What to Know About Hiring--and Retaining--the Class of 2024
Here's What Employees Think the Workplace Will Look Like in 30 Years
AI Will Give You Friday Off, Says Billionaire Steve Cohen
Trump's Truth Social Filings Offer a Window Into How He Does Business
Bitcoin or Bust: Investors Are Still Bankrolling Crypto Startups
Will AI Deliver a Real Star Trek Replicator? This Founder Is Making It His Mission
What Is Flip Commerce and Should Your Brand Join It?
It's tough out here for startups--especially the ones led by female founders.
For the past two years, entrepreneurs have been operating their businesses in a high interest rate environment in which bankers are stiffening loan standards and venture capital firms pulling back funding. That impact is compounded on female founders, who are now facing a double-dip downturn, says Alison Wyatt, co-founder and CEO of the Female Founder Collective. That's because not only did overall funding to all women-led companies decline last year in terms of the amount of money invested and the number of deals struck, according to a recent report from PitchBook, but the industries that female entrepreneurs tend to congregate also took a hit.
"The types of businesses that women are building are more focused in the consumer sectors, which are the sectors that are having trouble," says Wyatt, who co-founded the network for women-led businesses along with fashion designer and entrepreneur Rebecca Minkoff. "You're seeing venture capitalists shy away from consumer, because they're not seeing the same returns on exit that they need."
Indeed, Crunchbase found that the consumer sector, which includes e-commerce and shopping-related businesses, was one of the worst performers in 2023 with the amount of venture funding falling by 60 percent year-over-year. For direct-to-consumer brands, it has been even worse. Since the industry's 2021 peak, investment has plummeted 97 percent from $5 billion to $130 million in 2023, according to Crunchbase.
That dynamic is not going to change anytime soon, says Wyatt: "It's going to continue to be a somewhat chilly environment."
These odds are nothing new for female-led startups. For the past 16 years, the proportion of venture funding allocated to all-female-founded companies has never reached 3 percent, according to data from PitchBook. Last year, that share rounded out to 2 percent. That gap is in part what inspired Wyatt and Minkoff to launch the Female Founder Collective back in 2018. Even though female founders may have struggled with fundraising, Wyatt says, they can translate that experience and grit into an advantage--especially in a frigid climate like this one that has become laser-focused on profits over growth.
"They've had to build profitable businesses, because they don't have as much access to capital," says Wyatt. "They've always had to know how to do more with less."
Wyatt and Minkoff, who also serves on Inc.'s inaugural Female Founders board of advisers, recently spoke with us at the Female Founder Collective's Female Founders Day event in New York City. The two entrepreneurs shared some advice to weather this turbulent environment.
When outside capital is hard to secure, Minkoff advises other female founders to focus on perfecting the product or service that has gained the most traction with customers and ensuring they can scale that in a profitable way independent of a cash flux.
"Focus on building your hero product that has market fit," she says. You should avoid focusing on outside money, as Minkoff adds, "it's not going to solve all your problems."
As investors have changed their tune from growth at all costs to bottom-line returns, one thing that has hampered many startups, which once enjoyed soaring valuations, is customer acquisition costs. When money was cheap, it was easy for direct-to-consumer brands to spend heavily on digital and social media marketing campaigns. Plus, Apple cracked down on the use of third-party cookies in 2021--making it much more difficult for companies to target potential customers through their online history.
That means getting back to basics on customer acquisition, says Minkoff. "There's nothing like word of mouth," she says, and adds that founders can build up a customer base through anything from a Substack newsletter to an old-fashioned Tupperware party at a friend's house. "Sometimes you have to go back to that grassroots and one-to-one connection, as hard as it can be."
When looking for investors amid a pullback, Wyatt says female founders should expand their pool of options. She advises looking for strategic angel investors, who have the industry expertise you need, and that can start with reaching out to someone, whose career or expertise you admire, through Instagram or LinkedIn. Also, prioritize the investors that offer to make introductions to other firms--even after saying no.
Ultimately, tell everyone in your circle--professional and personal--that you need money and are looking for investors, says Wyatt, because you never know who might be able to help.
"You'll find that people know people, and they'll pass you along," says Wyatt. "It's a great way of just getting what you need."
Now accepting applications for Inc.’s Best Workplace awards. Apply by February 16 for your chance to be featured!
The Daily Digest for Entrepreneurs and Business Leaders
Privacy Policy
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Andrew Mitrovica
Mort Laitner
Rami G Khouri
Ali Fathollah-Nejad
Nikkei Editorial
visit website
