There are now 8.3 million women-owned businesses in the United States. Together they employ more people than McDonald’s, IBM and Wal-Mart combined, and their revenue of $1.3 trillion exceeds the market capitalization of Apple, Microsoft, GE, Google and Sony.
What is behind this trend? How have women managed to achieve this success in what has traditionally been a man’s world? Is this something that women are inherently better at, or is it simply part of a larger trend?
As you can imagine, this is a complex subject, and I certainly won’t have all the answers here. Perhaps we can at least put the questions into some kind of perspective.
Part of this can be explained by the intersection of several recent trends. One is the slow, steady gains being made by women in the workforce. Women today represent 14.6 percent of executive officers, including 23 CEOs in the SP 500 (4.6 percent). That’s still a small amount, but it’s much larger than it once was. Yet, these numbers have actually stagnated since 2007, even as women have come to represent 59 percent of the college-educated, entry-level workforce.
At the same time, more people — male and female — are leaving what used to be called “regular employment,” many taking advantage of the opportunities being presented by the digital economy. Entrepreneurship in general is on the rise. A full 13 percent of the population was involved in startups in 2012. That is further compounded by the fact that job satisfaction is at an all-time low.
So, as women are increasingly moving toward a sense of fulfillment beyond the home, more are taking to setting up their own shops. But that doesn’t answer the question of whether women are inherently more or less suited to entrepreneurship.
What makes a great entrepreneur
Jenny Ta is the founder and CEO of Sqeeqee (pronounced “Squeaky”), a social networking company that she refers to as “Facebook on steroids.” Sqeeqee offers “SocialNetworthing,” which allows users to monetize the exposure they provide to companies on their social media profiles. Ta spent 18 years working on Wall Street. She left to start her own investment banking firm — twice. Ta says that entrepreneurship is an individual trait that’s not necessarily associated with gender. For her and others like her, working for someone else, feels “like being in a cage.”
Ta continues, “The other piece is about whether a woman is inclined to be a risk-taker or not. It’s easier to say than to do. I’m the type of entrepreneur that, if I have a million dollars, I would rather put it into a businesses than buy a bunch of condos and rent them. And if I burn the entire million, at least I can say that I gave it a shot. Not everyone is like that. Some people are content. I am not. Risk-takers might achieve the most visibly spectacular successes, though they might not have the most success overall, statistically speaking.
For people like Ta, “It’s like a force deep within your gut. Entrepreneurs have their own vision, and they are motivated to execute that vision. Entrepreneurs will only be content at the top. The minute you reach the peak of that mountain, you see another mountain that’s even higher, and you start thinking about climbing it.”
Elizabeth Schirmer is another breed of entrepreneur. She has a job as a VP of marketing at a biofuels company called Sweetwater Energy in Rochester, New York. Like Ta, she’s not entirely content with that, but she has found a way to make it work. Schirmer has studied self-determination theory and follows its three precepts of Competency, Autonomy and Relatedness as guiding stars. She felt that while her career provided the first two, it was falling short on the third, which challenged her to seek more connectedness and impact. It was out of that concern that she founded the nonprofit Untapped Shores.
Untapped Shores provides an opportunity for travelers to make a difference by carrying and delivering a life-saving business-in-a-box to a woman or a family in need. Their motto is: “Give back as you go.”
In the box is a water purifier to which the user adds salt to produce purified water, plus chlorine as a byproduct. While the purified water is essential for drinking, as well as hydroponic agriculture, the chlorine can be used for various sanitation solutions. The women that receive these kits are also trained in simple business skills to show them how to set up a social enterprise that can produce sustainable income and lift them out of poverty. Some of these women have gone on to franchise their businesses and run workshops of their own.
The women entrepreneurs that benefit from Untapped Shores typically don’t have the option of finding jobs outside the home, nor are they in a position to pay for daycare for their children, or travel to work. So, this type of opportunity is really a perfect fit for them, and it is why entrepreneurship has become a major force in bringing the African economy forward.
Untapped Shores was started with founder seed-money and has continued with contributions from donors large and small. Of course, larger sums are sometimes needed.
The VC funding gap
As Jenny Ta pointed out, in the world of American business, money and power play a big role. This is one area where women entrepreneurs face a unique challenge.
Venture capitalism has been a male-dominated sector. Despite owning nearly 30 percent of U.S. businesses, women attract only 5 percent of the nation’s equity capital. When it comes to first-year funding, women receive 80 percent less capital than men.
“VCs often pride themselves on ‘pattern recognition’ and women aren’t in their typical pattern,” said Rachel Sheinbein, angel investor, who co-founded and manages Makeda Capital, a fund that invests specifically in public companies with female CEOs.
She spoke of VC meetings she’s attended where female entrepreneurs were presenting. The meetings reminded her of buying her first car: “I went with my male friend who was unemployed, while I was making a very nice chemical engineer’s salary. The salesman didn’t talk to me at all.” That male bias is compounded by the way that women are conditioned to not put themselves forward the way that men more often do.
Clearly, all of that is changing. There are tectonic forces at play that are shaking things up and providing opportunities that hadn’t existed before. New funding models like crowdsourcing can also circumvent the VC logjam.
There is a convergence occurring that is opening more doors: What had once been an existential choice for women — between pursuing a career, or staying home and raising children — has now been bridged by new flexible options. Now women can, to a large extent, define their own schedule, communicate asynchronously using email and contribute from almost anywhere. In doing so, they bring highly-valued perspectives into an economy that sorely needs a greater contribution from the feminine point of view.
Image credit: Untapped Shores