Survey: Founders without access to capital ‘find a way’ around barriers

Even founders who expect to raise outside capital often end up using their own personal funds or credit to sustain their companies, according to a new survey of founders and CEOs by the Women’s Venture Summit.

The survey from the Women’s Venture Summit, an annual conference in San Diego, California, that aims to connect female entrepreneurs with access to capital, collected responses in September from 140 women who identified as startup founders, co-founders, or CEOs. The survey found that 84% of respondents had used personal savings to fund or sustain their companies, while 52% had used personal credit cards.

“A lot of female founders take on the weight of funding their business any way that they can, which means that they’ll put their own personal liability at risk,” explained Morgan Spenla, founder and CEO of Crafter.com and a community builder with the Women’s Venture Summit. “What the survey told us is that if you don’t have access to capital, you’re going to find a way to do it.”

Spenla knows the risks firsthand. When she launched Crafter in 2015, she said she bootstrapped the company the first few years and co-signed loans and credit cards to the business.

“It can be really scary when so many businesses do not make it out of their first years,” Spenla said. “When you are taking responsibility for that personally, knowing that it could devastate your own finances, that’s very scary.”

Barriers to entry

In the survey, 60% of respondents said they lacked access to the investor network needed to grow their companies, with 73% of respondents who had attempted to raise funding in the last year reporting that they raised less than a quarter of their target. Among those who had recently tried to raise money, a lack of warm introductions was the most frequently selected single barrier.

For Spenla, addressing the barrier to access means being more deliberate about connecting founders with people who can help them secure funding, find customers, or grow their businesses at events like the summit. Rather than guard their networks, she said, women need to share their contacts as much as they can.

“We all have social credit, and you’re cashing it in every time you’re making a personal intro or recommending something for someone,” she said. “I think women have to just have a larger pie to pull from and be more willing to do that, and men as well.”

Spenla advises founders to build around a problem they understand, establish their value proposition, and find product-market fit before trying to scale. Showing that a product meets a real market need can help founders make a stronger case to investors while showing the potential for future growth.

“A big shift that’s happened in the funding world in the last six years is that companies are being asked to come to the table with, for the most part, traction and a better understanding of product market fit instead of just the experimental phase,” she said. “But to have that traction, people have to give you a chance, right?”

Spenla also has advice for entrepreneurs looking to position their companies to raise funding: Research.

“If you’re an introvert, you don’t have to show up in the rooms yet, but start listening to podcasts put out there by founders who have raised or investors,” Spenla advised. “That was my first foray into the space.”

“Eight years ago, the funding opportunities for a company like mine in San Diego, California, was the local bank, the local SBA. They were possibly grants.” she said. “The more I realized that there was a world that involved investors and advisors, and an ecosystem that helped to build companies as they go—I started with podcasts. I went on to read some notable books about it—and then I showed up. I felt comfortable enough to show up in the rooms and ask the real questions.”