Silicon Valley Kerfuffle on Women in STEM

There’s been a bit of a flare-up in the blogosphere on the topic of (the lack of) women in technology/computer programming. A recent interview with the co-founder of the tech incubator Y Combinator, Paul Graham, is what set it off.
Among other things, he said, “God knows what you would do to get 13 year old girls interested in computers. I would have to stop and think about that,” which has been interpreted a variety of ways: as yet another example of misogyny in the tech world … or as simply acknowledging the fact that there are a dearth of female programmers and female-founded tech companies.

The question, of course, is what to do about it. Will widening the narrow mindsets of venture capitalists be enough? We think not. It’ll take a combination of push and pull – of priming the pump with more STEM education and mentorship aimed at girls AND creating a more welcoming (or at least less hostile) environment in the post-secondary and start-up worlds.

Some of the great groups and initiatives that are doing their bit to open doors include:

As they say, it takes a village.

Women-Led Firms Venturing for Growth

As women entrepreneurs grow their enterprises, research has shown that they are less likely to seek and obtain equity investments, either from angel or venture capital investors. Some say women are less growth-oriented, some say their network ties don’t include the sources of referrals that are so important in this arena, and others point to a lack of interest or a bias in the equity capital community.Hand Holding Euro Notes

There are two new research studies shedding new light on this issue. The first, Venture Capital, Social Capital and the Funding of Women-led Businesses, published by the Small Business Administration’s Office of Advocacy, focuses on the venture capital industry, and finds that VC firms that network and invest together (thus sharing the risk) are more likely than those that go it alone to invest in women-led firms. Interestingly, firms that invest in women-led firms have a higher rate of return on their investment – which should show other firms that women-led firms may actually be a better investment or – at the very least – not as “risky” as they may presume.

The second analysis, “The Angel Investor Market in 2012: A Moderating Recovery Continues,” comes from the Center for Venture Research at the University of New Hampshire. Their analysis shows that, overall, there was a decline in the number of active angel investors in 2012 compared to 2011, but the size of their investments increased, for a net increase of 1.2% in the number of firms receiving angel capital investments. The share of angel investors who are women has increased significant: from 12% to 22% over that same period. And, perhaps not coincidentally, the share of women entrepreneurs selling capital also increased – from 16% to 25% of the firms tracked. And, while the number of women seeking angel capital is still low, when they receive an angel capital investment they top the average yield for investors by 4%. Here’s a good piece on about the study, featuring some insights from your truly.

Interestingly, angel capital is catching up may soon pass venture capital in their impact in the marketplace. In 2012, angel investments totaled $22.9 billion. A total of 268,160 investors made 67,030 deals. Conversely, while venture capital deals totaled $26.5 billion, that total was achieved by a much lower 3,698 deals. In addition, the value of  VC investments declined 10% in 2012 from the previous years, and the number of deals dropped by 6%. Will the more patient and personal angel investor soon top the more “take no prisoners” MO of the VC investor? Time will tell; the inflection point may come soon.

Another mano á mano form of equity investment is also gaining momentum. Crowdfunding is an avenue that more and more entrepreneurs are utilizing to raise outside capital – albeit at typically lower levels than angel or VC funding. And some say that this is an avenue that is becoming increasingly popular for women- and minority-owned firms.

As for the women entrepreneurs themselves, there are two successful NGOs that are helping women seeking equity investment to make the connections and talk the talk that will get them the deal: Astia and Springboard. Check them out.

And think that venture capital is only for single bottom line companies? Think again; there are many social capital investment firms. Here are some useful tips for seeking equity capital if you have a social enterprise.

A New Measurement of Support for Women’s Entrepreneurship

The Womenabler has long lamented the lack of a business-enabling environment (BEE) assessment that takes the special challenges facing would-be and established women business owners into account. Traditional BEE assessments (such as The World Bank’s Doing Business indicators or the Heritage Foundation’s Index of Economic Freedom) are “gender-blind,” thus ignoring both the legal and cultural impediments that exist for women in many countries when they attempt to start or grow businesses. And, at the same time, gender equality indices (such as the World Economic Forum’s Global Gender Gap reports, the Economist Intelligence female figure on map of EuropeUnit’s Women’s Economic Opportunity Index, or the UN’s Gender Empowerment Measure) do not include entrepreneurial measures as among the factors assessed. And, interestingly, the top-ranked countries in each of these two distinct types of environmental assessments share exactly 0 countries in common. (See the paper, “Assessing Business-Enabling Environments: How Gender Changes the Equation,” presented by Womenable CEO Julie Weeks in 2011 at both an academic conference and a meeting of national policy institutions.)

Now, into the breach, comes an exciting new project: Gender-GEDI. Spearheaded by a team at George Mason University that also developed the Global Entrepreneurship and Development Index (hence GEDI), this new index insist of 30 evaluation factors, aggregated into 15 pillars and three main environmental elements: entrepreneurial environment, entrepreneurial eco-system and entrepreneurial aspirations. The pilot effort assessing the individual, institutional and legal environment for high-potential women’s entrepreneurship includes 17 countries – picked to represent a variety of regions and development contexts. Who came out on top? Here’s the list:

  1. United States
  2. Australia
  3. Germany
  4. France
  5. Mexico
  6. United Kingdom
  7. South Africa
  8. China
  9. Malaysia
  10. Russia
  11. Turkey
  12. Japan
  13. Morocco
  14. Brazil
  15. Egypt
  16. India
  17. Uganda

This new analysis was underwritten by Dell, and released today at their 4th annual Women’s Entrepreneur Network gathering in Istanbul, Turkey. Womenable was pleased to have played a role as an advisor on this effort, and we look forward to expanding the analysis to additional countries in the future (pending funding, of course!)

Click on these links to learn more about Gender-GEDI, a news release summary of the findings of this important new analysis, and to download and read the 22-page white paper.

Many Successful Women-Owned Businesses are Growing “Under the Radar”

There’s a new report just out that kicks off 2013 with some great news: women-owned firms at the highest level of revenue achievement have been doing even better than we might have imagined. They’ve been growing in number right under our very noses. In fact, the number of women-owned firms with $10 million or more in revenue has increased by 57% over the past decade – a rate fully 47% faster than the growth of all $10M+ businesses, and nearly twice (+98%) the rate of growth of all women-owned firms.woman_icecliff copy

These startling new facts are from Growing Under the Radar: An Exploration of the Achievements of Million-Dollar Women-Owned Firms, a new report authored by Womenable and commissioned by American Express OPEN.

How could this have been happening, largely undetected, under our very noses? Well, the “million dollar bucket” is a diverse one – containing both relatively small $1 million privately-held firms and multi-billion dollar publicly traded corporations. And, since this population contains just 2% of women-owned firms and 5% of all firms, it’s the largest sales category published by the Census Bureau. Now, for the first time, Womenable was able to obtain previously unpublished data from our friends at the Economic Statistics Branch of the Census Bureau (mwah!) – and the information is gratifying:

  • Between 2002 and 2012, the number of majority women-owned firms with $10 million or more in revenues increased from 8,110 to 12,700 – a 56.6% increase. During that same time period, the number of women-owned firms with $1 million or more in revenues grew from 116,985 to 152,900 – a 30.7% increase. Thus, the growth in the number of $10M+ women-owned firms exceeds the growth of all $1M+ women-owned firms by 84%.
  • Comparing growth rates among the firms of highest achievement finds women-owned firms again surpassing average growth by a large margin. The growth in the number of $10M+ women-owned firms (56.6%) surpasses the growth in the number of all $10M+ businesses (38.4%) by fully 47%.
  • The share of firms reaching this rarified atmosphere remains small. Within the population of million-dollar firms, 75% have $1-$4.9 million, 12% have $5-$9.9 million, and 13% have $10 million or more in revenues. Among million-dollar women-owned firms, 82% have $1-4.9M, 10% have $5-9.9M, and 8% have $10M+ in revenues.
  • Some industries are more scalable than others. Looking within the population of million-dollar women-owned firms finds that women-owned firms in wholesale trade have achieved the highest level of firm revenues. Fully 20% of the million-dollar women-owned firms in this industry have topped the $10 million mark, well above the 8% seen among all million-dollar women-owned firms. Women-owned firms in three other industries have also exceeded the 8% national average: finance and insurance, in which 12% of million-dollar women-owned firms have achieved $10M+ in revenues; transportation/warehousing, in which 11% have passed the $10M mark; and arts/entertainment/recreation, in which 10% have done the same.

And, perhaps most importantly, why has this been happening? In our view, growth at the upper reaches of business achievement is not only a logical next step in the continued overall growth at rates exceeding the national average, there is now much more support for these mountain-climbing women – such as The Committee of 200 and the Women Presidents’ Organization. Higher achieving women are now getting more visibility and recognition. While it’s still not always good (strong, successful women still referred to in less-than-flattering, rhymes-with-witch terms), greater visibility provides more role models for young women, more of whom may be dreaming bigger because of the achievements of these high-flying women.

The news coverage of this exciting new report was kicked off late last week by an article in Meghan Casserly’s Girl Friday column for ForbesWoman, “Women In (Big) Business: How XX-Driven $10 Million Plus Firms Could Take The Lead.” More are sure to follow, as we’ve been chatting with a number of reporters.

In the meantime, fellow womenablers, read the report, applaud our achievements, and start spreading the news!

A Womenabling Manifesto

Last week, during Global Entrepreneurship Week, I kicked off the FastTrac Global Women’s Summit at the Kauffman Foundation in Kansas City with an opening address focused on the key global and domestic trends in women’s entrepreneurship today. So, naturally, I touched on some of the most recent knowledge from the World Economic Forum’s 2011 Global Gender Gap report, the latest Women, Business and the Law report from the World Bank’s fabulous Gender Law Library, and US trends from the American Express OPEN State of Women-Owned Businesses Report (which I authored) that was published this past spring.

But I couldn’t stop there. Given that the audience numbered 200, and the address was webcast to countless numbers of others around the world, I closed this trend-focused keynote address with a bit of exhortation focused on what we all need to do next, which I called the Womenable Manifesto. In brief, here’s what I think we womenablers need to focus on in the coming months and years to REALLY advance women’s economic empowerment, entrepreneurial development, and thought leadership.

  • Words matter, changing our lexicon: Discussions and definitions of business growth are currently conducted using a very male-defined, testosterone-charged dictionary. When held up to this lens, women business owners often fall short and are described as “risk averse,” owning “lifestyle businesses,” or lacking the ambition to grow. Instead of thinking of women as falling short of a male-defined yardstick, let’s develop our own measures and descriptors, including thinking of women as more aware of risk as opposed to averse of it. Also, many women don’t want to grow just for growth’s sake, which causes some to see them as lacking in ambition. We need to talk more about growing businesses as a means toward a broader end of making an even bigger difference, impacting more lives and making the world a better place – that would be much more attractive too more women than a currency-based growth exhortation. And, importantly, “growth” is not a zero-sum game. It’s not either-or, and the term “high growth potential business” should not just be used when referring to multi-million dollar, equity-backed ventures. Yes, it’s true that only 2% of women-owned firms have crossed the million-dollar threshold, but only 5% of men-owned firms have as well. So we need to make thinking and growing bigger – not just huge – a more central part of the conversation.
  • Policies with possibility, not proscription: Our public policies also do growth-oriented women – and men – business owners a disservice. Entrepreneurship support from many state and local governments – as well as the SBA – is the equivalent of primary school: they will only get a business owner so far along the educational process. While some may say that the government’s role should only be to provide a kick-start and that other players should pick up later in the journey – I would say that it is in a nation’s best interest – for international competitiveness and for sustainable economic growth – not to drop support when it’s needed the most. A case in point are the “golden handcuffs” of the SBA’s Women’s Business Center program. More about that later – and it’s covered in much more detail in my full remarks – but suffice it to say that the legislative marching orders for the program, and the tone that’s set in its management, do not support growth-oriented clients. This needs to change.
  • Building an entrepreneurial road/canal system: I used one chart in my presentation (see slide #22) depicting the canal system around Birmingham England, birthplace of the Industrial Revolution – to make the point that it was only when this canal was built did the revolution truly take off. We need an analogous system for enterprise development: one that provides multiple pathways for an entrepreneur to start and navigate her journey; one that provides super highways as well as local roads, off ramps and on ramps, and scenic routes as well as straightaways. One size does not fit all in entrepreneurial development assistance, so there should be a variety of routes to business growth as well.

Of course, there’s a lot more than this to be done, and each of these ideas deserves a deeper discussion in and of themselves. However, I believe that many hands make light work and we’ve got to start somewhere – AND we have to invest in areas that will have a broad and lasting impact.

What do you think about the elements of this manifesto? Any others to add? Am I off the mark on anything? Let’s get a dialogue going about how we can all work together to embrace, empower, and legitimize women’s entrepreneurial leadership in ways that allow for growth “in a different voice” and through multiple pathways.

If you’re interested, the slides from the PowerPoint presentation accompanying my remarks is available on Womenable’s SlideShare page, and the archived webcast of my address will be posted on the FastTrac Global Women’s Summit web page very soon.

Three cheers for the triple bottom line power of entrepreneurial women – hip, hip, hooray!

The New Chain Gang: Women as Suppliers

Time was, corporations parked their womenabling efforts in their corporate social responsibility silos. Now, corporations are far more likely to view women-owned firms as important customers and suppliers than a population in need of charity.

We can date US corporate interest in women business owners as a market back to 1995, when the Center for Women’s Business Research’s seminal report, “Breaking the Boundaries,” was published. That report, based on an analysis of the entire Dun & Bradstreet database, showed that women-owned firms were just as financially stable and creditworthy as the average US firm. The report’s release resulted in a virtual stampede toward women-owned firms by US banks.

Now, a number of global corporations are taking a market development approach to supporting women’s entrepreneurship – readying them to be more valuable links in their supply chains.

The most recent entry is Walmart, the biggest corporation on the planet, which recently announced a four-pronged Global Women’s Economic Empowerment Initiative. One important prong: $100 million USD in grants to women’s enterprise development efforts worldwide.

They join several other corporate giants in firmly planting a flag in the field of women as agents of economic change, rather than recipients of charity. Here are just a few:

  • Coke’s initiative, 5 by 20, aims to empower 5 million women entrepreneurs by the year 2020, by adding them to their retail vendor sales force. They plan to announce other elements of the program soon, as well as the paths by which they will achieve their goal. Let’s hope it includes women’s business association capacity-building!
  • Not to be outdone, Coke’s rival Pepsi has recently signed a memorandum of understanding with USAID and the UN’s World Food Programme to invest in chickpea production in Ethiopia. The project, called Enterprise EthioPEA, aims to double chickpea production in the country and improve childhood nutrition. The majority of the country’s – and the world’s – farmers are women.
  • Clothing company Gap, Inc. was recently recognized for their innovative PACE program (which stands for Personal Advancement and Career Enhancement), which has worked since 2007 in 6 Asian countries to improve the education and business skills of its garment workers.
  • Goldman Sachs’ 10,000 Women initiative, a 5-year effort launched in 2008, has the aim of increasing the number of business school-educated women in developing economies, pairing them up with corporate mentors in developed economies and partnering with universities and other non-governmental organizations. To date it is active in 22 countries, and is partnering with 75 groups to reach their goal.

These efforts all bode well for WEConnect International, a relatively new NGO that has formed to make the link between women business owners who wish to do business with large corporations and the corporations that are seeking out ways to engage women’s business enterprises in their value chains. WEConnect’s model is based upon that of the Women’s Business Enterprise National Council (WBENC) in the US. check out this brief video featuring WEConnect President Elizabeth Vazquez talking about the impact of including more women-owned firms in global corporate value chains:

So here’s to women as contributors of economic value! Are there any other big corporate “women in the value chain” efforts that you know of? Let us know!

If We Own It, We Can Define It

I’ve just spent a thought-provoking and engaging day discussing how to “drive collaboration, energize the global discussion, and create a road map for increasing women’s participation in high growth entrepreneurship” at the second annual We Own It Summit, organized by Astia with support from the Kauffman Foundation and other growth-focused groups. The summit, an invitation-only event limited to under 150 participants designed to have an engaging, roll-up-your-sleeves dialogue, offered 12 thematic discussions, scheduled 4 at a time. More’s the pity, as they all sounded interesting. I attended three, including one in which I was a panelist.

The order of the day was to challenge assumptions and look at things from multiple points of view, which was helped by a diverse mix of viewpoints – from women entrepreneurs, equity capital investors, researchers, policy makers, and entrepreneurial support organizations. I heard several recurring themes or areas of (positive) tension during the day, so I thought I’d dash off my impressions and take-aways, while they are still fresh in my mind.

  • Cultivation vs. Gardening: One key undercurrent throughout the day was whether the focus on fostering high-growth women’s entrepreneurship should be on “picking winners,” that is on identifying and cultivating high growth potential women entrepreneurs, or on “fixing barriers,” meaning doing a better job tilling and preparing the soil so as to improve the overall yield of high growth women entrepreneurs. My reaction: why should it be either or? In business development as in gardening, both are important.
  • It Takes a Village: Even though I’ve heard some say that “eagles don’t flock,” today the importance of networks, introductions, mentors, and relationships was mentioned time and time again. In business generally who you know matters as much as what you know, and that is doubly important when it comes to the equity capital markets. That makes networks such as Astia critically important for growth-oriented women entrepreneurs. It also points out the importance of other champions as well: in government, in the equity markets, in educational institutions, and among entrepreneurial support organizations and associations.
  • Validating Variety (on Taking the Road Less Traveled): For many women entrepreneurs, growth is not a linear journey. In their pre-entrepreneurial as well as entrepreneurial careers, women have more diversions – be they family-related or otherwise – and are more likely to “off ramp” and then re-enter the workforce. In addition, women entrepreneurs lead and manage differently, and often have broader goals for their businesses – such as desiring to make a difference as well as creating wealth. This variety in the pathways to growth should not only be celebrated, they should be legitimized. To do so, I strongly believe, will lead many more women to aspire to grow their businesses to a higher level, and will provide a much more robust pipeline to high growth.
  • Do We Know What We Don’t Know?: In a growth-focused environment, data drive decisions, but we still lack data-driven intelligence on the ROI of different combinations of investment and support – especially over the longer term. And does the fact that, in the US at least, the value of angel investments now matches or exceeds that of institutional equity capital indicate a permanent expansion of funding possibilities or a temporary blip driven by recessionary times? What types of education and support are critical at various points in the entrepreneurial journey, and do they differ for women and men? More longitudinal research, including a look at the large number of high growth firms that eschew equity, can aid in the legitimization of the variety of ways that high growth can be achieved, and greater acceptance of the value of offering a blend of support services.

Overall, I came away with an overriding sense that – if we do indeed own it – we not only can re-frame and widen the lens on the discussion of what it means to be “high growth” – we must do so. The status quo, as it stands now, was not established with our input and experiences, so now that women entrepreneurs are entering into this realm in increasing numbers, we have the power and the obligation to redefine what it means to be growth-oriented, how growth is achieved, and how “success” is measured.

All Hail the women and men who showed up to engage in this important conversation. Let it be the start of a fruitful collaboration, and let the 10-year goals of Astia be realized!