I grew up in a family of entrepreneurs where my mother and many of my aunts were strong businesswomen. I am also an entrepreneur, perhaps because I had female role models, and I have always wondered—why don’t more women start businesses? Claire Cain Miller of the New York Times agrees that something is wrong with the underrepresentation of female business founders. She notes that while women make up half the workforce and earn 40–50 percent of the degrees in business, science, and engineering, fewer than 10 percent of technology startups are founded by women, and only 36 percent of all US companies are owned by women. Also, many woman-owned businesses are small, employ only the founder, and earn less revenue than businesses founded by men, according to the census data. Why are there fewer women entrepreneurs? Miller cites research reflecting the following factors:
- Women have fewer role models.
- People mentor and give venture capital money to people like themselves. Miller notes that this dynamic is called “homophily, or love of same.”
- Of all venture capitalists, 91 percent are male. Most worked in investment banking, private equity, or consulting and went to the same few universities—Harvard, Stanford, or University of Pennsylvania.
- Not surprisingly, 91 percent of venture capital-backed entrepreneurs are men. Most of them have degrees from similar colleges and worked in the same firms.
- Women are outside of these established networks and do not get the same mentoring, contacts, or funding opportunities.
- Women are also less likely to get management experience before trying to become entrepreneurs. Only 19 percent of top executives are women, so women are less likely to have mentors in senior leadership.