I’m always fascinated to learn more about what makes an entrepreneur tick. Why we do what we do. Whether we’re genetically primed to be an entrepreneur.
I’m also interested in learning the traits and characteristics we share with men and also how women entrepreneurs differ. So you can imagine I was pretty excited to discover this 2010 report funded by Kaufmann Foundation and written by J. McGrath Cohoon, Vivek Wadhwa, Lesa Mitchell.
‘The Anatomy of an Entrepreneur: Are Successful Women Entrepreneurs Different From Men?’ is a 16 page report on 549 founders of high tech companies of which 41 were women. As you probably know only 3% of founders of high tech companies in the US are women and in this study it was actually at 7%.
What are the key findings?
It seems that prior experience looms larger in women’s own estimation of their chances for success than it does for men. Women also rated their professional and business networks more highly than men did as important contributors to that success.
In addition to wanting a balanced life, it seems that women want fair treatment and improved compensation, and that these desires motivated them to move from management to entrepreneurship – I concur.
Top Factors Motivating Women to Become Entrepreneurs
Overall, women who choose to become entrepreneurs are motivated primarily by five financial and psychological factors, specifically:
1. The desire to build wealth
2. The wish to capitalize on business ideas they had
3. The appeal of startup culture
4. A long-standing desire to own their own company
5. Working for someone else did not appeal to them
The Importance of Human Capital
On average, both men and women rated their prior industry and work experience as a very important
factor in determining their startups’ success. Both sexes rated experience highest, with lessons learned
from previous successes and failures rated slightly less important.
In fact there were significant differences in the results between men and women. Women believe it’s crucial to have had prior success. The authors and myself are not sure whether that’s because they are less confident to start a business without prior experience, or that they believe a track record is particularly valuable under these conditions because it demonstrates their competence.
The Importance of Social Capital
Social capital is defined as ‘the benefits derived from an individual’s personal and professional networks’ which is an essential resource to the successful running of a business.
Consistent with their finding that co-founder encouragement is more important to women than men, they also found that women especially benefit from other types of social support and encouragement. Both sexes rated their professional and business networks as very important to the success of their most recent startups, but women emphasized it more.
Financial Capital Sources
The majority of the successful entrepreneurs in this study had founded their current company
with money from personal savings.
I was surprised to see, as were the authors, that even though it’s long been believed that women entrepreneurs have less access to capital than men, they found no differences in the types of funding sources tapped by male and female entrepreneurs.
The one exception was that women were almost twice as likely to secure their main funding from business partners.
Successful Women Had the Resources They Needed
Men and women mostly see the challenges facing entrepreneurs in the same way. Large percentages of
both groups said the amount of time and effort required to start a business was a key difficulty.
More than half also found it difficult to recruit a co-founder. Financing, the consequences of failure, health insurance, and lack of experience or industry knowledge were lesser concerns, although shared by both sexes.
Lack of mentors was not a problem for either group and for women mentors likely contributed their success.
Even though that unachievable aspect of `work/life’ balance wasn’t specifically asked about it was interesting to see that men are twice as likely to feel greater pressure than women to be the traditional breadwinner and therefore keep a traditional job rather than becoming an entrepreneur.
Women have the potential for greater career flexibility, if that’s provided then we’d encourage more female entrepreneurs.
How do we recruit more women entrepreneurs?
It’s clear that mentoring is very important to women – so more of that please.
Encouragement and financial support from business partners, experience, and well-developed professional networks is also needed.
Efforts to promote women’s entrepreneurship should ensure that women have access to the mentoring and support networks that they view as important contributors to their success
If we focused on these proven success factors for women entrepreneurs we could enhance efforts to recruit more of them, and help make those who take the plunge more successful. Let’s make this happen!
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Great article. I agree that mentoring is huge and for myself, a mentor – either having one or wanting one – has always played a large part in my business decisions.
I agree although it was only last year that I actually started reaching out to the mentors I wanted to have to help me, and it’s been a mixture of informal and formal. What I love is that I feel as though I can give back and help them too so it becomes a mutually beneficial relationships and often turns into a friendship.
It’s great to see a study showing that women say that one of the top five reasons for starting a business is to build wealth. Traditionally, women do not set high growth goals and building wealth is NOT one of their goals. This often holds back the growth of ther companies. While this was a very specific population (founders of hi-tech companies), hopefully more and more women will embrace creating personal wealth as a business goal.
Great to have you visit here Sharon and comment. I can’t wait to interview you on here and get your views and analysis around this after all your experience and knowledge from your previous position at the Center for Women’s Business Research.
Your findings were really intriguing and illuminating.