Women and startups – the numbers

By Editor March 3, 2015

Monica Eaton-CardoneBy Monica Eaton-Cardone, Chargebacks911 founder

Women own approximately 30 percent of small businesses in America. In fact, according to the National Women’s Business Council, there are over 7.8 million businesses in the United States that are owned by women. Despite this, only three percent of tech startups have women owners. The technology industry, while growing at a rapid and exponential rate, has proven to be a difficult area for women to break into, particularly in leadership roles.

According to a 2014 report conducted by the Ewing Marion Kauffman Foundation—a nonprofit organization focused on education and entrepreneurship—approximately three percent of tech startups are actually led by women. However, Karen E. Klein reported that: “Women-led private technology companies are more capital-efficient, achieve 35 percent higher return on investment, and, when venture-backed, bring in 12 percent higher revenue than male-owned tech companies,” in an article for Bloomberg Business.

The Global Entrepreneurship and Development Institute, alongside computer technology company Dell, conducted a study last year entitled the 2014 Gender-Global Entrepreneurship and Development Index, using research of high potential women entrepreneurs in different countries. When compared to the sixteen other countries in the study, the United States ranked highest overall with a score of 83. The areas evaluated were entrepreneurial environment, the entrepreneurial eco-system and women’s entrepreneurial aspirations.

Many startups evolve from the want to fulfill a need or solve a problem that no one else has successfully tackled. The easiest way to uncover a solution to a problem is to have experienced the problem yourself. The minds that discover holes in the consumer marketplace belong to consumers who become merchants in order to fill them. Women lead the way in consumer spending. Nielson.com reports that women are responsible for anywhere between $5 trillion and $15 trillion of consumer spending annually in the United States alone. In terms of enabling women to spearhead technology and other startups, however, the decision to take on the task is just the beginning. A 2014 report by the U.S. Senate Small Business and Entrepreneurship Committee revealed that women owned businesses are only successful in receiving 4.4 percent of conventional small business loan dollars awarded. For every $23 loaned to small businesses by the government, one dollar is loaned to businesses owned by women. Of loans backed by the Small Business Administration, only 17 percent are awarded to women, while they receive a mere seven percent of venture capital funding.

One of the key ingredients to enabling women to take up leadership roles in business is encouragement—encouragement from men as well as from other women. It isn’t a surprise that there is a need for acceptance from men in the workforce when it comes to women in power. However, women can be competitive by nature, which can lead to animosity in the workplace. Despite the statistics, the truth is that there is enough space for each and every woman who strives to own or run a business to succeed. By supporting, encouraging, advising, and enabling each other, women are not only allowing for the professional growth of their gender as a whole, as well as the power of the industry which they represent, but also of their own leadership positions.