The ambition of women CEOs is even more striking given that they are still battling to unlock capital that is much more readily available to enterprises run by men. A persistent challenge in accessing funding at an early stage of the business lifecycle for a large proportion of female-led companies may be holding them back from exploring further financing opportunities.
The survey found that one in five women CEOs (20%) have no plans for raising capital, compared with just 3% of male CEOs. Strikingly, more than half of women-led companies (52%) have no external funding at all, compared with 30% of male-led companies. And 41% of female CEOs say they have not yet considered or planned an IPO, compared with 23% of male-run firms, although this may be partly explained by the fact that a greater proportion of female-led companies are less than five years old (26% of women-led businesses are start-ups compared with 11% of those led by men).
Why the funding gap matters
A report published in the journal Venture Capital in 2017 found that 97% of total venture capital funding went to companies with a male CEO, with possible reasons being the sourcing of deals through entrenched male-dominated industry networks, and the tougher screening process applied to female entrepreneurs. Meanwhile, a 2016 report by TechCrunch on venture capital investment found that between 2010 and 2015, only 10% of venture dollars globally went to start-ups with one or more female founders. Kiyomi Tsuchiya, MD of Japan-based Sound-F Co and STOCK POINT Inc, comments: “In a situation where there are two individuals with the exact same skillsets and one is a female and the other is a male, chances are the male would be chosen.”
This funding gap matters because companies with high growth potential that fail to secure early investment can have a harder time scaling up. Women CEOs are all too aware that limited funding opportunities are holding their companies back. Almost three times as many women as men say funding is the most significant factor in building their company’s agility (17% versus 6%), while 17% believe the cost and availability of equity finance is the greatest barrier to growth, compared with 11% of male peers.