Sources of Economic Hope: Women's Entrepreneurship

Abstract

The overall thrust of the survey findings presented here and their comparison with prior research, especially analysis of high-tech firms in the Kauffman Firm Survey sample, is that female and male entrepreneurs have a lot in common. They would seem to start their companies for similar reasons, cite similar self-perceived reasons for success, and face similar challenges. Out of this similarity, three differences do stand out. First, the women technology entrepreneurs surveyed here don’t appear to have had inspiring role models as their principal motivation. Second, women entrepreneurs in general appear to respond differently than men do to failure, and cite lessons learned from failure as a big reason for success. Finally, there is a financing gap when it comes to high-tech and high-potential women entrepreneurs. That financing gap turns into a growth gap in terms of company outcomes. Findings ways to fill that financing gap, then, could have huge payoff in job creation and innovation. What, if anything, can government and other organizations do to capitalize on the growth opportunity that exists with women entrepreneurs? First, building the financial capabilities of women and ensuring access to bank financing and equity financing by venture capitalists and angel investors is paramount to having more high-growth entrepreneurship by women. Second, encouraging greater participation by women on the financing and investing side also might be an avenue worth pursuing. Prior research documents the low level of representation of women as investors in angel investing and venture capital funds. A growing number of angel groups, such as Golden Seeds, Astia Angels, and the Pipeline Fellowship, are preparing women to become investors in this space. More is needed to overcome the gender imbalance on the funding side. Other steps also can be taken to support high-growth women’s entrepreneurship in ways that will allow us to tap this greatly underutilized resource. This issue needs to be addressed on multiple fronts: 1) by offering more opportunities in industry that will give women the experience needed to pursue entrepreneurship, 2) by providing more opportunities to learn about starting and growing businesses, and 3) through exposure to successful female entrepreneurs who can share stories and insights from their successes (and challenges). Family-friendly policies that allow women the flexibility to work outside of their homes and schedule activities around family commitments might also encourage women to tackle higher-growth opportunities. A recent paper from the Office of Advocacy at the Small Business Administration (SBA), found that different university programs, even those within the same field, can provide different types of exposure among men and women to entrepreneurial opportunity.4 In fields such as mechanical engineering, where women represent a small share of graduate students, male and female students still have different experiences when it comes to their faculty advisors, interaction with private industry, and entrepreneurship. Given how important prior exposure (whether in industry or in entrepreneurship) was for survey respondents here, finding a way to address the differential structure of these programs could put more women onto the high-growth entrepreneurial pathway. Encouraging and facilitating team startups (men, women, and mixed) is another avenue to pursue, given that our findings highlight the importance of team ownership in securing financial capital, particularly during the critical early years of the firm. There are an increasing number of organizations and events such as Startup Weekend Women’s Edition, Startup Grind, Founder Fridays, and Co-Founder speed dating that serve as encouraging examples of ways to meet this need. Programs that specifically target women-owned, high-growth-potential firms also have shown considerable success. Astia and Springboard Enterprises are two programs that have built successful track records in helping scale women-owned companies by providing them access to equity financing, as well as business mentorship and training. Clearly, more of these types of programs are needed if we are going to truly move the needle on high-growth women’s entrepreneurship.