Throughout her more than 30 years as a Rhode Island-based entrepreneur and innovator, Annette Tonti has started multiple businesses and raised tens of millions in investment funding. But these achievements certainly didn’t come easily.
Tonti says raising funds was one of the toughest challenges she faced throughout her entrepreneurial endeavors in the early 2000s.
Though Tonti has seen improvements since then, she notices these same challenges while working with women entrepreneurs as managing director of RIHub. Tonti says more women have started running high-growth companies, but raising funds can be difficult in general and even more so for people of color and women.
“It’s changing, things are getting a little better, but it’s just going to take time,” Tonti said. “It’s going to take more women that have had successes to be able to invest in other women.”
The struggles of women and people of color are not just a local phenomenon, but one recent report shows they are particularly difficult in Rhode Island.
January Ventures, a Boston-based venture capital firm, surveyed more than 430 founders throughout North America and Europe and concluded that founders who were female and from communities of color continue to have less access to early-stage fundraising and face operational, financial and social barriers when building their companies.
Although the “Early Stage Founder Sentiment Report” released in October showed that founders are feeling more optimistic about their ability to raise capital, there is still a wide gap between men and women: 68% of men as opposed to 45% of women surveyed indicated they were optimistic about their ability to access capital.
Further, the report showed female founder optimism is at a five-year low as 71% of women felt their gender was holding them back and only 30% felt optimism about the environment for women entrepreneurs.
But Rhode Island ranks in the bottom 10 states in the U.S., and ranks the lowest in New England, for growth and prosperity of women-owned businesses, according to the inaugural 2023 Wells Fargo Impact of Women-Owned Businesses report. The report used U.S. census data to rank each state based on the combined growth in the number of firms and employment, as well as average shares and revenues of women-owned businesses between 2019 and 2023.
Tonti says Rhode Island is a challenging place to start a high-growth business simply because it doesn’t have as many access points to capital as other major metropolitan areas such as New York and Boston, which both ranked within the top 10 for women-owned businesses.
As a result, Tonti says entrepreneurs in Rhode Island should leverage their networks and take every opportunity to go to meetings or events where they can meet people who work in their market and industry.
“The most important aspect of what an entrepreneur has in their tool set is really their network,” Tonti said, adding that she relied on her networks in Boston and New York throughout her career. “That’s really the key – you’re going to need to look beyond Rhode Island.”
Ruth Rodriguez, manager of outreach and Spanish programs for Social Enterprise Greenhouse, also says some women are hesitant to apply for funding because they struggle to meet certain requirements for revenue and how long the business has been open.
Along with this, Rodriguez says what she called the “cliff effect” holds women she’s worked with back from starting businesses. That’s when people who are relying on public assistance such as Section 8 housing or child care coverage boost their income just high enough that they no longer qualify for the assistance they still need.
“That’s the cliff effect: you take, you get, then you lose,” Rodriguez said. “So then women feel like they can’t progress because something is going to be taken from them.”
Rodriguez says she found herself at the edge of this very cliff in 2016 after launching her beauty business, Ruthy’s Glow Flow. As a single mother of six, Rodriguez says she relied on subsidized child care at the time, but she lost this support when her income increased as her business started to take off.
As a result, Rodriguez says she took a step back as an entrepreneur and reentered the workforce to regain the child care support she needed.
“It’s just not easy for women to progress,” Rodriguez said.
Now Rodriguez says she is eyeing opening another business offering services such as a life experience coach focused on helping women overcome barriers and access the resources they need to advance their careers and ventures.
Both Rodriguez and Tonti advise women who are struggling to start their own businesses to leverage the communities around them.
For example, Social Enterprise Greenhouse supports men and women entrepreneurs but also has programs focused on supporting women and those who do not speak English.
Tonti also says she works with New England Female Founders, a networking support group focused on supporting women who are founders or running high-growth startups. The group holds regular networking events, and Tonti says these are open to anyone of any gender or identity.
“Building a good relationship with the community is essential,” Rodriguez said.
