Women entrepreneurs to dispel micro myth

March 2, 2009

090301_glenda_pic- Glenda Stone is chief executive and founder of Aurora, a recruitment advertising and market intelligence company, and co-chairs the UK Women’s Enterprise Taskforce established by Prime Minister Gordon Brown. The opinions expressed are her own. -

Most venture capital and angel investment tend to go to a specific breed of entrepreneur – innovative, well networked, intelligent, confident … male. Is this the result of deep-rooted discrimination or is this simply an issue of supply and demand? Women-owned businesses are largely under-capitalised and this leads to inhibited growth.

Access to finance is cited by numerous sources as the greatest barrier to the growth of women’s enterprise but “access” is only the consequence and “education” is the cause. More women need to participate in business education addressing business growth, technology, revenue models, and securing correct types of finance.

Globally women-led businesses receive less than 5 percent of venture capital. Women business owners also seek less bank loans and overdraft facilities. Regardless of country, women are more frugal – they do more with less, for less. Is this a flattering positive or is this a naive flaw that perpetuates women’s relegation to micro enterprise?

I co-chair a taskforce established by Prime Minister Gordon Brown. We advise on strategy relative to increasing the quantity and scalability of women’s enterprise. If women started and grew businesses at the same rate as their male counterparts, the economy would experience greater wealth and job creation and, needless to say, generate further substantial tax revenues for government.

The private sector is keen to encourage emerging markets of women entrepreneurs because this can result in an expanded customer base and vertical cross-selling opportunities. One of the biggest challenges facing the Taskforce is the disproportionate interest in micro versus fast-growth businesses, not so much from the private sector or senior experts in central government, but from business support providers and the actual women themselves. Perhaps the fast-growth female led businesses are simply busy doing business and do not view gender-based networks as relevant.
In addition to government programmes and private sector support typically from finance and technology corporations, thousands of businesswomen’s networking groups also exist around the world to encourage and support the rise of female entrepreneurs. Serving an important need, many of these networks provide various training programmes and events but the networks themselves usually lack revenue models and so each month many new networks launch while others simply disappear.

Although recent years have seen an emergence of women’s funding networks predominantly in the US, Canada and the UK, most networks tend to focus on micro-enterprise and social networking rather than on formal business education. In addition, media coverage tends to focus on small women-owned businesses in retail that have a good story for high audience appeal rather than on the more scalable and complex business-to-business enterprises that may be of less interest to mainstream media audiences.

Media coverage of women starting their business from the kitchen table in an area they have always enjoyed as a consumer, all while working flexibly caring for children, certainly predominate both online and offline media. Such stereotypes, while important for their inspiration, simply reinforce a narrow concept of women’s enterprise. “Women’s enterprise” is often acknowledged as one homogenous group with little market segmentation. Is this ignorance or because it is a market not considered to be worth pursuing?

International Women’s Day on March 8, celebrated annually since 1911, provides an excellent opportunity for reinforcing the importance of women’s equality through economic advancement – and creating wealth through enterprise is key to this. With around 15 per cent increase in the level of International Women’s Day activity year on year around the world, there is certainly considerable energy for positive change.

Comments

Ms. Stone has articulated significant questions for our battered economy and launched an important dialogue for policy makers and entrepreneur organizations alike. To appropriately and adequately address women’s participation within high-growth markets, we must first understand the underlying context, and Ms. Stone has certainly touched on them both.

There seem to be two forces at play to the detriment of women as they grow their businesses. 1) Women and men still network in separate business networks. Why this matters particularly in the high-growth space is that VCs and Angels like to invest in who they know. It can mitigate the risk significantly for an investor if the entrepreneur is already a known entity. And as fewer than 7% of VCs are women, one can see the natural result is that fewer women are funded. 2) Women still self-assess differently than men and therefore they end up aspiring differently. Significant research has been done that shows that still today, men and women receiving the same grades will measure their performance differently. This tends to result in lower aspirations by women. Within entrepreneurship this often means that a female entrepreneur might either underestimate the true market potential of her business or worse, she might underestimate her ability to execute on it.

Fortunately, both of these factors can be simply and elegantly addressed via a comprehensive ecosystem – comprised of serial entrepreneurs, investors, value-ad service providers such as lawyers, bankers and accountants – built out around the entrepreneur for her benefit – both educational and as a reach into the rich relationships that will deliver results. At Astia this is our model – a community of men and women working together to ensure that women-led companies achieve access to funding and the high-growth that that funding will require. And we have proven that it is just that simple – more than 60% of the companies who engaged in the Astia ecosystem and program achieve funding or an exit within one year of entering the program. This is not insignificant when one considers that fewer than 1% of companies who seek venture capital actually are successful in this effort.

 

Glenda ~ One-half of Forbes ’100 Most Powerful Women’ last year were CEO’s of major Fortune500 companies. How did their companies do in 2008? What percentage of the total business failures in 2008 were women-owned/founded companies? If the % is low, one could argue women owners were able to manage their businesses with far less leverage using internally-generated funds. Women news anchors would definitely like that story. Perhaps having a more level playing field will be one of the upsides to this economic downturn. However, if women were playing primarily in the home-accessorizing businesses, then they suffered along with all other businesses dependent upon continued building & renovation of homes. [Aside: Personally, I've always wanted to run a railroad like Dagny in "Atlas Shrugged" by Ayn Rand.]

 

I am tired of hearing this stuff. It is 2009, not 1911. We have surpassed the women’s issue and have moved on and now elected an African American as president. While the nation has progressed, it is ultimately the media who have a lasting infatuation with the morbidity of discrimination. In our recent history eBay was started by a woman. We have had a series of three women in a row as Secretaries of State. The following companies ALL have women at the helm of their operations: Pepsi, Kraft, Archer Daniels, Xerox, Wellpoint, Avon, P&G Global Business, Sara Lee, Disney Media, DuPont, Oracle, MTV, TIME, Western Union, Reynolds Tobacco, Yahoo, UnitedHealthcare, Sunoco…and more. It’s time to mothball International Women’s Day. We have succeeded.

Posted by Stacy Law | Report as abusive
 

This makes sense and I must say that I sometimes experience this first hand. It seems like women have to spend more time ‘proving’ themselves than to focus on the business. I prefer not think of it this way. I prefer to focus on the ideas and business development. However, I do feel the challenge of being a female sometimes.

 

I agree it is no longer 1911 and I don’t think anyone is arguing there is a glass ceiling. However, the statistics still show that while women are starting businesses at rates commensurate with men, they are not leveraging equity investment for those start-ups (still today only 3% of venture capital goes to women CEOs and 5% to women-founded organizations). In the interest of ensuring our recovery, it behooves us all to make sure women know how to play in high growth markets as there is real opportunity for job creation, innovation and wealth creation. The dialogue is how do we get there from here?

PS
eBay was not founded by a woman: http://en.wikipedia.org/wiki/EBay

 

This article and a number of responses are total nonsense, myopic and reflect little thought to reality.

Most women get less financing because they are setting up business’s that are smaller and more likely to be home based with less growth potential. As this is the case they have less $ upside for investors. (Good to see that someone mentioned compounding effect that segregated networking may add)).
There is a never ending raft of legal protection that makes it more difficult to get rid of underperforming women than their male counterparts and therefore makes hiring more difficult. This is even more so in Europe where costly maternity (upto a years full paid leave) & other considerations are taken into place.
The world is also noticing that women in power are just as capable of making a mess or underperforming as their male counterparts – Rice, Fioreno, Clinton (losing from a position of strength) and a number of the women leading the companies mentioned above such as Kraft i.e. they are not bringing anything particularly new to the table.

A sad by-product of all the female whingers out there that want even more rules and protection is that the truly talented among you are being ignored by males because all they can hear is moaning by the less capable.

Posted by nick | Report as abusive
 

Brilliant article! Posing the question about are enough female entrepreneurs stepping up for finance is important (i.e. is there the demand?) – thus will all the female funds arising be utilized? And yes, the press do constantly only feature micro consumer female businesses. Perhaps with all the recent rounds of redundancies, more innovative and scalable businesses will emerge – some of them inevitably by women.

Posted by C.R.S | Report as abusive
 

It’s a shame the first post to this blog is posted by a man who I see refers to women as “corporate whores” on his website. Er kinda proves the point I think …

Posted by Larry | Report as abusive
 

I agree with the view that many women-owned businesses are under capitalised but do not agree that education only is the solution. In my experience, it’s also a question of desire and belief. Many women have the desire to start up enterprises in order to have flexibility and be in control. A great number have the belief that running a “high growth” business will take them right back into the world they have been trying to get away from. This is of course not necessarily the case, and it’s a question of aspiration and challenging beliefs.

 

I have been reading through this article and have to say that it’s not education that’s the problem. Many women are well educated.
The problem women in business face are ease to access government programmes and private sector support typically from finance and technology corporations. I have contacted various initiatives that are advertising or stating they are set up to help women set up business, finance and network. I have been left frustrated, realized most of this information provided is just a paper exercise or a way to get funding.
As a woman who has just set up a start up business, I have encountered lots of problems. I realised it’s not only women having problems accessing finance, technology, media or networking, men starting up are also going through the same problem
I am inspired to turn my business idea in to success by taking advantage of all problems I have encountered and mistakes made as a learning curve. I have stopped chasing or reading about funding for women business instead I am focussing my energy the growth and success of my business

 
  •