The Tides They Are A-Changin’ for Female Founders

Changing Tides Movement
7 min readMay 7, 2021

10+ ways female founders are finding funding, beyond VC funding

  • Jennifer LeBlanc, founder of the Changing Tides Movement
10+ Ways to Fund Your Business
10+ Ways to Fund Your Business

It’s time we pulled back the curtain and revealed the wizard: VC funding is neither required nor desired for every business. From my Silicon Valley perch, that may seem heretical, but to me, it’s just … logical. Very few companies, whether led by male or female founders receive VC funding. Just 0.05% of companies receive VC funding. Less than half a percent!

VC funding is especially not ideal, or likely, for businesses run by women. If we take the 100% of that 0.05% of companies that receive VC funding and divvy it up by gender of the founder/founding teams, just 2.3% goes to all female teams. The vast majority of VC funding goes to all male teams. It goes up and down from year to year, but the needle isn’t moving much. So the math here is getting pretty small, and as a business owner, I’m never keen on infinitesimal odds in my business.

Plus, it can be extremely expensive capital. Again, as a business owner, my job is to always be lowering my costs while increasing revenue. So tell me again why female founders are encouraged to pursue VC funding? And more importantly, please tell me why they are made to feel like failure when they don’t secure VC funding at 2.3% of 0.05% …? Those are terrible crap table odds ….

The Shame of Not Raising VC Funding

At our Changing Tides Wave Tour 2020 event, Christina Stembel, founder of Farmgirl Flowers, talked about how people looked over her shoulder for the next “interesting” person to talk to the moment she indicated that she hadn’t taken VC funding and was bootstrapped. How she felt like a failure because she didn’t have VC funding, or even the “right” VC backing. Hold on a minute — are we saying that a business that is SO successful that it doesn’t require outside support (that is after all, what VC funding is) is a failure? There is something very wrong in our thinking if that’s true.

Furthermore, Christina made the point that one day, when she’s ready to sell the company, she retains over 90% ownership. Again, let’s do a little math here. 90% of a multi-million dollar company sale is a lot of cash. Very few VC-backed founders retain much equity in the business they created. If they are lucky enough to still be founders at the point of sale since the VC process often pushes the founder CEO in favor of a chosen “professional CEO”.

The Array of Funding Alternatives

The reality is most companies never take a cent of VC funding. Ninety-three percent of the fastest growing companies on the Inc. 5000 list did not take venture capital funding, according to Melissa Withers, co-founder of revenue-based investment firm RevUp Capital.

So where is the funding coming from, especially for female founders? That is the question we are examining at our upcoming Spring Summit with the theme “VC and beyond”. There’s a world of funding out there to support female-founded businesses (well, all businesses really but my focus female-founded businesses). We will be having sessions throughout the event on the 10+ ways to fund your business “beyond VC”. VC funding may make sense for your business, but it’s far from the only game in town, ladies.

There are an array of ways to ensure your business grows with sources such as good old-fashioned customer revenue, friends and family, angel investment, strategic corporate venture capital, crowdfunding, traditional bank and SBA loans, government and private grants, to invoice factoring to ease cashflow and SEALs (shared earnings agreements), and more.

Data from SCORE, the nonprofit resource arm of the US SBA, indicates that women tend to use sources of funding a bit differently from men. Women charge 7% more to their credit cards than men do, for example. From the chart below, it’s clear that VC funding is the least likely form of capital used by women-owned businesses (at just 11% of businesses). Compared to other (non-SBA) loans at 54%, credit cards at 46%, personal savings at 40%, friends and family at 25%, SBA loans at 20%, and mortgage/401(k) at 15%.

What IS Working for Female Founders?

There’s plenty of good news to share about female founders if we look beyond the dismal VC funding rate. (Which by the way, is not a problem for female founders to solve — this is a problem that we as investors need to solve — and I’m growing tired of every female founder conference and event trotting out the latest dismal stat on the lack of VC funding for female founders. We all know it. We live it. It’s male investors who need to learn about it if they want to have better returns for their limited partners.)

There’s plenty of evidence that female-led teams outperform all-male teams and deliver better returns to their investors (here and here). I examined this in detail in my book, Changing Tides: Powerful Strategies for Female Founders, so it’s not new news. It’s just smart business sense to invest in female-led and diverse teams.

A few positive trends to consider:

  • 36% of small businesses are owned by women
  • The number of businesses owned by women in the US has increased by 114% over the last 20 years
  • 4.2% is the yearly growth of women in business in the last 12 years
  • In the last 45 years, businesses owned by women of color have increased 163%.

There is even progress within the VC funding world. In 2019, 21 new female unicorns were born. Julia Cheek, founder of Everlywell, raised $175 million in December 2020 to expand virtual and at-home health test kit offerings. It is now valued at $1.3 billion. ezCater CEO Stefania Mallet now runs a company valued at $1.25 billion. Julie Wainwright of TheRealReal, a used luxury goods marketplace, became a unicorn with a valuation of $1.7 billion. Horizon Robitics CEO Annie Tao now runs a $3 billion company. The list goes on.

And in 2019, 20 percent of global startups that raised their first funding round had a female founder on their team, which is double the 10 percent from ten years prior, in 2009. In the last five years, close to 9,900 startups raising an initial funding round had a female founder, almost double the count from the previous five years with only 5,300 startups.

Between 2010 and 2019, there has been 8x growth in the amount invested into companies with at least one female co-founder at $26.6 billion ($6 billion in female-only founded and $20.9 billion in female/male co-founded companies).

Growth in Changing Tides Community

We are seeing the tides change in our Changing Tides Community as well. A few examples of the wins we are seeing, many of these since we held The Wave Tour in November 2020 (and some as a direct result of that event):

Because of stories like these and those in the broader female founder community, I know the tides are a-changin’, despite the odds. So let’s focus on what *is* working for female founders and ease the journey for them. I believe there are many options and resources available for female founders and womxn entrepreneurs — we just need to pull back the curtain to reveal the wizard and break the pattern of pushing women into molds that don’t necessarily fit them well, Or serve them well.

If you agree, or are curious, join us next week at the Changing Tides Spring Summit. We do have a few free tickets still available (they are limited) and we would love to meet you and connect you to our supportive community of female founders, womxn entrepreneurs, investors, allies and ecosystem partners. The water is warm.

Jenn LeBlanc

As the founder of Changing Tides Movement, Jennifer works with female founders, allies, investors and ecosystem partners to drive massive amounts of capital into the hands of female founders because she knows it will literally change the face of the universe. She is also the founder of ThinkResults Marketing, a top Silicon Valley marketing agency. She is the author of Launching for Revenue: How to Launch Your Product, Service or Company for Maximum Growth and Changing Tides: Powerful Strategies for Female Founders.



Changing Tides Movement

Female founders, entrepreneurs and business owners collaborate, cooperate and co-create a community designed by women, for women.