The Trillion-Dollar Future of Funding Women in Small Business

Feb 19, 2020

The Trillion-Dollar Future of Funding Women in Small Business

The US gender pay gap is still stubborn and significant, currently paying women 85 cents for every dollar a man makes according to the latest figures from the Pew Research Center. That’s roughly where the pay gap has remained for about the last 10 years, despite years of debate on how to close the gap.

What’s discussed less often, though, is the financial equity gender gap that leaves women with less access to business credit, holding fewer stock options, and awarded less venture capital than their male counterparts. 

That shortfall doesn’t make women any less financially savvy. Women do more overall buying, and as Bloomberg reports, drive between 70 to 80% of consumer purchases. While women may not make all of those purchases themselves, they typically have the biggest say in household financial decisions. Women are also more adept at “making ends meet,” as they disproportionately take the role of primary caregivers of children or the elderly.

But despite women holding 40% of the world’s wealth according to Credit Suisse, their business needs are not being met by financing institutions like banks, the financial services sector, and venture capital funding firms. These shortcomings persist even though it’s common knowledge that women are making unprecedented advances in the workforce and the ranks of executive leadership

This problem starts at the top, and the top is not female. A CNBC study found that women occupy only 17% of senior leadership positions in the banking industry, 11% in the hedge fund sector, and 9% in the private equity field. The glass ceiling is cutting against the ability of women-owned businesses and female-founded ventures in a trickle-down bias that perpetuates a broader gender income gap. 

“It’s still mainly a white boys club,” OneUnited Bank President Teri Williams said in an interview with Entrepreneur. “There continues to be insufficient capital for women and minorities with great ideas, but the playing field has become more level.”

The modest change that has occurred has been fueled by the same things that fuel most voluntary changes—the sense that money is being left on the table. A report by global consulting firm Oliver Wyman estimates the financial services industry is missing out on at least $700 billion a year by failing to address the needs of women clients. 

About the Author

Joe Kukura

Joe Kukura

Joe Kukura is a San Francisco freelance writer whose work also appears in SF Weekly and SFist. He’s written financial advice for NerdWallet, tech industry analysis for the Daily Dot, sports content for NBC Bay Area, and good, old-fashioned clickbait for Thrillist.

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