Female entrepreneurs do a lot of things to get their businesses off the ground. They raid their life savings, take loans, hit up friends and family, and even rely on credit cards. But just one in 100 end up using venture capital.
That’s the finding of a new study from Ernst & Young (EY) and the Women Presidents’ Organization (WPO), obtained exclusively by Fortune.
The study looks at how 430 women-owned businesses were funded over their lifespan. It includes a mix of young and established companies; just over half (51%) of the businesses surveyed were launched 21 or more years ago.
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While the 1% figure may sound shocking, it actually aligns with what we know about the breakdown of venture capital dollars. Indeed, in 2016, women got just 2.19% of all VC funding. Historically, those numbers have been even worse: Of 6,362 companies that received venture funding from 1991 to 1996, only 31 deals were with women-led ventures, according to a 2001 study for the U.S. Small Business Administration.
So, if women aren’t using VC, where is the money coming from? The majority (68%) of those surveyed by EY and WPO say they used personal savings to fund their companies. A bank or line of credit was the second most common response, at 27%. About 22% incurred personal debt, and 18% received a loan from a family member or friend. Meanwhile, a mere 2% or so used private equity, according to the study, which was conducted November 2016 through January of this year. (Participants were permitted to choose more than one response.)
More than three-quarters of the entrepreneurs surveyed have generated between $1 million and $20 million in annual revenues, with 14% reporting over $20 million.
Venture capital’s funding gender gap is clearly a serious problem, but it’s worth considering that many women consciously choose to avoid VC and private equity money, says Lisa Schiffman, the co-founder of EY’s Entrepreneurial Winning Women program. For some female entrepreneurs, funding their company independently can be a “source of pride”—and perhaps more importantly, a way to remain the primary decision maker in their business, she says.
Sarah Kauss, the CEO of S’well, a popular stainless-steel water bottle manufacturer, is a prime example. Kauss, whose company was a part of the study, used personal funds to grow her business—a decision she says she made in order to “maintain control.” And her choice seems to have paid off: She says the company brought in $100 million in revenue in 2016.
“I have the luxury of owning 100% of the business,” she says. “In the early days it wasn’t because I didn’t have access to the capital, but I didn’t think it was right for me and my business. I really wanted to maintain control—creative control, control over distribution, and where the product was sold.”
Laura Zander, CEO of a yarn company called Jimmy Beans Wool, is another woman who has produced millions in revenue without the help of venture capital. In 2001, she and her husband “ditched the dot-com rat race of Silicon Valley,” she once wrote in the New York Times, and started the company with the $30,000 they had in savings. Jimmy Beans Wool was also a part of the EY and WPO study.
“There’s one side of me that wants to grow this business so fast. But there’s another part of me that wants to have a life, and be a renegade and do things my way,” she says. And even after talking to “various companies” that were interested in investing in the startup, “we couldn’t figure out an investment balance that felt like it was worth giving up control,” Zander adds. Jimmy Beans Wool had $8 million in revenue last year, she says.
Schiffman also notes that many of businesses in the study “are not in a typical mold of a venture-backed company.” That can refer to industry—a large segment of the VC world focuses on tech or tech-related companies—or location, as venture-funded businesses tend to cluster on the east and west coasts, namely in New York or California.
“If you’re not in a hotbed, it just may not be part of the conversation,” she says.