Sunday, September 30, 2012

Subverting the Gender Gap in Entrepreneurship

Just because we don't often talk about the glass ceiling in the startup world, doesn't mean it isn't there.  A study commissioned by the Kauffman Foundation, “Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers,” helps to shed some light on a phenomenon that remains scarcely discussed despite its massive impact on the economy.  The report highlights a number of distressing trends and statistics that exemplify the gender gap in young companies.  For instance,   

  • Women have made far more significant strides in established tech companies and university systems than in startups.

  • Just 1.8 percent of women-owned firms have revenues more than $1 million, versus 6.3 percent of men-owned firms. 

  • Most Americans who start businesses do so as self-employed professionals or service providers – only a fraction have firms that employ others, and that fraction remains smaller for women. 

Intuitively, these feel like symptoms of pervasive cultural prejudices, which can be as damaging as they are hard to pin down.  The following comment from a business owner named Susan Roth, eloquently sums it up:  “As much as we may not like to admit it," says Roth, 

"the world is still a ‘Good Ole Boys Club.’  When women reach a certain level of success, I believe they experience push back from their male counterparts in the business community.  It’s subtle and may only be a word here or a phrase there, but it’s real.  As a result many women lose confidence and begin doubting themselves.  I’ve been running a successful, woman-owned business for over 25 years and have developed a thick skin over time.  But it still hurts when a supplier labels you ‘relentless’ and ‘picky.’  I’m sure if I were a man, the moniker would change to ‘tough, precise, exacting and good businessman.’  In short, there’s still progress to be made.”  

While the Kauffman report presents a wealth of interesting findings, its actionable next steps remain somewhat limited.  Here are some suggestions for what we can do to help challenge the gender gap in entrepreneurship (and please feel free to critique and/or add this list with comments!):

1. Get involved with organizations that train, support and fund female entrepreneurs

How many of the following organizations have you heard of, let alone contacted, visited or actively supported?  They almost always need help from professionals –- whether as volunteers, donors, consultants, or advocates.

  • Women’s Initiative --assists high-potential, low-income women who dream of business ownership. 

  • DigitalunDivided --develops programs, projects and forward thinking initiatives that bridge the digital divide. 

Other local orgs that support women entrepreneurs include:

2. Use crowd-funding platforms like Kickstarter to support female entrepreneurs

The popular crowdfunder has been under pressure to make its system more transparent and its entrepreneurs more accountable.  If you’re more interested in microlending with an international scope, consider lending to low-income entrepreneurs around the world using Kiva

3. Turn up the pressure on VCs and angels to hire, promote and fund women

The professional investor community is dominated by men.  The average percentage of women venture capitalists at top VC firms has been found to be around 8%.  Not surprisingly, only 4-9% of all VC funding goes to female-lead companies. 

The power to change the status quo ultimately rests with the limited partners (LPs) who supply the cash for VC funds.  Venture capitalists have a vested interest in keeping their LPs happy.  Pension funds like CalPERS, universities with massive endowments (think: Harvard, Yale, Princeton, Stanford and Penn), investment banks, sovereign wealth funds, and powerful accredited investors who serve as LPs need to demand more inclusivity of women-lead startups and female VC partners. 

4. Create new women-lead venture firms, angel groups, incubators and accelerators

For reasons that probably deserve a whole separate study, fewer women then men with similar backgrounds in finance, engineering and/or operations find their into roles as financiers backing startup companies.  One potential strategy to address the apparent lack of opportunities for women in the investment world is to partner with women professionals to create new investment firms with a more inclusive set of values.  It's also important to actively encourage more women to fight for roles as professional investors after they have been proven to be successful in other fields. 

5. Encourage business schools to recruit and entice more female MBA candidates to participate in entrepreneurship programs, internships and competitions.  

Business school alumni need to demand that their alma maters integrate more female students into their entrepreneurship programs and electives.  "Want me to cut you a check?  First tell me what you’re doing to recruit and support female MBAs with an interest in starting a new business!"  If you have friends who have been to b-school, encourage them to connect with female entrepreneurs and help expand their network.

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