Women are becoming more and more entrepreneurial but still have barriers to knock down
Female entrepreneurship is getting closer and closer to reaching the levels of male entrepreneurship, but unequal conditions mean it is difficult for women to reach managerial positions.
Analyzing women and entrepreneurship in detail is not an easy task since data from different studies can be both complementary and conflicting. However, it is clear that more and more women are starting businesses from scratch with the total conviction that it will succeed.
This tenacity is managing to close the gap on some figures that still fall on the side of men, who are much more accustomed to entrepreneurship given their dominant position in the business world.
More employees than directors
A good example of this is in the UK, where the Innovate UK innovation office has launched a program for women aimed at putting them in positions of responsibility in businesses. After all, they occupy more than half of the jobs in science, technology and entrepreneurship, but only a small percentage of them lead projects.
For example, this reality was shown in the latest edition of the insur_space by MAPFRE program, where, of the 253 startup proposals that were received, only 16 percent were founded by women, 12 percent had a female CEO and only about 30 percent had women in the highest management positions.
The current situation
According to the Global Entrepreneurship Monitor (GEM), one of the main indicators of entrepreneurship in the world, there are only six countries on the planet where rates are similar between the two genders. In the rest of the countries, women still lag behind, which is a detriment to the economic possibilities of most regions, since they are a large part of the production force but do not have the tools or the capacity to generate jobs and wealth.
A good example of the progress that remains to be achieved is in Europe, where there are six women for every ten men who create a business. Curiously, in Spain, the trend is toward equity, as the figure is nine women for every ten men.
An upward trend
Whether it is because of the work carried out by local governments, international programs (World Women’s Entrepreneurship Day is celebrated on November 19), the improvement of education or the simple detail of having more and more role models, the fact is that the trend of female entrepreneurship has increased considerably (by up to 10 percentage points in 2 years, according to the aforementioned GEM).
In addition, more and more women are looking to create their own future by undertaking new projects, especially in countries with emerging economies or where it is difficult to access the labor market.
In this sense, South and Central America have the highest percentage of female entrepreneurs with respect to the total population. In Ecuador, a remarkable 33.6 percent of women—that is, one in three—have committed to setting up their own business. This is followed by Chile (32.4 percent), Brazil (23.1 percent), Guatemala (22.4 percent) and Colombia (20.9 percent). Next in this ranking is the world’s top power, the United States (16.6 percent), where the education system encourages entrepreneurship from an early age. In Europe, the figures are quite low, with the United Kingdom at 7 percent, and Spain at 6 percent, being the most prominent states.
The reality of female entrepreneurship
Despite the improvement in the figures—which represent a breath of fresh air—in reality, all that glitters is not gold. Women still face a clear situation of inequality.
South Summit’s 2020 Entrepreneurship Map shows that while women account for 43 percent of total entrepreneurs, only 20 percent do so in technology startups, that is, in those that require an educational background in STEM (Science, Technology, Engineering and Mathematics). This is precisely one of the outstanding issues: increasing female students in these fields of study. The aim is twofold: first, to satisfy the growing demand for professionals, and second, to reduce a pay gap that could grow wider if we consider that technical profiles tend to receive higher pay.
In addition, only 5 percent of women who start an entrepreneurial venture reach the ultimate rounds of funding needed to make their dream come true, versus 84 percent of men, according to The State of European Tech. This is certainly an obstacle to the aspirations of many female entrepreneurs embarking on new projects. These bumps in the road end up causing 60 percent of them to abandon the process before they reach the end, as explained in the document “Diagnosis and Methodological Toolkit on Gender Equality in Youth Entrepreneurship.”
A sector with disadvantages
There is another aspect to be highlighted in female entrepreneurship, seen in countries such as Spain, where 85 percent of women open businesses in the services sector, compared with 65 percent of men, according to the Observatorio Estatal de la igualdad en el Emprendimiento (State Observatory of Equality in Entrepreneurship). This is because they are activities where there are fewer barriers to entry and therefore it is easier to get started.
However, competition is very high, leading to work with scarce profit margins. The result is that the earnings are lower and therefore the chances of failure increase, given that the options for expansion are also reduced. The observatory also highlights that women invest with less capital, usually by themselves and with less of a technology base.
With all these data, one wonders why the situation is the way it is and where work must be done to reverse it and achieve a more equal labor market and entrepreneurial space. The different studies point to a number of reasons that are often the same in different geographies. These are:
- Labor market discrimination. Although the situation has improved, there is still horizontal and vertical segregation, also called a “glass ceiling.” This sometimes leads to a pay gap that makes it impossible for women to save in order to undertake their own projects.
- As a general rule, women are less able to access bank loans, as a result of the previous point.
- They also have lower startup capital, which makes it difficult to get startups with a high technological component off the ground.
- Finally, there are still negative stereotypes that need to be overcome since they remain present in many sectors.
Eliminating the gender gap could result in the GDP of a country like Spain growing by up to 15 percent. Thus, working to break down these barriers will be key to gaining more equal opportunities.