How Can We Create A World Of Powerful Female Entrepreneurs?

While women are graduating from college at ever-increasing rates, the amount of high-growth companies they start is still unacceptably low. What can we do to tip that balance?

2011 was a defining year in the United States. For the first time, the number of women earning college degrees exceeded the number of men. Thirty-four percent of the female population is now attending college. Sounds great, right? A more highly educated female populace should be great for the country. This is, of course, true. However, there is one sticking point that should be brought up—more than 82% of these women are receiving some sort of financial aid when they are in school. And, universities still receive large federal and local subsidies, in the form of research grants and tax exemptions, in order to operate.

This piece is part of a Collaborative Fund-curated series on creativity and values written by thought leaders in the for-profit, for-good business space.

Why does this matter? Because it means that there are more women not only graduating from college; but, also graduating with significant help from the government. This means that, as a country, we are currently making a significant bet on women and the potential impact that they might have on the overall, long-term economic growth of our country. How can we make sure that we get the highest overall return on our investment?

The Future of Job Growth

A comprehensive study conducted by The Kauffman Foundation found that companies younger than five years old (read: startups) are creating the majority of net new jobs in the United States. Startups are fueling our job growth, while existing organizations are counterbalancing this growth with a continued contraction in jobs. Over the long-run, high-growth companies generate the type of positive job growth that we are going to need in order to continue on the road to recovery, expand the economy, and remain an economic powerhouse. Given this information, it becomes obvious that in order to promote overall growth in the U.S. economy, we need to focus our energy and resources on developing more high-growth companies.

Herein lies the problem—there is a huge disconnect between the number of highly educated females who are entering the workforce and the number of these women who are going on to launch high-growth companies. In her inspiring talk at Silicon Prairie, Lesa Mitchell encouraged the audience to think about the implications of this paradigm and try to find new ways to help start women down the entrepreneurial path.

The question is: How can we ensure that these newly minted female graduates are going to provide us, as a country, with an appropriate return-on-investment?

The State of Women in Entrepreneurship

Who, then, is launching these types of companies now? Mostly men. Women comprise more than 50% of the U.S. adult population and yet account for only 35% of the people who are launching new ventures. Some might look at that figure and think, "not bad!" But it’s worth looking more closely at the numbers to determine whether women are creating the types of new ventures that will significantly contribute to overall net job growth. And, this is where we are failing.

According, to a recent study by AMEX Open (PDF), only 1.8% of female-led firms are generating annual revenues greater than $1 million, generally considered the threshold for deeming a venture "high growth." Additionally, women-owned firms employ just 6% of the U.S. workforce and contribute just 4% of all business revenues. Women might be making overall progress in the rate at which they are launching new ventures, but are failing to launch and build high-growth ventures.

What Now?

So, if we have this situation where we know that the majority of people who are graduating from college and receiving upper-level degrees are women, and that the majority of net new job growth will be directed via an emerging class of startups, how can we make sure that these highly educated women are leading this trend? How can we create systems of innovation that change the ratio of female-led high-growth companies from 35% to 50% or more? And, how can we move these existing companies up the value chain to create a larger pool of female-lead, high-growth companies?

The Development of Radically Transparent Networks

There is an incredible amount of information available—both online and off—that can be used to help women learn the skills that they need to launch and grow a new venture. Need to know what type of legal entity you should use to launch? Take a class on Startup Law at General Assembly? Want to learn how to code Javascript? Check out Codecademy or Treehouse? Want to understand how to install Wordpress or place ads on your website? Take a look at Grovo or Appsumo. Want to learn more about Lean Startup, take a class offline or online at Skillshare. Want to learn the basics of the web and all of the wonderful things that you can do with it? Check out Skillcrush.

The information is there. It is accessible. That is not the issue. The issue is that we are struggling to get this information into the right hands. There are still huge search costs involved in finding this type of information and a need to curate it so that the best of the best is being surfaced and shared.

I propose that we create a series of radically transparent, offline and online networks that can be leveraged to move women up the path to entrepreneurship. How can this be done?

Step 1: Coordinate: What we need is a single portal that contains reliable, unbiased sources of information that women (and, men) who are looking to launch new ventures can access to find everything that they need to get started. A natural place for this portal to become rooted is within an organization like the Kauffman Foundation, Mozilla Foundation, or Startup America. These organizations have already started down the path toward creating this type of portal and have access to the knowledge and connections to make it succeed.

This portal could be used to provide a one-stop shop for highly curated tutorials, articles, and links to additional sources of reliable information on how to launch a company. The portal could be organized to maximize the utility for all users—regardless of the type of company that they are interested in launching. The goal is to reduce search costs and to make sure that this information is useful and accessible to a broad audience.

Step 2. Educate and Mentor: Seed accelerators such as TechStars and Y Combinator are successful because of the combination of education and mentorship that they provide. However, there are some flaws in these models when it comes to inclusivity. There is an inherent geographic bias that is difficult to surmount because of scaling issues; there is a focus on very specific types of companies, which inherently creates a bias against some of the types of companies that many women may start; and, there are natural limits to the number of companies that can be accepted and funded.

However, there is still a ton of knowledge being created by these organizations that could be universally applicable and useful to a range of companies. According to a recent report by Xconomy, there are 121 incubators/accelerators in the U.S. Imagine what could happen if just a sliver of this information was aggregated on a single platform, similar to what has already been done at the Stanford Technology Ventures Program site.

Then, imagine if each of the organizers of these accelerators committed to offering two hours of online office hours one time per month. Layer onto this office hours by marketing executives from Coca-Cola; distribution experts from FedEx or Walmart; design experts from The D.school at Stanford, and sourcing experts from Nike. Create a for-profit version of Catchafire, where these experts can donate some of their time to provide assistance in their area of expertise.

Now you begin to see one place where women in rural and suburban America can come to not only learn; but also connect. It is essentially a farm league for the next generation of innovators.

Step 3: Connect Locally, Assist Virtually: We know that the information is out there. We know that this type of portal could be created relatively easily. However, we also know that a portal alone will not solve the problem of bringing more women into tech.

There needs to be some way to connect these online resources with the offline organizations that already exist to serve women. Women are particularly good at self-organizing. That is why you see such a proliferation of women’s groups around the country, from good, old-fashioned sewing bees to church circles to the Junior League to the PTA to the Girl Scouts. Women know how to get together and work together.

There is no need to go out and create new networks when these other networks already exist. Connecting with existing organizations and leveraging their longstanding infrastructure and networks would provide a mechanism to accelerate the rate at which women find and begin to use this information. Once word gets out, tools such as Skillshare and Meetup can be harnessed to make sure that those women who are interested in launching new ventures have a local group of fellow entrepreneurs with whom they can work.

The Beginning, Not the End

Of course, this is just one of many potential solutions to the problem. There are many hurdles preventing women from launching and growing new ventures. However, it is a start. A stake in the ground. A path toward finding a solution to the problem; rather than simply another discussion on the problem itself.

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10 Comments

  • Frederique C Irwin

    Hi Jennifer. I for one, enjoyed your article! There is so much progress to be made, and while this will not be solved over night, outlining an approach is a step in the right direction. As a woman entrepreneur myself, and as someone who has always enjoyed the mentorship of men and their advice and support, I found myself a few years ago wishing that I had something like what you begin to outline in point number three. A hyper-local and face to face network of other women business owners with whom I could collaborate with to accelerate growth. 

    While I have learned a lot from men, I have also learned that women do not build businesses for the same reasons as men do, (e.g. many women are building a long-term business that will also accommodate other facets and responsibilities in their lives,) and they also build them differently (that is, it's less of an aggressive throw everything at it for the first few year and perhaps get out within 2-5 years if the business isn't creating the high ROIs they were looking for.) As such we do have slower paths to growth, and we do also tend to hold ourselves back for a variety of reasons - confidence, lack of examples, fear of being able to build a big business given our other responsibilities. 

    Two years ago, I founded Her Corner (now my 4th business,) for myself. I wanted a resource of other women who were like me, understood business and how to grow a business, but also understood the realities of caring for children, aging parents, a home, all at the same time. I didn't want the posturing or the 'bless your heart' like attitude I was finding in groups like Vistage or BNI or EO. And I was tired of all the "what are you going to do for me," and preferred to start with 'what can I do for you.' Today Her Corner is really growing because women are responding to this idea that we don't have to build our businesses alone, that we can help and support one another by sharing what we've each learned to accelerate growth, and that we can do it in a feminine way with out having to be exactly like men. 

    My tiny little piece of the solution is not going to solve this whole problem, but I can tell you what we are solving. When we bring women together, over dinner, in their own homes, and in a small circle of peers they immediately start connecting one another to others (something you see women do in schools, communities, etc.) As they become one another's advocates and connectors, business is developing. Referrals and new business is popping up everywhere, even though we have "no direct selling" rules of conduct. I can't change the whole picture, but I can change 1 number from this AmEx report - the fact that 88% of women owned businesses today don't make more than $100K / year. Her Corner is changing that number because we provide a resource for women so that they don't have to build their business alone, where they can find the tools (a ning network, for example,) the connections and accountability partners, and the resources (a speaker series, for example) to accelerate their growth. Because we're hyper-local, and actually in your neighborhood, you get to know women in your community and you develop strong ties with these women, (vs. for example taking just 1 class at the local Women's Business Centers through the SBA.)Thank you for writing about this topic, and let's just ignore the people who want to tell us why we're never going to fix anything, or that we should be fixing other things instead. This is what I'm passionate about fixing, and I'm going to do just that. :) If you're curious, you can learn more at hercorner.org

  • G

    Dear Jennifer As we know the creation of a business and hopefully jobs world wide, is bigger and more critical task than just calling for more "empowerment" of women as the title and content of your article state. In your comment below you state you reach out to men? There is only one mention of men and it is a side bar, an after thought.

    Do you really believe in, or are you inadvertently parroting the philosophy of Harvard University psychologist Steven Pinker? He and the short sighted Ivory tower plutocrat thinkers that pay him are now pushing the "women in charge because they are more righteous then men movement". 

    It is obvious to all clear minded critical thinkers that these people and those who ascribe to such, have a major error in their thinking. They are ignoring the real problem of poverty. Yes poverty has been on a steady rise over the past 40 years, world wide. How can any sound minded person claim to be a mature in their thinking and preach unity while most of the world is suffering in poverty? This confusing elitists thinking has been promulgated through out the western world for the past 50 years. Here in the U.S. it has driven us further away from being unified and has created a super groups of citizens (U.S. Citizenship grants equal rights to all - its the corruption of law, not gender that keeps all of us from exercising these rights - exorbitant legal fees for lawyers). The system was corrupted and exploited by con-artist claiming to be feminist. They created false accusations and exploited a few victims.  They filed false lawsuits  personally making millions from those they falsely accused. This is a kin to someone pretending to slip and fall on the property of someone who has money, like you, and suing you for being such an negligent evil person.

    So If you really want to empower those who are oppressed then think critically. Advocate for real justice for all, empower the growing masses of poor (just think if instead of bailing out corrupt Wall Street and the banks and giving each one seed money millions of business would have been created and tens of millions employed). As the leader you are, you are truly in a position to step up and build bridges instead of false walls and prisons of gender, race and sex. Empower poor men and women of strength and compassion, who have overcome great adversity and suffering know how to encourage others to live the same and succeed  The dividends from this would be the creation of  more employment here at home and through out the world. Giving people a meaningful jobs world wide would reduce a plethora of major problems including wars and starvation, don't you agree? You have a real opportunity to change things in with your words and actions. Please do not use them to continue beating the same old drum.

  • Guest

    "How Can We Create A World Of Powerful Female Entrepreneurs?"
    While I do agree that women have to fight harder to become successful entrepreneurs, 
    it does not prevent women who truly want to do it from achieving success.

    These points are all debatable and there are a ton of exceptions to them.
    Why are there fewer female Entrepreneurs?
    1. Women in general take less risk as compared to men.
       This is why women are good at saving money, are involved in less accidents etc
       So in general less women would risk everything to bring their ideas to fruition.

    2. Women have to deal with having kids, family etc
       At the time when entrepreneurs have to work quite hard to build/steer their companies,
    i.e. mid 20s to mid 30s, women have to deal with starting a family. 
    For most women it is not easy to start a family and run a company.

    3. The above 2 issues are factors for investors and venture capitalists
       which creates an inherent disadvantage for women to get them to invest in their companies.
       The importance of the factors will vary among investors,
       but any good investor will have these in their mind.

    All of the points are debatable but I just wanted to point them out.

  • G

    Sorry Guest, I was not addressing you in that post but I was addressing Jchotchkiss. Your "comments" to me are that of a 2005 youtube drama troll, just a fact. Your arguments are completely straw-man as you claim I attacked a comment you didnt even make... and of course its all about you. I love what you bring to the table, nothing but trouble, strife and negativity.

  • Lisa Kuhn Phillips

    Inclusion, plain and simple. Not just those "entering the workforce", yet also those who "paved the way" and are ready to make real and meaningful impact.
    Unfortunately, people are more comfortable around people like them (which includes gender), working or otherwise. Assist tends to go to those first who are like them. Why? It's easier for the giver and more comfortable for giver and receiver. Who, gender-wise, are typically in positions of responsibility, executive-level, or otherwise?  
    What has taken centuries of competitive industrial/physical labor/same skills/status quo successor mentality will be sloooowly changed with pure intellect, creativity, and constructive+destructive (sometimes somebody has to wake the sleeping good ole' dogs) collaboration.  
    Do I want that to change now? Absolutely. Will it? No. Inclusion and Acceptance is not there yet, plain and simple. 
    Diversity.Diversity.Diversity. Some great examples of lack thereof in the US?  Presidents (not just the corner offices, but the oval office, or the home office where everyone has a perception of who should stay at home and who should work). Who elected, who appointed, who hired, who decided? Points back to you, me, and the crowd of popular opinion. 
    Inclusion, Acceptance, Diversity..... and miles to go before we sleep.

  • G

    You may sincerely believe what you write but you fail to understand you are beating a 50 year old drum. Don't you have anything new? We have a world full of people (not just in the US) who are dying for work and this is all you have to offer? How sad. You fail to take into account that men tend to be bigger risk takers? How about the fact that women tend to take the more sure path of education {that to their credit)? How about considering the fact that at least in the U.S., the school system of the past 40 years has been geared to help girls learn but not boys. It is a fact that the two learn differently. Instead of trying to mold the world into this monolithic thinking (the drum of gender, race, sex), we to ask the bigger question, HOW CAN WE LIFT UP ALL WHO want to be lifted out of there oppression, not just women. Just think of the injustice you are giving birth by promoting a philosophy that has LONG PAST ITS EXPIRATION DATE. Please update you thinking a help save us ALL.

  • Guest

    As for your rather troll-like comment below (and above, I suppose), I'm not proposing that we use taxpayer money to fund this and I am on the floor laughing right now at your suggestion that I'm getting rich in the process of trying to solve the problem. That's just funny :) Happy Thanksgiving, though!

  • Jennifer McFadden

    I believe that I actually stated that we should create the site for all people--not just women. And, if there is a site like this out there already, please let me know. I haven't seen it and would love to share it with other people--both men and women--who might find it useful.

  • Jchotchkiss

    I could care less what the gender of the founder/CEO is. I just want to see stuff work.

  • G

    I sincerely write this: Your answer truly gives me hope that the next generation. Maybe these self important people will realize that their obsessional fixation with gender has created a new set of injustice for the next generation. But hey why should they care if they profit from it? They create a false problem by claiming oppression and injustice, get some junk science/statistic to back it and demand tax payer money to fund their fix of the problem, and get rich in the process. In the past 50 years an entire industry has sprung up based upon this model.