Who are the new entrepreneurs? Insights on gender

Source: http://goo.gl/9Yej3L

The historical discrepancy in entrepreneurialism by men and women persists. According to recent data gathered by Kaufman Foundation (2016), women are half as likely as men to engage in entrepreneurship despite their increasing participation in the labor market and graduation rates in higher education. In recent decades, women have changed jobs as frequently as men (BEA, 2015) and still are being paid full-time wages 20 percent lower than men (White House, 2016). Even so, we do not yet observe more women than men pursuing careers as entrepreneurs. In fact, women’s share of new entrepreneurs has declined from about 44 percent in 1996 to 37 percent in 2014 (Kauffman Foundation. 2016).

A Growing Female Interest

Notwithstanding, the share of US businesses owned by women has increased from 29 percent in 2007 to 36 percent in 2012 (US Census, 2015). This surge was primarily driven by Hispanic and African-American women, for which the number of businesses owned increased by 87 percent (to 1.48 million) and 68 percent (to 1.53 million), respectively. This suggests that entrepreneurialism is probably driven mostly by necessity rather than opportunity motivations, particularly on the eve of the 2008 financial meltdown and the nationwide economic turmoil. It is also noteworthy that women-owned businesses tend to be smaller firms with fewer employees (WSJ, 2015) – averaging 8.5 employees, whereas men-owned firms average 13.5.

Barriers for Women

The Kauffman Foundation (2016) suggests that gender differences in entrepreneurship rates can be attributed to greater barriers that women face relative to men. Particularly in terms of securing funding, inconsistent and amorphous behavioral standards demanded by investors and other stakeholders, and the “threat” of motherhood and family life.  Concurrently, when assessing similar gender discrepancies in high-tech incubators and accelerators, a study conducted by ICIC (2016) claims similar barriers for women in this context as well, namely within the realm of recruitment practices, selection biases, program design, and culture. On the other hand, an empirical article published the National Academy of Science (PNAS, 2014) highlighted that investors tend to provide funding to entrepreneurial ventures pitched by men.  Not surprisingly, they found that women-led ventures have received only 7 percent of all venture funds allocated in the US.

It shall also be noted that the present state of affairs is much better than in the past when it comes to gender gaps. However, more needs to be done to provide women with the same opportunities and rewards given to men.