Women-led businesses have made significant gains in 2021, but the work of using digital technology to level the playing field for women entrepreneurs is only just beginning its ascent, addressing not only the classic barriers faced women in business, but also strong economic headwinds.
The May/June 2022 report “Women Entrepreneurs and Technology: Creating New Markets and Better Opportunities”, a PYMNTS and Payer collaboration, noted that the first three quarters of 2021 saw $40 billion raised by women-owned startups, calling this “a mere fraction of the $239 billion in venture capital (VC) invested during the same period, [but] double the amount raised by female-owned startups in 2020 and 2019, signifying the growing presence of women in the traditionally male-dominated business world.
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In a conversation with PYMNTS, frank faithhead of social impact and ESG at Payoneer, said while much progress has been made in the past year, business building and leadership among women and people of color still lags behind considerable compared to the entrepreneurial community at large.
“The [initial public offerings (IPOs)] of 2021 has definitely seen progress when it comes to women-led businesses, [but] it’s obviously not even close to male-led businesses,” she said, adding that venture capital firms such as Female Funders Fund, Ellevest and Rethink Impact only focus on funding women and people of color.
At this time, the amount of progress that can be made at this time is unclear. Frank said IPOs have slowed in 2022 so far – having more than doubled in 2021 compared to 2020. However, venture capital dry powder has been growing in the first quarter of 2022, and the The growing importance and interest in environmental, social and governance (ESG) issues can help women and minority-led businesses obtain financing.
A carrot and stick approach
Until the current funding drought returns to the number and types of deals seen last year, Frank told PYMNTS there are still some serious gains to be made from those all-time highs.
Part of the problem is the lack of legislation, especially in developing economies where opportunities are immense but meaningless without diversity protections.
Incentives coupled with regulations would be even more useful. Frank said the Securities and Exchange Commission (SEC) introduced new rules around climate and ESG disclosures in May, and lenders are complying with them because it’s the law.
Borrowing from this, she said, “I think if more legislation can be instituted not just for women, but for all different types of investors and all different types of entrepreneurs, that would help as well.”
Mentioning an audience of the Chamber’s Financial Services Committee in early July during which the billionaire philanthropist and former leader of Microsoft Melinda Gates, the CEO and co -founder of Ellevest Sallie Krawcheck and other business leaders testified to the growing entrepreneurship for women, Frank said: “There is potentially legislation to come. I don’t know how long it will take.
See also: Digital platforms fill funding gaps for women-founded businesses in finance and technology
Reviewing the World Bank’s findings that women entrepreneurs are about twice as likely to have their loan applications rejected as men, Frank said she was nonetheless optimistic about the future.
“Some would say it’s driven by the people doing the [lending] decisions, and that the people making the decisions are much more male than female,” she said. “Put more women and people of color in these positions [to be making] decisions will also help.
A newcomer to the world of FinTech, Frank said she joined Payoneer because she was drawn to the company’s mission to create opportunities for entrepreneurs around the world.
“I help build the social impact part of the business and our profile, and it’s going to be built around that mission,” she said. “We want to provide opportunities for women, people of color, to help grow their businesses and reach that new height of success.”