Entrepreneurship Industry News

Compared to men, women led-startups attract just a fraction of business funding

WOMEN-ENTREPRENEURS
Businesswoman in Office
A recent study has found that women entrepreneurs find it increasingly difficult to access venture capital funding for their start-up businesses than male entrepreneurs.

According to researchers, a lack of access to venture capital could constrain growth in women-led businesses, which could further reduce the number of women pursuing entrepreneurial careers.

Despite some signs of progress, the results revealed that all-men teams were four times more likely to receive funding from venture capital investors than companies with even one woman on the team.

The team compared the proportion of venture capital funding received by men and women entrepreneurs in the US between 2011 and 2013 and analyzed variation across sector, investment stage, region, and outcome.

They examined management team biographies for mentions of the word ‘she’.

This gender gap was even greater when leadership positions were considered: 97 percent of the total venture capital funding during the period studied went to companies with a man as the CEO.

Entrenched male-dominated networks within the venture capital industry and well-established institutional ties, with few new firms being founded, were noted as two of the leading restrictions on women participation.

The venture capital model in the US was therefore deemed unsuited to women entrepreneurs, illustrating the difficulty women in the country face in pursuing entrepreneurial careers.

The authors warned, that this could have significant economic implications.

Lead author Candida Brush emphasized the need for further research from a similar social science perspective to encourage a full understanding of the reasons behind the gender gap.

The study appears in Venture Capital: An International Journal of Entrepreneurial Finance.

Read more: Outlook India