Women entrepreneurs lag behind men when it comes to raising funding. According to the Harvard Business Review, women-led startups only received 2.3% of all VC (venture capital) funding in 2020.
One alternative that women should consider when starting a business is a small business grant. These are gifts given by a third party to help the entrepreneur start a new firm or expand an existing one. According to Lantern by SoFi, “grants could be awarded by federal, state, or local governments or private corporations”. While the money often does not need to be repaid, it does often come with strings attached. For example, a grant may specify how the money is to be spent.
How Business Grants Help Women Entrepreneurs
There are several ways in which grants can help female business owners.
- Zero cost funding: Since the money does not have to be repaid, and there is no commission or interest involved, this gives women breathing room to focus on their business. There may be some expectations, however, that the entrepreneur has to be aware of before accepting assistance. For example, there could be a specification that the recipient of the funds hires professional services to assist with writing a business plan or that she submits regular reports.
- Training programs are often offered by institutions offering business grants. This can teach a new entrepreneur many of the skills she needs to succeed.
- Women-owned businesses can find it easier to get VC funding down the road if they first get a grant. This is because it shows that the entrepreneur has already received backing from a reputable source. Because most such grants come with stipulations, this offers the owner to prove herself by meeting defined goals and targets.
- Publicity can open other doors, as often grant recipients will receive press coverage. This helps the entrepreneur, who gets a welcome spotlight, but also the donor organization.
Given the many advantages of these sources of funding, it makes sense to seek them out. However, many budding entrepreneurs are not sure where to find them. Fortunately, Lantern by SoFi can help with this. Their website offers links to both government and state grants.
There are also private programs available. Some of these, such as the one offered by Howard University and the PNC foundation, is specifically geared towards minorities. This particular one offers a 5-year partnership as well as resources for education and networking.
Other organizations offer grants targeted at specific industries. For example, the Anita Borg Institute for Women and Technology provides two types of awards. One, the Abie Award, provides recipients with up to $50,000. The other, the Pass it On Award, offers small grants of up to $1000 to help women and girls advance their computing education and skills. These awards are geared towards female entrepreneurs who are either already in technical spaces or who aspire to join the ranks.
As you can see, there are many possibilities for women entrepreneurs to getting the funding they need. While many grants do have strings attached, often, the requirements are geared towards increasing the likely success of the female business owner. Given all the advantages, it makes sense to leave no stone unturned as you research the possible funding options that are available via both government and private grants for your business.