Women's Entrepreneurship Has Potential to Create Tailwind for U.S. Economic Growth

The future of American growth is in the hands of women, says Kauffman Foundation study released on Women's Entrepreneurship Day during Global Entrepreneurship Week

(KANSAS CITY, Mo.) Nov. 19, 2014 – Female entrepreneurship, especially in high-growth fields, could be the catalyst for economic growth in America, according to a new Kauffman Foundation research report.

"Sources of Economic Hope: Women's Entrepreneurship," released today to coincide with Women's Entrepreneurship Day during Global Entrepreneurship Week, suggests that accelerating female entrepreneurship could have the same positive effect on the U.S. economy that the large-scale entry of women into the labor force had during the 20th century.

While women represent more than half of the educated U.S. population, they have far lower levels of participation in growth-oriented entrepreneurship than men do. Women-owned businesses account for only about 16 percent of the nation's employer firms and, among high-growth firms, they typically account for fewer than 10 percent of founders.

"Female entrepreneurs have untapped economic potential, and policymakers and relevant organizations need to empower them to pursue high-growth opportunities," said Alicia Robb, a senior fellow at the Kauffman Foundation and author of the report.

"By opening the doors for women to have greater access to bank, venture and angel financing and by preparing more women to become investors, we can engage this greatly underutilized resource in the engine of growth and innovation," said Vivek Wadhwa, fellow at Arthur and Toni Rembe Rock Center for Corporate Governance, Stanford University; director of Research at the Center for Entrepreneurship and Research Commercialization at the Pratt School of Engineering, Duke University; and distinguished fellow at Singularity University, who conducted the survey with the support of the Arthur and Toni Rembe Rock Center for Corporate Governance, the Pratt School of Engineering, Women 2.0 and Neesha Bapat, Innovating Women project director at Singularity University.

Wadhwa recently published Innovating Women: The Changing Face of Technology, a book that features a collection of more than 500 candid first-hand interviews and essays from women in technology that explores gender discrimination.

The survey of nearly 350 female tech startup leaders investigated what contributes to the low percentage of women running high-growth firms. Regardless of gender, entrepreneurs face many of the same challenges in starting businesses, but the survey showed three primary differentiators in female entrepreneurs:

  • Women lack role models who would motivate them to start companies. Because mentorship is important for successful entrepreneurs, this finding could contribute to the low share of women in growth entrepreneurship.
  • Female entrepreneurs say that lessons learned from failures are a greater factor in their success than lessons from successes are. Layering these survey findings with previous studies about how entrepreneurs of both genders experience failure may show that women are more likely to regroup and apply knowledge gained from failures to future ventures.
  • Women experience a greater financing gap than men do. Nearly 80 percent of the women in the study used personal savings as their top funding source, even though 31 percent of them had angel investors and 14 percent had venture capital funding.

The report also suggested that programs for female entrepreneurs should offer more opportunities to learn about starting and growing businesses and engage successful women business owners in mentoring.