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Gender and High-Tech Entrepreneurship

Posted by: Mark Marich on July 13, 2009 Source: Policy Dialogue on Entrepreneurship

A new research paper, Sources of Financing for New Technology Firms: A Comparison by Gender, shows that women continue to use a different financial strategy and lag behind men-owned firms in numerous performance measures over time.

The study is fifth in a series of Kauffman Firm Survey (KFS) longitudinal studies. The KFS collects data on nearly 5,000 firms that started in 2004 and are surveyed annually for information on the nature of new business formation activity and characteristics of the firms and owners.

According to the report, women entrepreneurs launch high-technology firms with less financial capital than men, relying instead more on internal funding sources. Although from startup through the fourth year of operation, the women-owned high-tech firms did make progress in raising substantial amounts of capital and in developing intellectual property, they continued to lag behind the men-owned firms in several performance measures, including revenues, profits, assets and hiring.

Alicia Robb, Kauffman Foundation senior research fellow and co-author of the paper, said that women high-tech entrepreneurs “may have relied on internal funding because they didn’t want to share control of the firm, or because they didn’t have equal access to external funding networks.” In addition, women entrepreneurs may not have had the personal capital for seed funding needed to attract larger amounts of external equity.

The study also found that women-owned high-tech firms were more likely to be organized as sole proprietorships or partnerships than as corporations or limited liability corporations, more likely to be home-based businesses and less likely to have employees. Moreover, the women entrepreneurs surveyed remained unwilling or unable to develop external sources of equity capital over their first four years of operation, which could fund further innovations, employment or growth.

The entire KFS dataset -- and all reports in the KFS series -- are available for download.

Category:  General 

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