Financing Patterns and Performance Outcomes of Women- Versus Men-Owned Firms: Evidence from the Kauffman Firm Surveys

Abstract

This study examines and compares characteristics, financing patterns, and performance outcomes of women-owned and men-owned young entrepreneurial firms. Using fully imputed data from the Kauffman Firm Surveys of U.S. start-up firms, we first examine the differences in firm and owner characteristics between women- and men-owned firms at the firm’s start-up. Second, we explore the differences in equity and debt financing between the two groups of firms during the first several years of the firm’s operations. Third, we explore whether performance outcomes (in terms of survival and growth) of young entrepreneurial firms are different for firms owned by women versus firms owned by men. We find large and significant differences in the amount of start-up capital (debt and equity), with women-owned firms at a significant disadvantage. We also find that women-owned firms are significantly less likely to use business credit than are men-owned firms which is important considering prior findings that firms using business credit at start-up survive longer and grow faster. Finally, while we find large and significant univariate differences in performance of women-owned vs. men-owned firms, these differences disappear in our multivariate analysis of revenues and survival. However, these differences remain significant for employment.