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1
ENTREPRENEURIAL CAREERS OF WOMEN
E. J. Reedy, Manager, Research and Policy, Kauffman Foundation
E. J. Reedy, Manager in Research and Policy at The Ewing Marion Kauffman Foundation
The opening workshop address was
“When we put a gender lens on
designed to provide an overview of women’s status
where the barriers are, it is
and participation in entrepreneurial careers. E. J.
around growth opportunities.”
Reedy presented findings from a Kauffman
Foundation study titled “Sources of Financing for
E. J. Reedy, Manager, Research and Policy,
New Technology Firms: A Comparison by
The Ewing Marion Kauffman Foundation
Gender” (2009)1 and noted that a relatively small
number of studies have specifically examined the
experience of women in high-tech entrepreneurship.2 The Kauffman Foundation study shows
that among all surveyed startup firms, only 15 percent of those in the biotechnology and high-
technology sectors reported having a female primary owner as compared to 30 percent female-
owned startup firms in all other sectors. In the initial start-up year, among the high-tech start-ups
examined, 20 percent of male-owned firms reported obtaining formal equity (primarily venture
capital or angel funding), compared to 7 percent of female-owned firms. Reddy suggested that
this occurs because the venture capital industry is relatively closed and male-dominated. His
studies show that women-owned firms represent a small minority of the overall venture capital
backed firms, which may contribute to the lack of initial formal equity. He noted that an
1 Robb, A. and S. Coleman, (2009), Sources of Financing for New Technology Firms: A Comparison by Gender:
Fifth in a series of reports using data from the Kauffman Firm Survey. Retrieved August 15, 2009, from
http://www.kauffman.org/uploadedFiles/ResearchAndPolicy/Sources%20of%20Financing%20for%20New%20Tec
hnology%20Firms.pdf.
2
Since this August 2009 workshop, “From Science to Business,” the Kauffman Foundation has produced the
following reports on scientific women in entrepreneurship:
Robb, A. and Coleman, S. (2009,), “Characteristics of New Firms: A Comparison by Gender,” The Kauffman
Foundation. Retrieved from http://www.kauffman.org/uploadedFiles/kfs_gender_020209.pdf.;
Cohoon, J. M., V. Wadhwa, and Mitchell L. (2010). “Are Successful Women Entrepreneurs Different than Men?”
[Working Paper] Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1604653, and
Mitchell, L. (2011), “Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers,” The Kauffman
Foundation. Retrieved from
http://www.kauffman.org/uploadedFiles/Growing_the_Economy_Women_Entrepreneurs.pdf.
1
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2 FROM SCIENCE TO BUSINESS
additional factor may be that female owners of high-technology firms have less overall
managerial experience than their male counterparts and are less likely to have previously owned
start-up companies in the same field, since 55 percent of male owners have previously owned a
high-technology start-up compared to 12 percent of females. Reedy pointed out that venture
capitalists view this serial behavior—and even serial failure—as a mark of an entrepreneur being
tested, because investors value an entrepreneur’s willingness to start over again and again.
Reedy further elaborated on the gender gap in the high-tech industry by quoting similar
findings by other researchers. A 2006 study by Cross and Linehan found that in established
high-tech organizations, women are often excluded from formal and informal networks that
would otherwise provide access to managerial or technical leadership positions in those firms.3
Similarly, a 2005 study by Tai and Randi L. Sims4 found that women had difficulty gaining
senior management experience that would make them attractive to external capital providers,
should they start their own companies. Reedy considered the pervasive culture in such
enterprises as a plausible reason for this gap, where issues such as work-life balance and family-
friendly policies affect gender equity.
Despite the existing gaps, Reddy noted that women-owned firms represent a growing
component of the small-business sector. According to a U.S. Census Bureau report,5 there were
6.5 million privately held women-owned firms in the United States in 2002. These firms
generated an estimated $940 billion in sales and employed 7.1 million people. He continued to
comment that women-owned firms now account for 30 percent of all firms, including self-
employment and larger businesses. From 1997 to 2002, the number of women-owned businesses
increased 20 percent. However, he noted that revenues from women-owned businesses increased
less than 15 percent during this period, compared to a 22 percent revenue increase for all
businesses.
A study on women-owned high-tech firms in four metropolitan regions in the United
States—Silicon Valley, Boston, Washington, D.C., and Portland, Oregon— found that in all four
regions women-owned high-tech firms were smaller in terms of average revenue and
employment.6 Reddy suggested that women are more likely to form companies alone than in
partnership with men, even though studies indicate that the success rate for new companies
increases as the number of company founders increases. Women entrepreneurs are also more
likely to participate in high-tech sectors such as software publishing, computer systems design
services, research services, and management and consulting services; whereas men are more
likely to establish companies in the manufacturing sector. Interestingly, Reddy noted both male-
and female-owned start-ups were initially shown to be based out of the home, 50 percent of the
time for males and 60 percent of the time for females, suggesting a focus on consulting efforts.
Female-owned high-tech start-ups do show a slightly higher survival rate than those
owned by men. However, Reedy noted that women entrepreneurs launch high-technology firms
with less financial capital than men, and continue to follow a different financial strategy over
3
Cross, C., & Linehan, M. (2006). Barriers to Advancing Female Careers in the High-tech Sector: Empirical
Evidence from Ireland. Women in Management Review. 1, 28.
4
Tai, An-Ju R., and Randi L. Sims (2005). The Perception of the Glass Ceiling in High-Technology Companies.
Journal of Leadership and Organizational Studies. 12 (1), 16–23.
5
U.S. Census Bureau (2006). Women-owned Business Grew at Twice the National Average, Census Bureau
Reports. Retrieved August 15, 2009 from
http://www.census.gov/newsroom/releases/archives/business_ownership/cb06-14.html.
6
Mayer, H. (2008), Segmentation and Segregation Patterns of Women-owned High-tech Firms in Four Metropolitan
Regions in the United States, Regional Studies. 42 (10), 1357-1383.
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ENTREPRENEURIAL CAREERS OF WOMEN 3
time. Women’s reliance on internal funding sources (e.g., owners’ savings, loans from family
and friends, credit cards) makes a difference such that years after startup, women-owned high-
tech firms lag behind men-owned firms in numerous performance measures, including revenues,
assets, and employment. However, profits were shown to be higher for female-owned firms.
In addition, Reedy discussed the age at which entrepreneurs usually start their businesses.
One of the common misconceptions about entrepreneurs is that these individuals are age 25 to
30.7 In fact, it is more common for those in their late 30s and early 40s to start companies
because at that age people have considerable industry experience and starting a business is a
strategic part of their overall career goals. This average start-up owner age was not shown to
vary significantly between men and women or across sectors. But women owners reported
working slightly fewer hours per week than their male counterparts.
7
Kauffman Foundation Survey. Available at: http://www.kauffman.org/research-and-policy/kauffman-firm-
survey.aspx.
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