For nearly anyone transforming an innovative concept into a profit-making enterprise, entrepreneurship is literally “risky business.” Starting a company often requires money, time, networks, and expertise far beyond an entrepreneur’s early expectations and best-laid plans. Even in economies that actively encourage enterprise-led growth, the odds of a new business remaining open after five years—around 50% in the U.S. and generally less in most countries—are daunting.
The entrepreneur’s journey is especially challenging for women. As amply detailed in recent years, women in all countries launch new enterprises with fewer resources, and face more treacherous roadblocks, than men. Both social expectations about how women are supposed to behave and actual laws can result in informal, home-based, or relatively small women-owned enterprises. When women try to raise capital for larger businesses, they often struggle to find financing they need—whether from the male-dominated finance sector or even from their own friends and family. The result is a 1.7 trillion global finance gap for women-led entrepreneurs, with less than three percent of venture capital today going to women-led firms in developing economies.
Venturing through the "Valley of Death"
As part of its “Transforming Women’s Lives through Digital Technology” Challenge sponsored earlier this year, DT Global has been studying the unique challenges faced by women entrepreneurs and identifying under-tapped solutions to overcoming the roadblocks they face. Following the announcement of the Challenge’s winning concept note, we (specifically, yours truly!) facilitated a panel at the Women Innovators and Leaders (WILD) Network’s virtual 2022 Women in Global Development Leadership Forum to discuss a critical juncture on an entrepreneur’s journey: “the Valley of Death.” This is the period after which an enterprise has begun operations with initial capital, but before which it has not generated the revenue stay open indefinitely. The sharp dip in a new company’s cash flow looks just like a valley followed by a mountainous incline toward sustainability and profitability.
Supplementing DT Global’s perspective gained from decades of helping entrepreneurs navigate their journeys to sustainability, the WILD panel included Arancha Martinez Fernandez, Founder and President of itwillbe, a Spanish non-profit that helps poor women access and engage digital technologies to create and grow their own enterprises and the winner of DT Global’s challenge. Also participating was Stacy Edgar, a former international development professional and current CEO of Venteur, and Wendy Teleki—Head of the Women Entrepreneurs Finance Initiative (We-Fi).
Eight key takeaways to navigate the Valley
The tangible takeaways from the WILD panel discussion—useful not only for entrepreneurs, but for the finance and development professionals eager to serve them—include the following:
1. Supportive families can make all the difference. As observed by Arancha of itwillbe, many women seeking to escape poverty through entrepreneurship “have to start by fighting [for themselves] in their own families.” Parents, spouses, children, and whole communities often expect women to devote themselves fully to their homes and families and overtly or subtly undermine women’s ambitions for partial independence. Training women who are most constrained by these expectations—and even working directly with families that may oppose their dreams—is an early way to help women entrepreneurs prepare for the Valley of Death, where continuous self-advocacy remains essential.
2. Time management is a foundational skill. Busy entrepreneurs need to relentlessly manage and ruthlessly guard their time, focusing on what matters and resisting time-devouring, low-value distractions. “Be ruthless with time,” Stacy of Venteur advises fellow entrepreneurs, because the most important thing for a new enterprise is survival. Again, training directed at early-stage women entrepreneurs can help them learn to prioritize their time, including by helping them see how they can balance and share their home-based responsibilities.
3. Business accelerators can help women find their footing and build essential networks. Worldwide, accelerator programs for all entrepreneurs are expanding. Sponsored by donors, non-profits, financial firms, and large, sector-based players, the best accelerators connect entrepreneurs to essential skills, advice, networks, and finance. They are “huge door-openers,” according to Stacy, who has worked with three different accelerators since launching Venteur. Among the best resources she has found through the experience are her fellow founders, who, following their accelerator experience, continue to engage each other for connections to customers and “soft introductions” to potential investors.
4. Business accelerators can and should serve women better. According to Wendy of We-Fi, there is abundant opportunity for accelerators to better serve women. Overwhelmingly, women participating in accelerators come away feeling “over-mentored and under-funded.” The best accelerators should assume a greater role in pressing funders to fairly evaluate and respond to entrepreneurial ideas presented by women. Accelerators can challenge the overt and subtle disrespect experienced by women founders and help educate traditional funders on key sectors—such as childcare, educational services, beauty, and education—where women often launch their businesses. Helping women cope with funder bias and misunderstanding is another job for accelerators, which can help women apply key data and technologies as they advance their quests for funding.
5. Women’s networks need to become broader. Although women all over the world prove adept at forging deep and lasting personal networks, they have yet to reap the benefits of the extended business networks that are more hospitable to and dominated by men. Strengthening women’s ties to key sector-based networks (such as trade groups and specific value chains) and in finance, technology, and other professional services, can immeasurably strengthen their readiness. Helping women participate and become leaders in their own affinity groups—such as women’s business associations—is a powerful way to help them gain confidence and experience; just as importantly, women entrepreneurs require access to and a welcoming experience with a range of empowered partners. Broader networks may lead to empowering collaboration opportunities: As observed by Wendy, the highest-potential firms often are those that operate under gender-diverse leadership and senior management.
6. Everywhere, implicit bias must be assessed and addressed. It is a sad truth of domestic and global finance that deeply entrenched attitudes and stereotypes among all genders assign greater value to the ideas, experiences, and capacities of traditionally empowered men than to women and other minority groups. There is vast under-funding of entrepreneurial concepts and solutions offered by women, ethnic minorities, people with disabilities, and other underserved groups. During the WILD panel, Stacy recounted her observation of how, even in the most dynamic venture capital environments in the world, investors ask women founders more questions about risk, while men are invited speak more in terms of “opportunity.” The yardstick stretches further, she said, when it comes to measuring the revenue, traction, and progress of women-owned firms. Against this backdrop, development professionals and other outsiders could help decision-makers recognize their biases and help business organizations call out these inequitable realities.
7. Women entrepreneurs can be well-served by all kinds of capital. Often viewed as non-traditional entrepreneurs, women must become adept at turning over many stones, seeking finance that is best applied to the type of business they are growing. Increasingly, banks and other lenders offer loan products that exhibit greater awareness of the strengths and opportunities forwarded by women entrepreneurs. Contests (such as DT Global’s Challenge), hackathons, and “angel investors” also present opportunities that can bridge the Valley of Death by bringing not only new monies to a new company, but an injection of confidence and redoubling of resolve. Business support professionals and service providers—such as banks and lawyers—can also reduce or defer fees, helping entrepreneurs to incubate a new enterprise and bet on their own success.
8. Ultimately, crossing the Valley of Death is about survival and tenacity. As evidenced by statistics worldwide showing that many enterprises fail even after they are formally established, the endeavor of keeping a new and innovative concept alive is difficult. But family support, self-advocacy skills, targeted training, and forging connections, can make a woman’s journey easier. Where funding is concerned, Stacy advised, raising money “is like courtship.” Beyond a single pitch, entrepreneurs must engage over many months and multiple meetings, digging deeper, building relationships before additional capital is even needed or sought. “Get to know people, and let them get to know you,” Stacy says—because in the end, they are placing their bets on a person. As for funders and development professionals, relentless dedication to strengthening the enabling environment remains an essential goal. Finally, for all entrepreneurs, an adage applies: “If at first you don’t succeed, try, try again!”