This article is part of the Forum Network series on New Societal Contract.
For women to be able to realise their full economic potential requires we need to create a new, inclusive business culture. Chiara Condi, President and Founder of Led By HER, discusses the importance of entrepreneurship in driving gender equality and the role of policy makers have to make it a reality.
This year, world leaders such as Angela Merkel and Justin Trudeau placed women’s entrepreneurship as a key driver for gender equality at the top of the global agenda.
They are right. If women business owners in the US could form a country, its GDP would rank fifth globally. Imagine where our economies would be today if a much larger portion of half of the world’s population seized the opportunity to create high-growth businesses. Integrating women and fully realising their potential is both a necessity to keep economies growing and an accelerator for our future. However, there is still a long way to go.
The solution is a more global and holistic public and private sector strategy to accelerate women entrepreneurs. While we have to work on an individual level by empowering more women to become entrepreneurs, we must simultaneously work on creating environments conducive to opportunity. The challenge is vast and the problem complex. We must be fully aware of this before embarking on a holistic solution.
We could of course start with the huge funding gap. Women-owned companies are quite simply poorly funded, which limits their capacity to build larger scale companies. To give an idea of magnitude in venture capital dollars, women are receiving just 2.19% of funding. While venture capitalists invested US$58.2 billion in companies with all-male founders, women received just US$1.46 billion in 2016.
Yet the truth is that we cannot only afford to concentrate on the funding gap because we would be thinking too far along the pipeline. While women-owned businesses are not being financed enough (and when they are it is substantially less compared to men) the greater problem is that women are not creating enough companies, and much fewer high-growth companies. Our problem today emerges at a much earlier stage than we think. If we only focus on women who are looking to raise funds we only help those who have already almost made it. But now we clearly need to focus on all those who could potentially get there.
One solution could be to get more women into STEM fields because such fields are fertile ground for innovative, high-growth businesses. However, even if we do convince young girls to choose STEM subjects, they are still not on par with men in terms of earnings as business owners. Research shows that the birth of children significantly decreases women’s near-term patenting and entrepreneurship in STEM, with no similar effect for men. Yet, about half of women start companies between the ages of 20-34, which is when over 75% of children are born. As Mariam Naficy, Founder & CEO of Minted and a Silicon Valley entrepreneur who has raised over US$90 million in venture capital, explained in Reid Hoffman’s Blitzscaling course and in interviews: “If a woman doesn’t take risks early enough, by the time she thinks about starting her venture, she is also thinking about having kids and the tradeoffs she will need to make during motherhood. Of course, a man and a woman both raise a kid, but the childbirth and early toddler timeframe weighs more heavily on women. If they have delayed starting a business, they may have to think about taking a big first entrepreneurial risk while having a newborn. Thus, women have a shorter runway and I would encourage them to start businesses earlier in their careers, if they are considering entrepreneurship.”
If this is all true then why do we not do our utmost to reduce these discrepancies for women today?
Obviously the problem has remained unsolved because its numerous intertwined facets are too complex to solve alone. Solving one problem will never solve the problem. This is why policy makers need to focus on creating a new inclusive culture that welcomes women into the labour force and allows them to seize economic opportunities, while building partnerships with organisations that support women’s empowerment and self-realisation.
To create a culture that allows women to fully seize their economic potential, policy makers must first and foremost ensure that successful initiatives promoting equality become mainstreamed. We need programmes for young women in STEM to not be limited to a few private schemes serving small pockets of individuals, but to be incorporated into school curricula, and perhaps even complemented with universal entrepreneurship education. We need to create massive awareness-raising campaigns to fight against hundreds of years of gender stereotyping that have hurt women in entrepreneurship. We need to show real role models to the world that will counteract the patterns we have tended to develop and cling to. And governments should fund this as a huge investment in their future.
Finally we have to make sure that the environment makes entrepreneurship possible through both childcare and social policies, which should be guaranteed rights for women in all countries. In real life there is a gap between one’s aspirations and one’s possibilities and policy makers have the power to narrow that gap by working on accessibility.
And once this massive investment in creating an environment to support entrepreneurs is made, one must work on the entrepreneurs themselves. Clearly policy makers cannot do that alone. Women entrepreneurs say that they lack resources and skills the most, yet most entrepreneurship programmes and funds today are unconsciously discriminatory in recruitment and culture. Policy makers can make a conscious choice to ask for numbers and not to support funds and programmes that do not serve women, instead investing in those that focus on women-led projects and create environments in which they will thrive.
The choice is obvious. Tomorrow’s women entrepreneurs are already here – in schools, universities and companies – and we must do everything we can to ensure that they seize their dreams and ambitions today: because their future is our future.
Read Chapter 25: Policies to address barriers to women entrepreneurs taken from the OECD report The Pursuit of Gender Equality: An Uphill Battle