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Between 1972 — the first year the Census Bureau began tracking the gender of business owners — and 2018, women-owned businesses have grown from representing 5% of all business to 40%, according to American Express 2018 State of Women-Owned Businesses (SWOB)*. However, their economic clout has not grown equally. In 2018, women-owned businesses represented 8% of total employment and 4% of total revenues.
New York City is taking action. Timed for Women’s History Month, the city announced a series of initiatives to address persistent gaps in funding and business development opportunities.
Closing The Gap In Venture Capital
With the dramatic rise in venture capital investments in 2018, the percentage of companies with at least one female founder receiving venture capital decreased from a record high of 14% in 2017 to 11% in 2018, according to PitchBook. Every year, New York and San Francisco compete to be ranked #1 for venture capital raised by female-founded companies headquartered in the city. In 2016 and 2018, the crown went to San Francisco. In 2017, it went to New York.
With the announcement of WE Venture by New York City, the game may be over, and New York may have won. “WE Venture is a real-life example of the City of New York putting our money where our mouth is,” said former deputy mayor Alicia Glen (she stepped down on March 1, 2018). WE Venture is the latest in a series of WE Fund financial products, which include crowdfunded interest-free loans in partnership with Kiva, as well as larger low-interest loans provided by local Community Development Financial Institutions (CDFIs). WE Venture is aimed at closing the gap in venture capital for female founders, especially for women of color.
“By partnering with five [VC] firms, more women will have access to capital that they need to start and grow their great ideas.” The partners — Archer Gray, Future\Perfect Ventures, Golden Seeds Venture Fund, WOCstar Fund, and the Multicultural Innovation Lab at Morgan Stanley — have agreed to a matching ratio of 2:1. Using this ratio, New York City Economic Development is co-investing $10 million alongside $20 million from the venture capital partners for a total of $30 million over the next five years.
“A recent Morgan Stanley report revealed that investors are missing out on a trillion-dollar opportunity due to the funding gap we are seeing today,” said Carla Harris, Morgan Stanley Vice Chairman, Global Wealth Management and Multicultural Client Strategy Group Head. Research by Boston Consulting Group (BCG) and First Round found that founder teams with women on them outperform male-only teams.
Tech companies started by women of color historically have received shamefully less venture capital funding despite the higher returns women generate, commented Pialy Aditya, General Partner, WOCstar Fund. For example, of the female founders who have raised equity financing, only 4% were black, according to the ProjectDiane 2018 by digitalundivided. Thirty percent of all net new women business owners were black, according to SWOB.
Money is a critical ingredient in growing businesses, but it isn’t the only ingredient. “This program will have a significant impact by not only providing capital to entrepreneurs but also support infrastructure through networking and business development opportunities,” said Jo Ann Corkran, Managing Partner of Golden Seeds Fund II.
Encouraging Female Creatives To Be Creative
The stats are pretty dismal in the media industry, too, which is one of the largest industries in New York City. In 2018, women directed only 4% of the top 100 grossing films. In the 2017-2018 television season, women comprised less than 30% of writers, creators, directors, and other leading positions; and theater isn’t any better. This past Broadway season, women were at the helm of less than 20% of productions.
“Today, exceptional women creators, directors, and producers are still not getting the recognition and professional success they deserve,” said Glen. The Women’s Fund for Film and Theatre, a three-year, $5 million program provides grants to New York City-based female creatives in the entertainment industry who are working on projects “made by, for or about” women and are produced in New York.
Leveraging Women’s Purchasing Power
New York City has more women-owned businesses than any other city in the U.S. It ranks 16th among the top 50 largest metropolitan areas in average revenue for women-owned businesses, according to SWOB. The city is committed to changing that. New York and American Express have teamed to launch “Shop Women-Owned NYC” during Women’s History Month, which makes it easier for New Yorkers to support restaurants, stores, products and other businesses that are owned or produced by women. As the primary consumer purchase decision-makers, women can use their purchasing power to grow women-owned businesses. Participating women-owned businesses throughout New York will be promoted on LinkNYC kiosks, bus shelters, digitally, and on WE.NYC. The campaign features businesses including the Astoria-based home and gift store Lockwood, Chinatown-based The Sill, Lower East Side vegetarian restaurant Dirt Candy, Urban Asanas Yoga Studio in Crown Heights, and Bulletin, a retail shop featuring only women-made products, and Porteñas, a yerba mate spot in Williamsburg.
On March 1, 2019, Glen stepped down as the deputy mayor, but her resignation does not change any of these plans. By integrating these programs into the DNA of the city’s government agencies such as New York Economic Corporation and the Department of Small Business Services, the work will go on. Glen will continue to be involved as a member of the advisory board for Women NYC.
How will you take advantage of the opportunities New York City is offering?
*The author of the article’s company, Ventureneer, is a co-author of the report.
March 6, 2019 at 06:57AM
Forbes – Entrepreneurs