Non-technical female founders get a fraction of funding but they're changing the game in spite of it...

When I surveyed a group of non-technical female founders currently building software solutions, it was with a simple intention:

to gain insights into what barriers and challenges they faced – and what opportunities they needed – to build their products.

As I read over the data, I was struck by how many founders took the plunge and bootstrapped their products, launching to audiences of tens of thousands and almost immediately seeing results.

I was also struck by why so many of them were bootstrapping instead of seeking funding – because, for many of them, the barriers to acquiring funding would take too much time or too many resources to surmount.

The best option was to bootstrap or watch as a competitor surpassed them in the marketplace.

This isn’t a problem unique to the 75 non-technical female founders and cofounders we surveyed for PDS Lab's research. In 2023, female founders received just two percent of all available venture funding – and this statistic doesn’t take into account that, historically, it’s more difficult for non-technical founders or products to receive funding.

However, despite this bleak statistic, female founders still remain optimistic…if not about the future of funding for women, then for the other options they’ve identified as viable ways to get their businesses off the ground and see big results.

“I need to be willing to go to war”

As Ashley Rector, founder of creative and marketing agency Quimby Digital, set about executing on her company’s vision for a SaaS tool, securing funding was a consistent, top-of-mind need.

But one thing stopped her from seeking out capital: access.

“Raising in this economy is hard, and women get a fraction of a percentage of funding that our male counterparts do,” she said. “I need to be willing to go to war, and I haven’t made that decision yet.”

This is a problem female founders contend with again and again. McKinsey found that only a tiny fraction – between 0.1 and 1.9 percent, depending on the exact demographic makeup – of funding goes to BIPOC- and women-owned companies.

The majority percentage goes to male-owned organizations.

This presents a huge barrier to entry for female founders who could be first to market with the products they’re building…were it not for the challenges of finding funding. It’s not enough that non-technical founders often find it more difficult to secure backing – they’re not men, which makes the whole endeavor that much harder.

“I need fast growth since our product is first to market,” said Chelsie Hall, co-founder and CEO of ViralMoment, a B2B social intelligence platform. “The lack of funding directed toward female founders has been a massive barrier and has forced us to build slower and more sustainably, but with more focus on generating value immediately.”

Some founders like Hall are able to raise – ViralMoment recently raised $2.5 million in seed funding – but the majority choose to bootstrap rather than wait for capital to come in from outside sources. 53 percent of PDS Lab survey respondents bootstrapped their company and its software products, and 12 percent of those women don’t plan to seek out funding at all.

What might seem risky to many has been rewarded; respondents reported they saw tens of thousands of product downloads and enjoyed major marketing success thanks to their bootstrapped solutions.

For Brittany King, co-founder of postpartum support network neli, the need for funding underscored how much easier it would be to grow her business if she had access to the same funds her male counterparts do.

King, who bootstrapped her company, highlighted another disparity women often encounter in the pursuit of funding: a burden of proof much higher than it is for men and their products or ideas.

“Even with a solid idea, enough business and technical experience to know what we needed to get done, and a significant total addressable market, we have to work hard to prove our credibility,” she said.

You can build it…but will they come?

When Kat de Haën, co-founder of The Fourth Effect – a market network working to close the gender power, wealth and funding gap – thought about taking her company from first MVP to a more sophisticated solution, one of her first feelings was that the odds were against her. 

For the last four years, The Fourth Effect had been bootstrapped; de Haën and her co-founder didn’t want to distract themselves from the product by seeking out funding, especially knowing that the fundraising space’s odds were always against two female founders.

But at the same time, she didn’t want the competition to catch up to the product The Fourth Effect was building. Therein was the catch. To better their odds of securing funding, they needed to build the product first…even though building the product is what spurred the need for funding.

“If we were part of the percentage that could easily find venture funding, we might have done it from the start,” she said. “As women, we knew we had to build the product first to convince investors that there is a market and that we are capable.” 

Anecdotal evidence suggests that this standard is the norm for women but not for men. Women are expected to provide more proof that their ideas have merit, even though their male counterparts’ ideas often need no such validation.

“Bias in investing makes investors ask different questions of women founders versus men,” said de Haën. “Men get asked based on potential, women on risk. Women need to prove their idea’s potential up front.”

Additionally, because finding funding opportunities for non-technical founders is so challenging, many women surveyed reported having to choose: build their businesses and serve their customers or seek out funding. The latter is often too time-consuming; many women equated attempting to find funding to another full-time job.

“Underrepresented founders have to work twice as hard to get funding, and time spent raising is time away from my customers and product,” said Kendra Koch, founder of wellbeing brand Divergently. “I decided I would only focus there if it’s absolutely critical to my company’s success.”

Optimism is low – but it’s there

Despite all of this, survey respondents told me they feel optimistic about their founding future – making them part of the 30 percent of female founders who look ahead to the future of fundraising with hope.

“I’ve been told I should be willing to ‘eat glass’ (when seeking out funding) more times than I can count,” said Kate Ritter, founder of virtual staging and interior design firm HOMEKYND.

“Every single time, I smile, nod and share that eating glass would be a dream compared to starting a company after the pandemic. I believe lack of funding is an attitude, along with a lack of access.”

Yidi Campbell, co-founder of digital wardrobe app Indyx, chose to leverage her intimate understanding of her industry when bootstrapping her product. She sought out no-code solutions and ultimately brought in over 15,000 downloads and nearly 300 daily active users after launch – without any investors.

“Non-technical founders have a better understanding of our industries, and that’s our true differentiator,” she said. “To solve these systemic problems, we need to create holistic solutions to drive real change.”

This kind of success story is why PDS Lab and other female founder-focused communities exist.

‍I hope that one day, this isn’t relegated to a problem only women can solve. As our survey respondents have shown, it’s time to show the marketplace that non-technical female founders – and the software they’re building – deserve so much more than two percent of available funding.

‍

If you liked this article, let's amplify these incredible women by sharing to your social channels!

To the moon,

Nomiki