Lesa Mitchell
Vice President, Innovation & Networks, Ewing Marion Kauffman

In 2000, I stood on a stage at a New York conference focused on supporting women entrepreneurs and announced that this would be the decade of the woman high-growth entrepreneur. The Kauffman Foundation has partnered with organizations like Astia and Women2.0 that provide support and resources to women starting high-growth companies, and the Foundation has funded a lion’s share of research trying to understand the barriers and opportunities that might allow women greater entrance and growth as entrepreneurs.

Women have outnumbered men in college enrollment since the late 1980s. Today, a greater proportion of women than men receive advanced degrees at U.S. universities; however, in 2012, only 10 percent of Inc. 500 companies and 13 percent of Ernst & Young Entrepreneur Of The Year finalists are women-led companies.

Growing challenges

"Only 6.5% of privately held companies that received venture capital funding had a female CEO."

Sheryl Sandberg’s Lean In, which calls for empowering women and highlights the financial disparities between the genders, is a New York Times Best Seller, but data show venture funding of women-led companies seems to grow more challenging by the day. New studies continue to be released documenting the serious gender bias that negatively impacts the ability of female-led startups to raise venture funding.

The Dow Jones 2012 “Women at the Wheel” report notes that only 6.5 percent of the privately held companies in the dataset used for the report were led by a female CEO. If this data point isn’t bad enough, the report also found that only 1.3 percent of privately held companies have a female founder.

“The woman effect”

New firms are able to scale if they have access to strategic customers or partners, allowing them to grow their firms without outside funding. If that isn’t possible due to the type of firm (capital requirements drive much of this), then firms receive a monetary boost from family and friends, angel funders or venture capital. Because it is extremely difficult to collect data on the former (firms that scale without outside funding) but possible to collect it on the latter (firms that scale with funding), I will use the following as a proxy of measurement: Between 1997 and 2000, women-led businesses received only 6 percent of the $18.5 billion in venture capital invested during that period. But, the Dow Jones report found that companies have a greater chance of going public, operating profitably or being sold for more money than they’ve raised when they have females acting as founders, board members, C-level officers, vice presidents and/or directors. At successful companies, the median proportion of female executives was 7.1 percent; at unsuccessful companies, 3.1 percent. This is what one writer called “the woman effect” in a recent Forbes article about the financial success of women-led firms that was aptly titled, “The Mysterious Success of Female-led Firms.”

I have to wonder, does anyone care about the data? While the macro-level statistics are bleak, examples of women and men supporting female-backed entrepreneurs can be found in every pocket of the world.    

More needs to be done. The hope is next time I am on stage giving a talk about the “decade of the female-led entrepreneur,” the words will not ring hollow.