Supporting the Business Life-Cycle Needs of Women Entrepreneurs

Working with Players in the SME Ecosystem

Two banks, a risk finance company, and a researcher contributed to the rich discussion on the different growth stages of women-owned businesses and how banks can best serve their needs. All agreed that by the time a woman comes to a bank for a loan, she is generally a less risky bet. They also discussed the importance of partnering with other organizations, such as investing in incubators or accelerators, or partnering with local women entrepreneurs’ networks in order to reach new markets.

Key Points

    • New and young firms are creating the majority of new jobs, and we know that capital constraints are the most challenging for early-stage companies, so in order to support growth in our economies, we must focus on better serving organizations at the early and growth stages.
    • Women use less financing than men across the board.
    • Women are less risky because of the planning they do and the stages they reach before they even ask for money.
    • At the beginning stage of business, women are often looking for validation. They don’t always have confidence in their business or business skills.
    • Thirty percent of businesses are owned by women. Though the rate of women starting businesses is growing at a higher rate than that of men, women-owned businesses are generally smaller businesses.
    • Women tend to self-fund their growth, and this is correlated with how fast they are growing. If they are self-funded, they tend to grow at slower rates.

Business Life Cycle Women 2016 GBA Summit

      • Women control more than half of the wealth in the U.S., and because they live longer, they will inherit even more.
      • Business Partners found that women were 25-30 percent less likely to default than men. This and other experiences led to the creation of a women’s fund. In the last 10 years, they have dispersed an average of $100 million a year, with more than 40 percent going to women. They receive an equal return from both men and women.
      • There is no “one” definition of a women-owned enterprise. For Business Partners it was when women own 25 percent of the equity and are operationally active in the business. Now it is 50 percent and operationally active.
      • PNC trains its staff to be certified Women’s Business Advocates across locations to better understand and serve women customers. Each year they train around 400 Advocates, 30 percent of whom are men. They support women entrepreneurs as a business development opportunity.
    • At Westpac, business bankers usually start their careers in the SME space, and all entry-level positions attend training that features a component focused on relationships. The training includes case studies of businesses in different growth stages, as well as women-owned enterprises, male-owned enterprises and businesses in a number of other circumstances.

Business Life Cycle Women 2016 GBA Summit

  • Westpac does not directly lend to start-ups, but to reach this market they use non-traditional methods, including working with incubators and accelerators and investing in start-up-focused funds. They refer the start-ups to an organization that can help them. The Westpac brand is associated with the organizations, as they have invested in them.
  • Partnering with accelerators mitigates the risk of investing in start-ups, and the bank can capture the graduates as clients.
  • There are new financial technology companies, such as Cabbage, Prosper and Lending Club. They use alternative collateral sources such as accounts for short-term loans at reasonable interest rates.
  • The Women Presidents’ Organization provides peer-to-peer mentoring for women who receive $1 million or more in revenue if they provide a service, or $2 million if manufacturing a product. They exist in the following countries: Australia, the UK, Turkey, Israel, Malaysia, Mexico, Peru, South Africa, Portugal and Sweden.

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Business Life Cycle Women 2016 GBA Summit

SPEAKERS

MODERATOR: PETER TROPPER
Senior Advisor, Emerging Markets Private Equity Association; Former Chief Investment Officer, IFC Private Equity Group; Former Head, IFC SME Ventures

ALICIA ROBB
Senior Fellow, Kauffman Foundation
Presentation (members only)

BETH MARCELLO
Director, Women Business Development, PNC Bank

JULIE RYNSKI
General Manager, SME Banking & Connect NOW, Westpac

NAZEEM MARTIN
Entrepreneur and SME Consultant, Former Managing Director, Business Partners Ltd.

IN THEIR
WORDS:

“Women use less financing than men across the board – early-stage, home-based, high-growth, VC-backed, high-tech…”
— Alicia Robb

“Seventy percent of widows change their financial services provider within a year of their spouse’s death.”
— Beth Marcello

“Women go to a bank, the bankers ask them questions that they feel are irrelevant, and they don’t go back.” 
— Julie Rynski