New Firm Formation Picking Up in the US, Led by Women

One of lingering negative aftereffects of the 2007-2009 recession has been sluggish business start-up rates – except, of course, among women-owned businesses. (See our 2015 and 2016 State of Women-Owned Businesses reports, underwritten by American Express OPEN.) Now, a recent analysis from the Kauffman Foundation has found that start-up rates are picking up again, and are continuing to be led by women-owned firms.
The 2016 Kauffman Index of Startup Activity, published last month, finds that:

  • The Startup Activity Index, a key annual indicator of new business creation, rose to 0.38 in 2015 – going up for the second year in a row – a mere two years after plunging to its lowest level (0.28) in two decades. (An index of 0.38 means that 380 out of 100,000 every adults started a business each month during 2015.)
  • A growing share of new firms are being started by people of color: with 40 percent of new entrepreneurs being comprised of African American, Latino, Asian, or other non-white entrepreneurs in the 2016 Index.
  • Of greatest note to womenablers, the rate of women entrepreneurs saw the biggest increase in almost twenty years—increasing from 0.22 percent to 0.26 percent (meaning 260 out of every 100,000 females become an entrepreneur each month). Approximately four in 10 (41%) new entrepreneurs, according to the Index, are now female.

kauffman-index-2016-startup-activity-entrepreneurial-demographics-profiles

Download the report and learn more at the link highlighted above. A new microsite also provides the ability to look at startup activity on a state-by-state and metro area-level basis.

In other positive women’s entrepreneurship news, the Census Bureau’s inaugural Annual Survey of Entrepreneurs, which will publish insights on employer firms over the next three years thanks to support from the Kauffman Foundation, was just released. Look for highlights from that survey in our next post.

Top Ten Womenabling Research Facts of 2014

Top TenWe’ve kept tabs on the facts and figures that have been published during the course of the year (as we do every year). Here are what we consider to be the top ten new research-based facts about women business owners and their enterprises of 2014. They fall into four general categories: money, mentoring, metrics and STEM (science, technology, engineering and math). Here they are, along with links to the original source material for your reference. Many happy returns of the season from Womenable!

Money

  1. International CurrencyClosing the credit cap for women-owned SMEs across the developing world as a whole could boost the growth in per capita income by over 110 basis points (1.1%) on average. ~ Goldman Sachs Global Market Institute. February 2014. Giving credit where it is due.

  2. In an analysis of over 25,000 projects on Kickstarter, launched by 22,000 entrepreneurs between 2009 and 2012 and supported by over 1.1 million investors, researchers found that this crowdfunding platform is more hospitable than many other forms of business financing for women. For example: 1) a significant share of Kickstarter investors (40%) are women; 2) these women are more likely than men (40% versus 23%) to invest in women-led projects; and 3) women-led projects are more successful than those launched by men. The fundraising success rate for women was 69.5%, compared to 61.4% for men. ~ Dan Maroum, Alicia Robb, Orly Sade. May 2014. Gender Dynamics in Crowdfunding (Kickstarter): Evidence on Entrepreneurs, Investors, Deals and Taste Based Discrimination.


  3. The amount of early-stage investment in companies with a woman on the executive team has tripled to 15 percent from 5 percent in the last 15 years. Despite this positive trend, 85 percent of all venture capital–funded businesses have no women on the executive team. This is the case despite the finding that businesses with a woman on the executive team are more likely to have higher valuations at both first and last funding (64 percent higher and 49 percent higher, respectively). ~ Candida G. Brush, Patricia G. Greene, Lakshmi Balachandra, Amy E. Davis. September 2014. Women Entrepreneurs 2014: Bridging the Gender Gap in Venture Capital.


  4. In 2013 women angels represented 19.4% of the angel market, similar to 2012 (21.8%). Women-owned ventures accounted for 23% of the entrepreneurs that were seeking angel capital and 19% of these women entrepreneurs received angel investment in 2013. ~ Jeffrey Sohl, Center for Venture Research. April 2014. The Angel Investor Market in 2013: A Return to Seed Investing.

Mentors

  1. Closeup of business people with hands on handsAn analysis of high-growth women entrepreneurs (those with sales or employment growth of 20%+ over the past three years) in Latin America and the Caribbean finds that growing up in an entrepreneurial family helps define their entrepreneurial spirit. Both high-growth men and women are more likely than average to seek mentors to guide their growth. However, while high-growth men entrepreneurs seek mentors from outside their family, women tend to receive guidance from within their own families. ~ EY, Multilateral Investment Fund of the Inter-American Development Bank. March 2014. WEGrow: Unlocking the Growth Potential of Women Entrepreneurs in Latin America and the Caribbean.

  2. A comparison of a survey of women in technology firms launched between 2002 and 2012 with a more general sampling of technology firms founded in 2004 (the Kauffman Firm Survey) finds that female and male entrepreneurs have a lot in common. They would seem to start their companies for similar reasons, cite similar self-perceived reasons for success, and face similar challenges. However, several differences stand out: 1) the women technology entrepreneurs surveyed don’t appear to have had inspiring role models as their principal motivation; 2) women entrepreneurs in general appear to respond differently than men do to failure, and cite lessons learned from failure as a big reason for success; and 3) there is a financing gap when it comes to high-tech and high-potential women entrepreneurs. That financing gap turns into a growth gap in terms of company outcomes. Finding ways to fill that financing gap could have a huge payoff in job creation and innovation. ~ Alicia Robb, Susan Coleman, Dane Stangler. November 2014. Sources of Economic Hope: Women’s Entrepreneurship.

Metrics

  1. measuring_tape copyIn an analysis of the conditions in which growth-oriented women’s entrepreneurship can prosper, the United States (with a score of 83), Australia (80) and Sweden (73) are the top ranking countries among 30 analyzed. They are followed by France and Germany (tied at 67), Chile (55), the United Kingdom (54) and Poland (51) which all received an overall score of 50 or more. ~ Ruta Aidis, The GEDI Institute. June 2014. The Gender Global Entrepreneurship and Development Index.

  2. As of 2012, just under one-third (29%) of the 40.6 million business owners in Europe are women, up from 26% in 2003. Over that nine-year period, the share of business owners who are female has risen most strongly in Lichtenstein (with a 16% increase in the share of entrepreneurs who are female), Iceland (+8%), and Cyprus (+8%), compared with the overall 3% increase. ~ European Commission. September 2014. Statistical Data on Women Entrepreneurs in Europe.


  3. On average over the past 17 years, there has been a net increase of 591 women-owned businesses in the United States each and every day. The number of net new women-owned firms has fallen in the wake of the recession – there was a net increase of 714 women-owned firms per day from 2002 to 2007, and a lesser 506 per day between 2007 and 2014 – but start-up activity is increasing. Just in the past year, there have been an estimated 1,288 net new women-owned firms launched each and every day. ~ American Express OPEN & Womenable. March 2014. The 2014 State of Women-Owned Businesses Report.

STEM

  1. womanlab copyWomen have increased their representation in STEM graduate enrollment, but that increase has been uneven across STEM fields. Women have achieved parity for PhDs in biological and medical sciences, but their enrollment continues to lag in some of the most entrepreneurial fields, such as bioengineering, mechanical, and civil engineering and materials science. Further, across all STEM fields, female PhDs have lower rates of entrepreneurship than their male colleagues (5% compared to 7%), and file fewer patents (15% vs. 28%). ~ Margaret E. Blume-Kohout for SBA Office of Advocacy. October 2014. Understanding the Gender Gap in STEM Fields Entrepreneurship.

  2. (A 2-for-1 listing: this report also appeared in our ‘mentors’ category) A comparison of a survey of women in technology firms launched between 2002 and 2012 with a more general sampling of technology firms founded in 2004 (the Kauffman Firm Survey) finds that female and male entrepreneurs have a lot in common. They would seem to start their companies for similar reasons, cite similar self-perceived reasons for success, and face similar challenges. However, several differences stand out: 1) the women technology entrepreneurs surveyed don’t appear to have had inspiring role models as their principal motivation; 2) women entrepreneurs in general appear to respond differently than men do to failure, and cite lessons learned from failure as a big reason for success; and 3) there is a financing gap when it comes to high-tech and high-potential women entrepreneurs. That financing gap turns into a growth gap in terms of company outcomes. Finding ways to fill that financing gap could have a huge payoff in job creation and innovation. ~ Alicia Robb, Susan Coleman, Dane Stangler. November 2014. Sources of Economic Hope: Women’s Entrepreneurship.

Global Entrepreneurship Week Adds Women’s Entrepreneurship Day

GEW_mainLaunched with great fanfare by the Kauffman Foundation in 2007, Global Entrepreneurship Week celebrates the creative spirit and transformative power of entrepreneurs – taking a “Pied Piper” approach to encourage more people to think about “unleashing ideas” and launching entrepreneurial endeavors. Starting with 37 countries in 2007, there is now engagement in 150 countries in this, the eight year of the celebration. The 2014 Global Entrepreneurship Week takes place from November 17th to the 23rd.

What is this all about, you may ask? Check out the brief explanatory video below:

Why are we sharing this with you, fellow womenablers? Because, for the first time, the folks at GEW are adding in an official Women’s Entrepreneurship Day on Wednesday, November 19. (The midweek point has been used in a number of countries to mark the contributions of women entrepreneurs, but this year marks its official debut.)

Check out the list of events already scheduled on this day, or during the entire week, in your country. Or – better yet – consider organizing an event on the 19th to celebrate women’s entrepreneurship! Check out the GEW/WED page for ideas and resources. The GEW folks are “leading by example” by planning an event at the United Nations in New York City. More information about that particular event can be found HERE.