Women entrepreneurship: Miles to go and room to grow

I am an unabashed coffee fan, but conflicting research on my favorite brew has both raised and dashed my hopes. One study reveals that my two-cups-a-day may increase longevity, while another points to an increased risk of heart disease. Sipping a cup recently while reviewing data on women-owned businesses and entrepreneurship, it occurred to me that these studies, like the research on coffee, serve up a mixed bag of good news and caveats. Here are a few examples.

Elizabeth Usovicz

New business creation by women has increased significantly.

The number of women-owned businesses increased by 74 percent between 1997 and 2015, and represent 30 percent of all businesses in the United States, according to The American Express Open State of Women-Owned Businesses 2015. In 2014, women launched an average of 887 new businesses daily.

During the same 18-year period, however, American Express Open reports that women-owned businesses contributed only 4 percent to total U.S. business revenues. So while the growth rate of women-owned businesses is increasing, their contribution to total revenues has plateaued.

Women-owned businesses make up a small percentage of high-growth businesses.

The National Women in Business Council took a 10-year view of the creation of women-owned businesses. The Council’s recently released research indicates that in 2012, 89 percent of all women-owned businesses were sole proprietorships. Its 2015 annual report cites an increase to 91 percent. The increase in sole proprietorships indicates that while women are starting more businesses than ever before, they are not scaling to become larger companies. Women who are creating high-growth, scalable startups are still a pioneering minority.

Women tend to seek or receive less external capital investment.

The Council’s statistics on investment in women-owned businesses are as jolting as a double espresso: only one woman raises equity financing to every nine men who do. Whether by intention or by circumstance, women are more reliant on personal sources to fund their businesses.

A bright spot is the increasing participation of women in angel investing. Venture capital firms with women in senior management positions are two and a half times as likely to invest in startups with women on their management teams, according to the Council’s 2015 Annual Report.

Cultural shifts, greater awareness and more studies are needed to cultivate and support women founders of high-growth startups and increase investment in their companies.

The Kauffman Foundation recently announced research grants in Women’s Entrepreneurship. I’ll be eagerly awaiting the outcomes. In the meantime, I’m leaning in, coffee in hand.

Elizabeth Usovicz is topline revenue strategist and principal of WhiteSpace Consulting, and General Manager of Transaction Commons. Her career includes leadership roles in corporate, start-up and consulting environments. Connect with Elizabeth atelizabeth@whitespacerevenue.com or @eusovicz on Twitter.

In July of 2015, Startland News collaborated with WhiteSpace Consulting to conduct a whiteboard conversation with women entrepreneurs in the Kansas City region. Women entrepreneurs shared their perceptions about launching and leading companies and identified topics for ongoing discussion. As a result of this conversation, Startland News and WhiteSpace Consulting have developed (S)heStarts, a blog series that explores the entrepreneurial experience that women and men share, as well as perspectives on how their experiences are unique.

Find more of this series here.