Challenges for Women Entrepreneurs: Creating Entrepreneurial Ecosystems
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Women challenges face additional challenges in entrepreneurship compared to men. At 2016's Global Entrepreneurship Summit (GES), Alex Krause with the Kauffman Foundation presented research on this topic. This was part of a session with Ed Steidl from Microsoft on Creating Entrepreneurial Ecosystems.
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Challenges for Women Entrepreneurs: Creating Entrepreneurial Ecosystems
- 1. © 2016 Ewing Marion Kauffman Foundation Women’s Entrepreneurship Research Alex Krause Program Officer in Research & Policy June 22, 2016 Global Entrepreneurship Summit www.kauffman.org
- 2. © 2016 Ewing Marion Kauffman Foundation first things first Women entrepreneurs: data • Labor force participation • Gender composition of entrepreneurs • Rate of new entrepreneurs Challenges for women in entrepreneurship • Financing • Mentors • Cognitive biases • Family dynamics What can we do? • Public policy • Entrepreneurship support organizations • Look at the gig economy • Societal shift
- 3. © 2016 Ewing Marion Kauffman Foundation demographic shift • Labor force participation rate (U.S. Bureau of Labor Statistics U.S. Department of Labor) • Educational attainment by women (U.S. Census Bureau) • Declining marriage rates, delayed parenthood (Matthews, Brady 2016)
- 4. © 2016 Ewing Marion Kauffman Foundation
- 5. © 2016 Ewing Marion Kauffman Foundation millennial workers • ESOs looking to attract young entrepreneurs (ICIC 2016) • Effect of Great Recession (Finn, Donovan 2013) • Egalitarian couples (Pedulla, Thébaud 2015)
- 6. © 2016 Ewing Marion Kauffman Foundation GENDER OVERVIEW results of the Kauffman Index
- 7. © 2016 Ewing Marion Kauffman Foundation GENDER OVERVIEW results of the Kauffman Index
- 8. © 2016 Ewing Marion Kauffman Foundation GENDER OVERVIEW results of the Kauffman Index
- 9. © 2016 Ewing Marion Kauffman Foundation Lack of diversity in funding Mentors are in short supply Masculine perception of eship Family dynamics challenges
- 10. © 2016 Ewing Marion Kauffman Foundation the financing gap
- 11. © 2016 Ewing Marion Kauffman Foundation mentors in short supply • Mentors typically tend to be older men who have been entrepreneurs in the past. • Limited entrepreneurs who can relate to the specific challenges of women and minority entrepreneurs. • Mentorship is critical in helping professional developing successful entrepreneurs.
- 12. © 2016 Ewing Marion Kauffman Foundation cognitive biases Discrimination in hiring, pay, performance Entrepreneurship is a stereotypically masculine trait Perceptions of women as less ambitious, less committed to their work
- 13. © 2016 Ewing Marion Kauffman Foundation Gender WorkParenthood family dynamics
- 14. © 2016 Ewing Marion Kauffman Foundation why is it so hard to be a mom entrepreneur? Traditional work isn’t working. Mothers seek entrepreneurship as an alternative. Entrepreneurship also isn’t working.
- 15. © 2016 Ewing Marion Kauffman Foundation how can we address these challenges? Public policy Entrepreneurship support organizations Advocacy Future research
- 16. © 2016 Ewing Marion Kauffman Foundation public policy • Address parental leave, subsidized childcare • Women are better able to start opportunity-based businesses when policies are supportive (Thébaud 2015) • Policymakers celebrate women entrepreneurs
- 17. © 2016 Ewing Marion Kauffman Foundation changing nature of work • New platforms for work are rapidly creating a new gig economy. (Zysman, 2016) • Many gig-workers must work multiple jobs/have unreliable hours. Challenges for these flexible workers are similar to those of entrepreneurship.
- 18. © 2016 Ewing Marion Kauffman Foundation entrepreneurship support organizations • Provide family-friendly spaces • Develop mentoring programs • Counseling services to improve family/spousal dynamics • Celebrate women entrepreneurs
- 19. © 2016 Ewing Marion Kauffman Foundation societal shift in promoting women entrepreneurs The problem • There are greater challenges faced by women entrepreneurs than by men entrepreneurs • Masculine Perception of Entrepreneurship • Family Dynamics • Financial Constraints • ESO Issues • Missed growth opportunity for the economy Lenses considered • Labor force participation and demographic changes • Changing nature of work • Millennials in the workplace • Cognitive biases Recommended changes • Public policy • Create support that truly supports women entrepreneurs • Celebrate women entrepreneurs
- 20. © 2016 Ewing Marion Kauffman Foundation Which programmatic characteristics lead to better outcomes for diverse groups in which contexts? Does being born out of a community vs. placed into a community impact the effectiveness of diversity inclusion? What does diversity inclusion mean in a successful entrepreneurship program? (Attraction, retention, programmatic characteristics, etc.) How can we draw the line between getting diversity and maintaining quality vs. meeting a diversity quota? Who is joining women’s-only programs? What are the motivating factors attracting programs to building in a women and minority focus? future research
- 21. © 2016 Ewing Marion Kauffman Foundation w w w. k a u ff m a n . o r g
- 22. © 2016 Ewing Marion Kauffman Foundation #GES2016 | @AlexKrause | @EdSteidl @KauffmanFDN | @Microsoft | @MicrosoftMIC Ideal state • It is 2026 and women entrepreneurs no longer struggle to raise capital for their ventures compared to men, perceptions of their competence are based on actual performance / merits, and they are equally represented in entrepreneurship. Being female is no longer a barrier to be managed in entrepreneurship. Group task • Working back from that moment, describe the social changes that made this possible. • What social and systems changes made this possible? • Which problems had to be addressed and what programs were designed to address them? • What did people try that didn’t work? • Which common assumptions had to be challenged?
Editor's Notes
- Since WWII, women have been joining the workforce at rapid pace, while men have been leaving the workforce. Women are more likely to leave the workforce for family reasons, while men are more likely to be fired or laid off. CITE?? AND DESPITE WOMEN INCREASING THEIR LABOR FORCE PARTICIPATION, WOMEN ARE STILL STARTING BUSINESSES AT HALF THE RATE OF MEN. Women are outearning men in terms of college degrees (with even more pronounced rates for people of color Women are getting married later and having children later (and less children)… All of these things together mean that women have contributed greatly to the U.S. economy over the years and will continue to do so, and are a key driver of economic growth. But, as I’ll prove later, while women have added significantly to the economy, policies have not changed in a way to support women and mothers.
- At the same time, millennials are moving into the workplace, and are shown to exhibit changing values. Their parents worked all of the time and felt the shocks of the great recession at the same time millennials were entering the workplace. Millennial relationships are becoming more egalitarian. Because of these things, many millennials are beginning to seek a career which would afford them greater work-life balance. Demand for more work-balanced policies will increase Not true for all, but true for many Nearly 80% of millennial couples are dual-earners (Schulte 2015) Photo credit: https://www.flickr.com/photos/itupictures/9024333319
- Demographics are an important piece of the declining entrepreneurship puzzle. Increasing the amount of women who choose to be entrepreneurs can also help reverse the decline of entrepreneurship.
- Today, women remain underrepresented among the ranks of entrepreneurs. In fact, they are half as likely as men to start a business. This discrepancy is not just a gender or a fairness issue—it is an issue of economic growth. By addressing the gender gap in entrepreneurship, policymakers can unleash a wealth of ingenuity and creativity that can spark a new era of entrepreneur-led growth in America.
- Opportunity Share of New Entrepreneurs, the percentage of new entrepreneurs driven primarily by “opportunity entrepreneurship” as opposed to “necessity entrepreneurship.” Female new entrepreneurs have a higher likelihood of being opportunity entrepreneurs than do their male counterparts, with 84.1 percent of the new female entrepreneurs in the 2015 Index not coming from unemployment.
- There are many challenges facing women entrepreneurs and entrepreneurs of color. We have outlined four challenges to discuss further.
- Both women and people of color are less likely to access funding from both informal and formal sources. Two-thirds of entrepreneurs start businesses with either their own money or money they receive from family and friends. If they aren’t getting money through these channels, they are shorthanded as they have less capital to start, and can raise capital less quickly than their counterparts. For women, as this graphic shows, this leads to them beginning companies with nearly half as much capital. One way entrepreneurs get funding is through equity investment. Equity financing is better suited for firms intended for high growth. However, equity investors often find entrepreneurs to invest in through their personal and professional networks, which tend to be homogenous. The result is that minority-owned firms receive smaller equity investments than non-minority firms and that venture capital funds focused on minority-owned firms are competitive. Minority angel investors make up just 3.6 percent of total angel investors.
- Older (white) men, limited knowledge of the newer generation of entrepreneurs, immigrant entrepreneurs, mom entrepreneurs, minority entrepreneurs, etc.
- While untrue, the narratives create real barriers Research has shown that there is an implicit bias against women as entrepreneurs, where people are less likely to believe that women have the skills to succeed as entrepreneurs. This perception makes it harder for women to secure funding for their entrepreneurial ventures. In addition, this cultural assumption that entrepreneurship is a masculine activity might dissuade women from considering entrepreneurship in the first place. Perception of warmth and competence for men and women Pitch competition where for the same pitches, women were seen as both presenting a less good business idea and less likely to have the skills and abilities to undertake the business. Men were seen as having better ideas (same ideas) and better skill set to perform the business work. (Sarah Thébaud) Perception of Warmth Perception of Competence
- Going to be talking about a few things today: why is it hard to be a mom entrepreneur, and within the contexts of 4 things: changing demographics, changing nature of work, millennial workers, and cognitive biases …which would help to answer the question of why it’s so hard to be a mom entrepreneur, by first answering the question of why it’s hard to be a working mom generally, why entrepreneurship seems to be a solution for mothers, and why the failing of these two problems is a failure for our economy and an urgent matter for policy. It was really our goal that policies would follow which would be helpful to mothers
- Advocacy = Celebrate women entrepreneurs (in the public policy and ESO section)
- moderately long paid leaves and greater public expenditure on childcare are linked to smaller gender gaps among business owners in terms of their business size, growth aspirations, and propensity to innovate or use new technology. By providing mothers with the time and resources they need to balance work and family, work-life policies like these help make entrepreneurship a more feasible and attractive career option. Policymakers should find the right balance in creating policies that help mothers receive assistance and encouragement for entrepreneurship.
- Need to increase research in these realms—help promote spillover effects in terms of policy for gig economy + entrepreneurship While Traditional jobs are in decline, new platforms for work are rapidly creating a new gig economy. The gig economy focuses on peer-to-peer lending for goods and services, where more people are self-employed, finding shortterm assignments or renting resources through various platforms, such as Uber, Airbnb, and Task Rabbit.14 Many of these workers are unable to support themselves through one job and often are dependent on unreliable hours. While this new gig economy offers opportunities, it also brings its own sets of challenges. These challenges are similar to those of entrepreneurship and, in particular, mother entrepreneurship, which seeks to achieve worker flexibility that gig economy workers are also seeking.
- Conclusion slide
- Conclusion slide