Over the last year, the leadership of venture capital-backed women founders continues to get press attention from Audrey Gelman’s resignation from The Wing to Steph Korey’s management challenges at Away. We’ve read about these now public struggles and just recently, Fortune published a piece covering startup female founders and the double standard they experience running businesses, and how that’s covered in the media. Venture-backed companies in general receive a bulk of the business and tech press coverage. I am not saying we shouldn’t be telling these types of stories because the double standard for male and women founders exists, but that's not the whole story. Another part of this story is the double standard created by the media between women who raise money (venture capital) and the women business owners who don’t, more than ten million to be exact.
The stories told can be different. While it is important to examine what went wrong and more importantly the lessons from these founders’ very public struggles, I truly believe there is an opportunity – and a responsibility - to show that these are not the only women’s leadership examples in business. There are other women-owned businesses managing and growing their companies with success, building outstanding cultures and creating incredible products and services. The perspective that the responsibility of the failure or success of a company depends on a group of investors isn’t the full picture. When any founder, male or female, raises money from an investor you know the stakes. To quote something I learned from my mother, “they know the bed they are making and must lie in it.”
Kara Goldin, Founder and CEO of hint, created a whole new category of beverage with a personal investment and budget of $50,000. But that was the start of building her company. It has taken millions of dollars and fifteen years to where they are today. As Goldin says in her recently published bestselling book Undaunted, “That was the beginning, not the end, and I’m here to tell you that, sometimes, if you think too much about the end, you will never get past the beginning. While Hint has raised millions since that first $50,000 of personal savings, most recently in a $25 million Series D, it hasn't taken traditional venture capital or private equity investment." Given the media’s coverage, many entrepreneurs continue to believe they need to seek funding from venture capital, but the truth is, that's not the only way to raise money or build your business. Hint remains the number one independently owned non-alcoholic beverage company in the U.S.
It seems strange that often, only companies that have raised capital from investors, specifically the VC community, are deemed successful. This is especially true as most investors ultimately care about rapid growth (10X if we’re getting specific) and the success of their investment, and not focused on the culture of the company, the customer, or the development or preparation of the CEO nor his or her success. But raising capital is merely one way to identify businesses with potential. What these stories don’t tell are the many examples of ways to build successful companies, with the customer at the core of what they are building, creating inclusive and diverse cultures, many with tremendous impact, with innovative products and services. We forget those founders who self-funded at the beginning, scaling at their own pace, raising when and if they need to, including Goldin, Beatrice Dixon of The Honey Pot, and Jacquelyn De Jesu of Shhhowercap to name a few.
“Women startups do not have to start with a ton of money. Honey Pot is an example of that, we started with little to no money because we wanted to understand the lay of the land and also our customer and their behaviors. I think the best way to raise is when you need it and when you have a very big fish that will scale your business strategically and for the long term,” says Dixon. The Honey Pot’s success didn’t come from landing an early venture capital investment. Instead, Dixon started her company with a $21,000 loan from her brother and co-founder, Simon Gray and spent three years working a full-time job to support herself while launching her company.
The reality is there are many ways to build companies and many may never want to sell. They are the heart of America, generating $1.8 Trillion of revenue per year. Of the fourteen million women-owned businesses in the U.S., more than 75% self-fund their business. What many of these businesses need is access to business financing such as working capital loans, lines of credit, and small business loans. Less than 2% of women founders receive VC capital, and while that number should be much higher, the majority of small businesses or start-ups should never and will never raise from an external investor. Companies like IFundWomen, Hello Alice, Luminary, and many others create space and community as well as resources to support entrepreneurs, most of whom are women, in building their businesses and who need investment at coaching and mentorship at the start.
With more than 1,800 new businesses started per day by women, and the majority of those businesses were started by women of color. The face of entrepreneurship is evolving and the stories being told need to evolve too. It’s these small, bootstrapping businesses that are often excluded from the networks of connections, introductions and doors being opened for them, with considerably less access to expert mentors and potential capital expansion.
Why do we make raising money this assumed measure of success and continue to question women entrepreneurs’ competency and market knowledge, particularly if they do not or are not able to raise money? If we don’t tell the broader story, how do we combat misconceptions that women who don’t raise venture capital are building businesses that aren’t successful or profitable? These founders and their businesses are routinely disregarded for the sheer fact that they have not raised money (yet). While we continue to advocate, we need more voices and perspectives at the table, these voices are rarely heard yet they makeup 40% of all businesses in the U.S and employ more than 10 million people.
Telling a different story might provide support to founders in an alternate way, breaking down some of the barriers that exist around access to new markets, recruitment of critical employees, start-up funding and growth capital. Despite women owning nearly half of all the businesses in the U.S., in 2019, less than 2 percent of women-owned businesses generated more than $1 million in sales (and that percentage is even lower when you only look at women of color). How we do “invest” in these founders in a much different way with access to funding but also access to peer networks, business resources and tools to help a founder and their business succeed, not just raise capital.
It’s important for the media to tell the stories of different founders and the stories we tell about management and business strategy need to evolve. There is a double standard for women founders but there’s also over-sensationalizing venture-backed founders. Creating an either-or bucket further hinders the ability of women business owners to amplify their voices and their businesses.
De Jesu started Shhhowercap after she saved money for the 6 months leading up to her product launch. The more she saved, the longer her lifeline became. It also meant the longer she had to prove her concept and turn a profit before looking at ways and options to scale her business. "As a consumer goods company, you can be very successful independently — if your unit economics are healthy and you have a strong brand presence. However, there are pros and cons to every business decision. And, neither path guarantees success. Ultimately, it comes down to product market fit, demand, and tenacity.
How you finance your business is a deeply personal decision that guides the way you work, live, and where you spend your energy. Consider all options to support what success means to you as the business founder. Especially in times like these, always be sure whatever path you choose enables you to protect your business from the unexpected,” says De Jesu.
The pandemic has provided an additional spotlight on main street small businesses and how they are rebuilding and recovering. With PPP and other government programs, as well as support from large companies and programs infusing grants into small businesses especially those led by people of color, the media should be looking for greater emphasis on how to support these women and their companies overall, and tell their stories - both trials and triumphs - and not only for “Small Business Saturday.” The double standard that has been created amplifies the voices of one community over the voices of millions that are not only surviving but thriving.