Did you know that U.S. women-led businesses:
- Generated $2.7 trillion in revenue in 2023[1]
- Grew their market share of new businesses by 72% between 2019 and 2023 1
- Started nearly half of all new businesses in 2023 1
- Increased average annual revenue 15.5%1
- Grew new businesses 2X faster than men since 2019[2]
Despite this surge, women business owners continue to experience barriers in funding, pay and valuation. Although women could be set to inherit a large portion of the $9 trillion[3] expected to horizontally transfer over the next decade from spouses and partners, closing the wealth gap will also depend on their independent financial success.
Barrier 1: Funding
Estimates show almost a $1.7 trillion financing gap for women-owned small- and medium-sized enterprises globally.[4] According to Harvard Business Review, capital access is a primary obstacle to women entrepreneurs’ profitability.7 Female-founding teams averaged only 2.4% of total Venture Capital funding.7
While this gap seemingly stems from deal-sourcing and pitching, it could also be linked to women’s’ historically held hesitation in seeking financing to avoid debt or being rejected by a lender.[5]
Barrier-buster tip: Seek the funding you need.
Barrier 2: Pay
Women put themselves at a disadvantage when setting pay. According to University of Chicago, there’s a big discrepancy in how women determine their compensation versus men.[6]
It’s common for a founder to refuse or take a lower salary during a company’s early days, yet data shows 42% of men paid themselves a salary consistent with industry standards, compared with 18% of women. 9 Further, on average, female entrepreneurs paid themselves 28% less than men.9
Barrier-buster tip: Compensate yourself fairly.
Barrier 3: Valuation
The valuation process for women-owned businesses should be a priority equal to establishing capital equality among entrepreneurs. According to a Boston Consulting Group study, women-founded start-ups offer a stronger average ROI than men: 78 cents per dollar vs. 31 cents.[7] However, because initial investment in women-founded start-ups is considerably less than men-founded, the timeline for demonstrating long-term viability is longer.
Barrier-buster tip: Be strategic in determining your valuation timelines.
Closing the gap, empowering women entrepreneurs
While women are founding new enterprises daily, there’s still a long way to go towards ensuring they have equal opportunities for success. Closing the gender wealth gap starts with education and awareness, followed by thoughtful, deliberate action.
As a female financial leader, myself for 27 years, I’ve seen considerable growth and resilience, among women-owned and led business owners. More than ever, I encourage you all to double-down: be strategic and recognize that your actions are not only empowering women economically, but that they are making strides to close the wealth gap.
Author: Corey Saba-Basha is commercial banking leader for Wells Fargo.
[1] Revenues Of Women-Owned Businesses Grew 15% In 2023 (forbes.com)
2 2024 Impact of Women-Owned Businesses Research | WEI (wippeducationinstitute.org)
3 Spouses, Especially Women, Could Inherit $9 Trillion: UBS – Business Insider
4 Research: How to Close the Gender Gap in Startup Financing (hbr.org)
5 Why so many women business owners avoid bank loans | American Banker
