Since 2007, women-owned businesses in Iowa saw increasingly higher levels of revenue and employment growth—and while such good news should inspire female entrepreneurs in the state to hit the ground running, many still face roadblocks in terms of access to capital. This not only impacts initial business growth, but reinforces a steady gender gap as women-founded startups typically only receive mere percentages of venture capital funding. Clay & Milk delved into the struggles faced by female investors and women entrepreneurs with respect to funding, and talked with a few individuals on both sides of the coin doing their part to change the narrative.
What challenges do female investors and entrepreneurs face?
Cayla Weisberg, Partner at InvestHER Ventures, invests in emerging technology startups led by women and has been an entrepreneur since age 17. She has led business development initiatives for two fast-growing tech companies at a venture capital incubator, and after realizing that less than 2% of venture money went to female founders, Cayla focused on women and growth initiatives.
Weisberg is in Des Moines this week to speak at the second annual Accelerate DSM event being hosted by Square One DSM on Wednesday.
“In the startup world, I saw firsthand the quantity and quality of female-led technology companies that were at a standstill because of lack of access, meaning investors,” said Weisberg. “Less than 7% of women are partner-level at a venture fund, but at the same time, I personally met with more than 200 female founders who were actively fundraising with B2B enterprise software companies. I realized this was a pipeline issue, not a deal-flow problem. These entrepreneurs needed access to funds and help making connections.”
Building upon her own experience and network of connections, coupled with the philanthropic services of her business partner, Gerri Kahnweiler, Weisberg was able to send these companies to her network of investors, and begin to help close the gap.
“We created a destination in the Midwest for women and tech that didn’t exist before us,” said Weisberg. “And over the past year and a half, we’ve seen incredible change in the form of angel groups focused on empowering women, more female-led companies, and networks of investors who are all women. There’s also incubator and accelerator programs more readily available to women now, and a few national VC funds that have a female focus.”
Megan Milligan, President and CEO of the Iowa Center for Economic Success, and Heidi Wessels, Director of FIN Capital, echo Weisberg’s sense of opportunities on the horizon. The Iowa Center has been serving people interested in owning or growing their own business for more than 30 years, and it focuses on providing direction to a network of resources that address skills such as accounting, taxes, business plans—and access to capital. FIN capital, the first women’s angel investment network in Iowa, directly offers two options (among others): membership for accredited investors and entrepreneur applications for investment.
“Investing can be a gut reaction sport and being comfortable making a gut decision often comes from experience,” says Milligan. “Most of the women who are FIN Capital members are executives or leaders in their field. They make gut decisions every day when it comes to personnel or business management but when it comes to investing, they haven’t used that part of their gut yet. They are learning quickly that they enjoy making these decisions just as they have enjoyed the pressure of decisions at work. We have only begun to see pitches but we are already seeing the level of engagement between the investors and the entrepreneurs reach great new heights.”
According to Liz Lidgett, CEO of Adore Your Walls, a Des Moines-based startup, the problem also includes a lack of visibility. “We’re not seeing each other at the table,” Lidgett claims. “Less than 3% of venture-funded companies have women CEOs, which is unacceptable. Part of this is because there aren’t women angel investors at the table in the same way that there are men. But women angel investors can, and I believe have, the duty to raise up other women business leaders and owners.”
The reality is that it is much harder for women to raise capital and receive financing for new businesses, notes Emily Boyd. As President of the Des Moines chapter of FemCity, a professional women business network helping female entrepreneurs online and across 75 communities, Boyd strives to give women a platform to drive business and inspire success. And while she recognizes improvements for women seeking financing for new businesses—targeted programs, women-specific groups for investors and strong communities—she still says investing can be incredibly intimidating.
“As women, we tend to be more methodical, so when it comes to investing there are multiple layers we want to consider before making an investment. Understanding the ins and outs of investing takes both education and women who are willing to take the risk,” says Boyd.
Why are women-focused investment firms so important?
Weisberg says women control buying decisions in America, and they’re proven to generate higher return. To her, it’s not a black-and-white issue that can be simplified into men-led versus women-led firms.
“Women-led companies have higher value base than male counterparts,” says Weisberg. “But I’m seeing a phenomenal shift in the way so many investment firms are diversifying their portfolio. They’re seeing the wins of women, and the reason I’m gender focused now is to encourage those outcomes.”
What are some sources of support in Iowa for female entrepreneurs?
Iowa is known for being “nice,” but it’s key to understand how such general support translates into tangible wins for women on a financial and business level.
Tiffany O’Donnell, Chief Operating Officer for Iowa Women Lead Change (IWLC), focuses on finding gaps in cultivating and supporting women entrepreneurs, and identifies potential overlap of services. Through their Invest in She Pitch Competition, IWLC gave $170,000 in services to women-owned businesses ready to scale. IWLC also serves as a co-founder and lead partner in the statewide Women’s Entrepreneurial Collaboration Council (WECC), which brings together organizations, statewide, that work in the entrepreneur space.
Lidgett was one of those recipients of financial support from the Invest In She competition after participating. She cites incredible female mentors and local resources as key to her sense of strong support. “From the Iowa Center for Economic Success reviewing my business plan, to mentorship through Square One and the Des Moines Partnership, I’ve had institutional support for my company,” says Lidgett.
The Invest in She competition isn’t happening in 2017, due to what O’Donnell cites as a strategic decision to let others provide similar events, but the IWLC continues to use its resources to advance, promote and develop women and their organizations to impact the regional economy.
Plus, the Women’s Business Center arm of the Iowa Center provides a seemingly endless list of resources—networking opportunities, industry-specific classes, and small business loan portfolio management—because Wessels and Milligan love any chance to bring female investors and female entrepreneurs under the same roof.
“For a long time, our client was a woman who wanted to stabilize and grow her financial future through business ownership,” says Milligan. “But now, with FIN Capital, we can also serve women who want to grow their wealth through business investment.” Milligan says this includes “conversations and educational opportunities about convertible notes, industry specific trends, fee structures, term sheets and more.”
Additionally, FIN Capital recently introduced a boot camp of sorts for Iowa women interested in investing, called the Aspirant Series. The first one occurred last fall, with industry experts from both Iowa and the West Coast, and another will be available this September.
That’s exactly the type of education Boyd thinks women entrepreneurs need, in Des Moines and throughout the broader state. “Our community is saturated with workshops that support small business, but I’d love to see more targeted classes around angel investing and to get involved at the local or state level to move the needle for women,” she explains.
Why does the Midwest need more women angel investors and/or women businesses?
Weisberg gravitates toward Midwestern companies, primarily because “there’s something so special about good, old-fashioned work ethic.” She continues, “There are so many archaic industries based in the Midwest with incredible opportunity to create innovation. Think market research, insurance, agriculture—the Midwest is a hub for some of these B2B outlets, and women have such an edge for creating software solutions for these markets. And now, women are beginning to have a destination to pitch when they are seeking capital.”
Iowa was ranked dead last for women-owned businesses a couple years ago, though the state has since moved up, and Boyd views such rankings as a call to action. “When we see more women investors and business owners, it sends a powerful message, especially around investing and owning businesses in male dominated fields,” she says. “I strongly believe a snowball effect will happen the more vocal we are about these women who are angel investors or starting businesses and sustaining them; it almost creates the ‘if she can do it, I can do it’ mentality.”
Besides, as Lidgett puts it, the “numbers don’t lie.” She insists women angel investors have a seat at the table to make sure the startup world does not continue to be a boys’ club.
Wessels and Milligan wanted that same sort of change, as did Lt. Governor Kim Reynolds and Debi Durham, Director of the Iowa Economic Development Authority, when they decided to kick off FIN Capital. They set a goal of enrolling 25 women investors in the network’s first year, and met it. This year, they’re working to double that number to make, as Milligan says, “impactful investments in solid companies.”
“Women are ready to respond to this opportunity, and it’s really the same thing for women-owned businesses,” says Milligan. “So many women run businesses out of their basements or from their sofas late at night after they have finished their day jobs and put their children or parents to bed. Women have incredible ideas, and we think many of those ideas and businesses are what make Iowa a place worth living. The Iowa Center supports businesses that make all of our lives a little easier—cleaning companies, restaurants, salons, massage, greeting card companies, clothing stores—but women are also contractors, and build storm shelters, and do taxidermy, and can rig electrical lines. It’s extraordinary what anyone can do with support.”
What advice should women keep in mind, if they’re interested in owning a business or investing in women-owned businesses?
“The best advice for owning your own business that we say over and over in our office is do something that you truly have a passion for,” shares Milligan. “You should have been thinking of almost nothing else before you hang that shingle or start that LLC. But in addition to that passion, it is the people you pull around you. We all need people to challenge us, to support us, and most importantly, to believe in what we are selling and to buy it. As for investing in a woman-owned business, hopefully one day all investors will invest in the best product or best idea regardless of the gender of the owner—but in the meantime, I can say this about the women business owners we serve: they do not want to fail. They have a lot to prove and hold themselves to extraordinarily high standards. They will not let you down because they are going to make sure they never let themselves down.”
For those readers who have an idea or a passion, Boyd recommends talking to people who have already done it, and bringing your curiosity and list of questions to the table. “Starting and running a business in order to be profitable takes a lot of work! Keeping customers happy, maintaining an engaged team, making money, choosing where to spend advertising dollars—these are the types of things you will think about daily; it is all-consuming.”
Lidgett suggests looking to other female entrepreneurs, as it may empower you to carry on. She refers to her first experience pitching as the “most supportive competition I have ever been a part of. While our businesses were all so different, and we were all competing for the same pot of money, we were there rooting each other on.” Lidgett says it also opened her eyes to the other female entrepreneurs around the state of Iowa.
“If there are resources, women in Iowa will use them. We’re hungry for opportunities,” she concludes.
As for Weisberg, she merely wishes she had gotten to work sooner. “Ten years ago, as an early stage entrepreneur, I had no idea what getting an investment even meant. I didn’t think it was an option. If there were resources out there to provide education for people like me, young in my career, I would’ve stayed in that entrepreneurial world longer.”
Still, Weisberg is grateful for the fundamentals she learned working for a Fortune 500 company along the way, as it helped her carve a path in impacting the gender disparity women investors and entrepreneurs face.
“My job right now is to talk less and do more,” she laughs. “And for any person looking to take a risk, know that it’s going to be hard and really scary, but the more you stretch yourself every single day to embrace fear, the more fearless you become. You end up embracing uncertainty which results in really incredible things.”
Julia Dellitt is a freelance writer based in Des Moines and a contributing writer to Clay & Milk.