Men and women start their businesses with different levels of financial capital, network differently, and hold different perceptions of themselves in the entrepreneurship space, according to a recent study.
A special issue published in Small Business Economics titled “A gendered look at entrepreneurship ecosystems” reviewed seven research papers focused on understanding the role of gender in entrepreneurship ecosystems. This approach can be very revealing in understanding how men and women behave differently in these ecosystems, and in turn, how these ecosystems respond differently to gender. Here are some of the key findings of some of the studies reviewed in this issue.
- Access to start-up capital is a particular challenge for women.
In a study of venture-capital funded companies in the U.S. from 2011 to 2013, only 15% of companies had a woman executive, and only 3% had a female CEO. Another study found that women start with an average of USD$75,000 compared to an average of USD$135,000 for men. Women also reported being just as likely to take on loans or debt as their male peers, but were more likely to receive less favorable loan sizes, interest rates, and collateral requirements. Women were also less likely to feel satisfied with their financial lending experiences.
Previous research shows that there is a lot of lost potential here – while women founders may struggle to secure their first round of investment, they are just as likely to succeed at raising consequent rounds as all-men cofounding teams once they do get funded. This indicates that women-owned companies create a significant amount of value from the first round they receive.
- Women expect to receive less support and act accordingly.
Sperber and Linder investigated the effects of perceived support on start-ups and found that women tended to mobilize more resources than men when starting their ventures, suggesting a greater perceived lack of support.
- There is a need for more research into how women entrepreneurs experience network effects differently.
McAdam and colleagues interviewed people in women-only and mixed networks, as well as individual female entrepreneurs, to understand the role of women-only networks in improving access to and participation in entrepreneurial ecosystems for women. Findings showed that challenges persisted in women-only networks, where women in these networks still reported being unable to access sufficient resources (such as financial capital) and establish credibility in their fields.The study also found that more experienced women entrepreneurs were better able to structure and utilize their networks, and that further research is needed on how different types of women entrepreneurs experience network effects differently.
- There are many potential strategies for policies to address these challenges.
A study by Foss reviewed published entrepreneurship policy-related studies in top peer-reviewed journals over the last 30 years and found that many of these generally lacked a specific target audience and focused mostly on education and training. The authors conclude that changing this focus alone and addressing women entrepreneurs specifically at the institutional and organizational levels can go a long way.Additional sources point to potential policies for addressing these obstacles including better programs and economic access to child care in ecosystems where women are looking to enter entrepreneurship, and assuring wage parity and role parity in ecosystems where women are already present as entrepreneurs.Further research could examine topics like the role of incubators and accelerators across gender, or how ecosystems with a higher proportion of female entrepreneurs compare to those dominated by males.
The full article can be accessed here.
Contributed by Victoria Smith