Momentum and Capital

magdalah-silva-11By Magdalah R. Silva

If money is the momentum that makes the world go round, and women represent approximately 40% of the global labor market, control over $20 trillion of total consumer spending globally, and are starting businesses at twice the rate of male owned businesses, then where is the capital momentum for women? In this decisive election cycle, we should definitely be keeping our eye on which candidates will drive momentum. Let’s first agree on some basic fundamentals on the women’s entrepreneurship ecosystem. 1) The growth of women businesses is good for the economy, 2) Unconscious bias plays a significant role in accessing capital, and, 3) The control and disbursement of capital is not in the hands of women. To balance this ecosystem and create momentum candidates need to agree first and foremost that getting money in the hands of women business owners is not a “women’s issue”, it is an American competitiveness issue and that capital remains among the highest predictors of a company success.

  • Growth of women’s business is good for the economy. That’s where all of us come in. Whether you are a policy expert, journalist or blogger we can heavily influence the priorities of a new administration. If the conversation about supporting the growth of women businesses is stimulated in public conversation than it is highly likely that the markets will also see it as a strategy for economic growth, and job creation. This branding concept can result in exponential growth of new business, a greater appreciation by investors of the women’s market and establishment of new policies aimed at the support of women’s entrepreneurship.
  • Unconscious bias plays a significant role in accessing capital. Gender bias, including gender discrimination, conscious and unconscious, is real. Many studies have revealed that unconscious beliefs about women and their business capabilities have manifested itself in various phases of the American culture specifically in raising venture capital. These biases make assumptions relative to capabilities and types of businesses men and women launch resulting in types of investments they ultimately receive. The good news is, according to a study by Babson College, “Venture capital firms with women partners are twice as likely to invest in companies with a woman on the management team (34% of firms with a woman partner versus 13% of firms without a woman partner).” We need programs aimed at preparing more women to be VC’s!
  • The control and disbursement of capital is not currently in the hands of women. Though this is currently true, there is a shift taking place where technology is having a significant impact on the ability to access capital in many forms such as mobile banking, global peer-to-peer lending and trusted transactions conducted on the web through blockchain. The advent of blockchain, where two or more people don’t need to know each other to conduct a trusted business transaction will be revolutionary. This technology is behind digital currencies such as Bitcoin, and will disrupt the current models we have today. This will allow for breakthrough applications that run without banks while cutting cost and saving transaction time. It will ultimately change the dynamic between companies and their consumers while allowing new entrants into the lending business. The system will be built on social and economic capital controlled by individuals rather than intermediaries. If the women’s market makes a shift in that direction it could have a significant impact on how traditional lending is currently done.

So how about some fun facts to close off my blog to encourage the rise of a Momentum Capital Movement for Women, here you go:

  • The average ROE of companies with at least one woman on the board over a six-year period is 16%; ROE of companies with no female board representation over the same period is 12%. Source: Credit Suisse
  • Women entrepreneurs have an estimated credit gap of between $285 billion and $320 billion, depending on geography, and an estimated 70 percent of women-led SMEs are either unserved or underserved financially. – International Finance Corporation (IFC)
  • Women control over $20 trillion of total consumer spending globally. Women make or influence up to 80 percent of buying decisions worldwide, on everything from appliances to cars to medical services. – Dalberg
  • When women earn income, they reinvest 90 percent of it in their families, as compared to men who invest only 30 to 40 percent. This ‘multiplier effect’ boosts social and economic outcomes for entire communities. – Half the Sky

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