor investment readiness. See our explainer video on YouTube https://www.youtube.com/watch?v=ay5zVlq4zQM
Key Factors to Low Investment Flow. Access to investment dollars is major problem for startups, especially those that are women-led. At least 83% of startups, in general, do not access bank loans or venture capital, approximately 65% rely on personal and family loans, and close to 10% use their personal credit cards. Self-financing -- or bootstrapping -- serves as the principal financing approach for many startups; unfortunately, it is a viable option only for those already with the financial means, thereby contributing to a longer runway in building and providing real value to customers, limiting opportunities for traction, preventing founders from investing as much as they should in validating the product-market fit of a prototype and contributes to the emotional strain of building a startup. As for the issue of social equity, gender and race intersect with placed-based matters to constrain investment flow to women-led enterprises. Capital markets tend to concentrate investment in certain places and communities (e.g., established financial centers in Boston, Chicago, Frankfurt, Hong Kong, London, New York, Paris, San Francisco, Shenzhen, Shanghai, Singapore, Tokyo, and Zurich), leading to ineffective discovery of the full spectrum of startups, especially those led by women. Men dominate the startup ecosystem, often leading to experiences of bias, prejudice, and discrimination among women and cultural (e.g. LGBTQ) minorities that aggravate the stressors and emotional strain of building a business. Attesting to its scale and importance as a global issue, the UN Women and its Global Innovation Coalition for Change (GICC) exist to advance gender equality.
Key Factors to Poor Investment Readiness. Investment readiness is an issue for which best practices remain influx. It has three dimensions: equity aversion (i.e., founders equating equity investment to a ‘loss of control’ to investors); investability (i.e., founders not meeting investor requirements) and presentational failings (e.g., poorly considered and constructed business plan and pitch presentations); furthermore, three dominant reasons for poor investment readiness include weaknesses in the management team, flawed or incomplete marketing strategies, and flawed financial projections. Recent research finds that more than 90% of startups fail, and that approximately 49% of entrepreneurs report a mental health condition, and that poor mental health undermines founder performance, often contributing to substance abuse, team conflict, a toxic company culture, and poor decision-making, such that 65% of failed startups are due in part to the effects of poor mental health and less than 50% of startups make it past year five due to founder burnout. Some investors and founders take mental health seriously enough to support the Investor’s Pledge , while others include a line item in their P&L for wellness or self-care.
To address low investment flow and poor investment readiness effectively, what is needed is a broad, deep, and durable social movement that brings women-led startups from the margins to the center. Building and sustaining such a movement require strategies that are participatory, inclusive, and creative. As such, our chosen strategy is to use the arts -- music, singing, poetry, and dance -- to tell stories of how women entrepreneurs harnessing technology for social good.
Join us at “The Future is Female: The Music of Diversity, Equity, and Inclusion” benefit concert to be held on December 28, 2019. We will simulcast via Facebook and YouTube to reach our friends far and wide. To ensure as many women groups know about the event, we designed a Watch Party program and need your help. More details on the event and Watch Party program can be found at https://thefutureisfemaleconcert.eventbrite.com
Through music, poetry, comedy, and community-building, we raise awareness of the needs of women-led startups. We leverage local artistic talent to tell the story of women changemakers and mobilize support for the investment readiness of women startups. Through a benefit concert that will be broadcast via Facebook Live and podcast interviews with key opinion-makers, we will:Raise public awareness of the needs of women-led startups. Artists will perform songs, poetry, and dance that tell the story of women leaders and innovators in the global movement toward sustainable development and a low-carbon future;Mobilize financial support for the investment readiness of women-led startups. We will use currently available crowdfunding tools; donors will get an opportunity to nominate women-led startups for accelerator services from CYPHER X; andEstablish the practical application of the arts in advancing the STI framework for SDG implementation. We put the ‘A’ in ‘science, technology, engineering, art, and math’ (STEAM). Event will lead to stakeholder engagement tools that are art-related.
ReferencesCarrasco, I. (2014), "Gender gap in innovation: an institutionalist explanation", Management Decision, Vol. 52 No. 2, pp. 410-424. https://doi.org/10.1108/MD-07-2012-0533
Chapman, Jake (December 30, 2018). Investors and entrepreneurs need to address the mental health crisis in startups. Retrieved from https://techcrunch.com/2018/12/30/investors-and-entrepreneurs-need-to-address-the-mental-health-crisis-in-startup-culture/
Chen, Amy (April 19, 2019). It's Official: Self-care Leads to Long-term Business Success. Retrieved from https://www.entrepreneur.com/article/331861
Hammond, Jonathan. (June 4, 2018). How do we Bridge the Gender Diversity Gap in the Startup Space? Retrieved from https://medium.com/startup-grind/how-do-we-bridge-the-gender-diversity-gap-in-the-startup-space-3956c5dd33c
Hanna, Hala & Federal, Caroline (June 30, 2017). To Fix the Gender Gap, Fix the Digital Divide. Retrieved from https://solve.mit.edu/challenges/women-and-technology
Herrling, Sheila (n.d.). Women-Led Startups Aren't Getting Funded, and There's a Very Simple Reason Why. Retrieved from https://www.inc.com/sheila-herrling/women-led-startups-arent-getting-funded-theres-a-very-simple-reason-why.html
Hwang, V., Desai, S., and Baird, R. (2019) “Access to Capital for Entrepreneurs: Removing Barriers,” Ewing Marion Kauffman Foundation: Kansas City.