Overall, women-owned businesses account for about one-third of all types of U.S. businesses. Among employer firms, women-owned businesses are only about 16% of the total, and their share of revenues and employees are in the single digits. Among high-growth firms, women usually account for less than 10% of founders.
The survey of more than 350 women who were founding CEOs, presidents, CTOs or lead technologists of tech startups founded between 2002 and 2012 revealed three primary challenges for women-owned high tech firms:
• Lack of mentors – Few women in the survey cited a role model as motivation for starting a business, but many ranked a lack of available advisors as one of their top challenges.
• View of success and failure – Women rank lessons from failures higher on their list of factors contributing to success than lessons from successes.
• Financing gap – Seventy-two percent of respondents cited financial capital as a critical challenge to launching and nearly 80% used personal savings as their top funding source. This is particularly significant because high-growth firms typically require larger amounts of external capital in debt and equity.
Overcoming the challenges is crucial not only for women entrepreneurs, but for the country, according to the report. Citing the slow recovery from the recession and the potential economic boost of more high-growth firms led by women, the report states, “It seems clear that the future of American entrepreneurship and growth is in the hands of women.”
The Kauffman report concludes with a number of recommendations for increasing the number of high-growth women entrepreneurs:
1. Build the financial capabilities of women and ensure access to bank financing and equity financing by venture capitalists and angel investors.
2. Encourage greater participation by women on the financing and investing side. The report cites the work of such groups as Golden Seeds, Astia Angels and the Pipeline Fellowship as examples to follow.
3. Offer more opportunities in industry that will give women the experience needed to pursue entrepreneurship.
4. Provide more opportunities to learn about entrepreneurship.
5. Provide exposure to successful women entrepreneurs who can serve as inspiration.
6. Encourage team startups.
Why start a company or get involved in a startup (% of respondents that rate it as extremely important, very important or important):
Capitalizing on a business idea – 85.6%
Startup company culture was appealing – 75.8%
Always wanted to start own business – 72.6%
Top challenges (% of respondents that rate it as a challenge, a big challenge or extremely challenging):
Time and effort required – 76.9%
Lack of availability of financial capital – 72.1%
Lack of available mentors or advisors – 47.9%
Drivers of success (% of respondents that rate it as extremely important, very important or important):
Prior industry work experience – 88.2%
Lessons learned from previous successes – 88.2%
Lessons learned from previous failures – 87.3%