Key Takeaways: Transforming Capital Access for Women Entrepreneurs

Investments in the lives of women and girls are investments in a better world for everyone. Research bears this out, indicating that educating girls boosts GDP, and addressing gaps in care services not only frees up women to work but also creates jobs. At the same time, addressing women’s unequal access to financial credit increases income for entire communities. 

But the gender parity necessary for economies to truly flourish is still too distant. Kartt noted that the U.N. projects that at the current pace of change, it will take 300 years to achieve its Sustainable Development Goal of Gender Equality. 

In their discussion, Jung, Sun, and Kartt each emphasized the power of one particular lever for change: expanding women’s access to capital. Today, women receive a dismal percentage of small business loans and only 2% of venture capital funding.  

“This is not just about any given entrepreneur being denied an opportunity,” Kartt said. “This really represents a massive market failing. It’s limiting innovation, it’s limiting economic growth, and it’s limiting social progress.” 

All three agreed that the solutions are becoming increasingly clear—though they need to be more loudly trumpeted.  

Takeaway #1: It’s time to break the cycles of financial exclusion. 

Sun recalled that over a decade ago, when she was enrolled in a college entrepreneurship class, all of the accomplished business owners invited to speak to the students were men. She decided to think about the problem from the perspective of an entrepreneur. 

“The beauty of an education in entrepreneurship was it made me realize, ‘What if this isn’t my problem?’ Sun said. “’What if this is a systemic problem, and what if I can help other people who have the same pain point?’” 

At 24, she co-founded SoGal Ventures—a women-led venture capital firm investing in women and diverse entrepreneurs.  

Sun has seen that women founders take longer to raise smaller funding rounds than men, and raise money with less-advantageous terms. And even after establishing their own businesses, women are more likely than men to be kicked out of them by their boards of directors.  

“It’s a chicken-and-egg problem: the less capital we give to women, the less-convincing results we’re going to see,” she says. “And that in turn creates more barriers to capital access.”  

Jung reported that she, too, sees such exclusionary cycles playing out far from the VC world in her role as president and CEO of nonprofit microfinance organization Grameen America.  

One way to think of the problem is as a “circular” one, she says: “If you can’t get a loan, then you can’t build credit.”  

Too often women—and especially women with lower incomes—are denied credit because the metrics applied by traditional funding models fail to appreciate the full potential of a business idea, and of its founder. 

Grameen America has demonstrated that in more than 15 years of operation, their non-recourse microloans to the women historically shut out of credit systems have yielded an exceptional 99.6% repayment rate.   

Takeaway #2: Harness the power of community. 

Sun explained that within SoGal, communities have been at the core of the value proposition from the beginning. Over the past ten years, her firm has built chapters all over the world that comprise over 250,000 investors, executives, and entrepreneurs. She points out that such communities should be diverse and include women angel investors (whom SoGal trains and nurtures).  

“Investing as an angel is such an impactful way of voting with your dollars for the future you want to see,” she says. SoGal also educates women on how to invest as LPs, and some of their investees and trainees even go on to invest in VC funds for the first time through SoGal.  

“When women create entrepreneurship ventures, they usually take other women along with them,” Sun says. “When you help one woman, it usually brings the entire village along.”  

Jung doubled down on this point, describing how within Grameen America, too, small groups of members meet regularly to offer one another peer support.  

“It’s incredibly powerful,” Jung said, explaining that each week, Grameen America facilitates about three thousand meetings of 30 entrepreneurs each. The nonprofit also brings members together with a member app, and financial training programs.  “The community opportunity is huge. In my mind, the ‘social capital’ is such a big part of the glue, the magic, and the alchemy of our model—in addition to the access to capital itself.” 

Takeaway #3: Recognize and celebrate the inherent economic opportunity for all. 

The idea that investing in women can be nothing more than a “do-gooder” effort is a mistake—and a harmful one for entire communities, the women agreed.  

“I think we need to take the lens of, what can it actually do to U.S. GDP or global GDP when we let women partake in capital access?” Jung said. 

She added that recently published results from research that included Grameen America’s work offered some hard data that help to answer that question. 

The study, conducted in Union City, NJ, over a three-year period, revealed that women entrepreneurs who received the microloans saved at much higher rates for their families, had much higher credit scores, and experienced less material hardship when it came to paying for necessities like medications and food. 

“We want to be saying, in a louder and louder voice: women-owned businesses are growing very quickly, and there is not enough capital going to them,” Jung said. “I think there is a broad case to be made for boosting the health of our nation’s economy—it can’t be done without gender equality in capital access.”  

For more information on ImpactAssets’ gender equality approach, please visit our Gender Equality page.

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