Wells Fargo announced resources designed to help increase the growth of women-owned small businesses, including a $1.5 million grant to How Women Lead aimed at disrupting the unequal venture capital (VC) system for women founders. The grant will help inspire 10,000 women to invest with venture capital for the first time, ultimately building a $1 billion fund. In addition, the company is sharing new data and an interactive tool-kit on closing the economic gaps facing women entrepreneurs.
“Supporting women and women in business has always been a huge priority at Wells Fargo and this month we are underscoring our year-round commitment,” said CEO of Wells Fargo Consumer and Small Business Banking Mary Mack. “If we come together on actionable steps to close the gender inequity gap, we can accelerate the trajectory of women entrepreneurs and their contributions to the economy.”
Empowering a $1 Billion Venture Capital Fund for Women-Founded and Led Companies
Wells Fargo’s grant to How Women Lead will seed a $1 billion fund — the largest women-founded venture fund in the U.S. for women founders and women-led startups in the technology and health sectors. By engaging women who want to align their wealth and values with positive change, How Women Lead hopes to enlist 10,000 women to invest in other women as a means to build the fund over time.
Data shows that there is a significant gender gap in venture capital funding. According to the Center for Venture Research:
- Only 5% of accredited women investors have access to invest in VC funds, even though women control 50% of wealth today.
- Only 1.8% of VC investments go to solely women-led startups. There are no large funds focused solely on women founders.
- Only 5% of general partners in VC firms are women.
“We are at a unique moment in time, an inflection point, where we have a generation of women who have risen in the ranks as corporate leaders and have wealth to invest,” said Julie Castro Abrams, founder and CEO of How Women Lead. “Investing in women-founded companies is financially savvy, creates six times more jobs for women and results in economic growth for us all. Collectively we have the wealth to fund women founders and the expertise and influence to support those companies to success.”
Promoting Gender and Economic Equity Among Women Entrepreneurs
Wells Fargo also collaborated with the Nasdaq Entrepreneurial Center, Penn State University and Fair Pay Workplace to launch a study looking at pay, ownership and valuation issues affecting the gender wealth gap among small business owners. Key findings included:
- 55% of the early-stage women entrepreneurs surveyed do not pay themselves for work they do for the company.
- Women entrepreneurs were more likely to pay themselves if their companies were eight years or older.
- One third (34%) of women entrepreneur respondents do not have a three-month emergency fund for their expenses.
- Access to capital was the number one barrier to company profitability, growth and entrepreneur compensation.
- 59% of women entrepreneur respondents said their income varies from month to month, and 53% said they’re spending equal to or more than their income.
- Women, particularly women entrepreneurs of color, are leading the way in fair pay practices.
“This study shows us that women entrepreneurs have extensive knowledge about fair pay, but the actual practice is not within their desired reach due to challenges in funding and resources,” said Nicola Corzine, Executive Director of the Nasdaq Entrepreneurial Center. “It is clear that once we remove pervasive barriers, women entrepreneurs will organically become change agents for fair pay.”
As a result of this study, a toolkit is available to small business owners to promote entrepreneurial empowerment and economic equity. In this step-by-step workbook there are tools, resources and video content to guide business owners through what is needed to get to the place where they are paying themselves a fair wage. In addition to a pay equity checklist and an interactive workbook, included are insights, guidance and learning from leading women entrepreneurs.
“Acknowledging the gender gaps that exist today is one of the first steps toward eradicating inequalities,” said Jenny Flores, Head of Wells Fargo Small Business Growth Philanthropy. “By bringing more awareness, additional resources and key connections and conversations to the table, we can create more avenues to capital, more equality and help more women reach their full potential.”