Did you know that U.S. women-led businesses:
• Generated $2.7 trillion in revenue in 2023
• Grew their market share of new businesses by 72% between 2019 and 2023
• Started nearly half of all new businesses in 2023
• Increased average annual revenue 15.5%
• Grew new businesses 2X faster than men since 2019.
Despite this surge, Las Vegas women business owners continue to experience barriers in funding, pay and valuation. Although women could be set to inherit a large portion of the $9 trillion expected to horizontally transfer over the next decade from spouses and partners, closing the wealth gap will also depend on their independent financial success.
Ivan Ferraz
Barrier 1: Funding
Estimates show almost a $1.7 trillion financing gap for women-owned small- and medium-sized enterprises globally. According to Harvard Business Review, capital access is a primary obstacle to women entrepreneurs’ profitability. Female-founding teams averaged only 2.4% of total Venture Capital funding.
While this gap seemingly stems from deal-sourcing and pitching, it could also be linked to women’s historically held hesitation in seeking financing to avoid debt or being rejected by a lender.
Barrier-buster tip: Seek the funding you need.
Barrier 2: Pay
Women put themselves at a disadvantage when setting pay. According to the University of Chicago, there’s a big discrepancy in how women determine their compensation versus men.
It’s common for an entrepreneur to refuse or take a lower salary during a company’s early days, yet data show that 42% of men paid themselves a salary consistent with industry standards, compared with 18% of women. Further, on average, female founders paid themselves 28% less than men.
Barrier-buster tip: Compensate yourself fairly.
Barrier 3: Valuation
The valuation process for women-owned businesses should be a priority equal to establishing capital equality among founders. According to a Boston Consulting Group study, women-founded startups offer a stronger average return on investment than those started by men: 78 cents per dollar vs. 31 cents. However, because initial investment in women-founded startups is considerably less than men-founded, the timeline for demonstrating long-term viability is longer.
Barrier-buster tip: Be strategic in determining your valuation timelines.
Closing the gap, empowering women entrepreneurs
While women are founding new enterprises daily, there’s still a long way to go toward ensuring they have equal opportunities for success. Closing the gender wealth gap starts with education and awareness, followed by thoughtful, deliberate action.
As a Las Vegas financial leader myself for many years, I’ve seen considerable growth and resilience among women-owned and -led businesses. More than ever, I encourage you all to double-down: Be strategic and recognize that your actions are not only empowering women economically in Southern Nevada, but that they are making strides to close the wealth gap.
Ivan Ferraz is the Wells Fargo Commercial Banking leader in Nevada.