Female Founders Face an Uphill Battle. This Contest Wants to Give them $50K

And a seat at the table.

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Seventeen percent and three percent. 

Those numbers reflect the percentage of startups that have a female founder and the percentage of all venture capital going to companies led by women. 

Do women just have less interest in entrepreneurship than their male counterparts?

No—quite the opposite, in fact. Last year, the business planning and assistance nonprofit, SCORE, conducted research that showed female-owned businesses have increased by fifty-eight percent, and that women are now slightly more likely than men to start a business.

And women don’t just start companies.

They start successful companies. 

According to First Round Capital, startups with a female founder or co-founder outperform all-male founder teams by sixty-three percent. Despite that success, female founders struggle to get funding—but one nonprofit is trying to make a dent in that.

Since 2012, Arch Grants has hosted a competition that provides $50K equity-free cash grants to startups with the condition that they relocate to St. Louis, Missouri. The results are impressive: More than ninety percent of the 134 Arch Grant Recipients are still in business today. 

Though the competition is not exclusively focused on any one demographic, the organization is actively working on funding more female founders. 

“One of our missions is to fund startups through our Global Startup Competition that are reflective of the community we serve,” said Arch Grants Executive Director Emily Lohse-Busch. “To be clear, we are not doing that to meet some sort of diversity quota. Research has shown that startups founded by a woman—and startups founded by immigrants, for that matter—are disproportionately successful.”

There is a reason for that. 

“As a woman, I know I have to work to prove myself from Day 1,” said Megan McKissen, the former director of a startup incubator and now co-founder of communications firm McKissen + Company. “When you have to earn a seat at the table, what you do once you’re at that table has a good chance of being something pretty special.”

While Arch Grants is working to increase the number of female-led startups entering its annual competition, the organization has already funded some of the country’s most exciting female founders.

“Arch Grants helped us establish our business model and move our product into beta testing,” said Nadia Shakoor, co-founder of Argela Ecosystems. “Thanks to them, we were able to turn our research project into a viable company.”

The program has also helped female founders expand their existing startups.

“Because of the funding we received from our Arch Grant, we were able to hire two new account executives that supported our shift into agribusiness,” said Beth Handrigan, co-founder and CEO of Lean Media

Of course, one organization will not break the glass ceiling that exists in startup world. In 2018, just seven percent of the partners at the top 100 venture capital firms in the country were women. 

The barriers don’t end there.

A study by the Harvard Business Review found that the questions investors ask female founders make a difference. The HBR research found that female founders are frequently asked “prevention-oriented” questions around safety and responsibility, while male founders were more often asked “promotion-oriented” questions about hopes, goals, and achievement. 

In other words, investors ask women questions about what could go wrong while asking male founders questions about what could go right. 

It’s a process that lends itself toward biased funding decisions.

It’s also a process that drags down the economy by leaving talented, high-performing female entrepreneurs starved for capital. 

No single organization will solve a problem that is ingrained in a society. However, collective action from several investors, VC firms, and organizations that support entrepreneurs will make a difference. In St. Louis, one organization is doing its part by making a push to increase the number of female founders entering its global startup competition. 

The prize?

Fifty thousand dollars, a seat at the table, and the chance to do something pretty special. 

*Special thanks to Transcription Outsourcing for transcribing the interviews to help make this article possible.

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