Tory Burch (above). Elizabeth Holmes. Oprah Winfrey. They are among the most famous women entrepreneurs out there today.

But these women are outliers, rather than the norm, according to a policy report from the Kauffman Foundation, released Monday. Women tend to start businesses at roughly half the rate of men, particularly during the prime business formation years, between the ages of 35 and 44, Kauffman research indicates. 

The reasons for this imbalance are numerous. Women entrepreneurs tend to face more significant obstacles when it comes to starting their own businesses than their male counterparts, although they bring unique abilities to entrepreneurship as well, such as a more sophisticated approach to taking risks, the brief says, including not being overconfident and not putting their employees at risk. And if the economy expects to fire on all cylinders to produce jobs and growth, more women have to start their own businesses, Kauffman’s researchers say.

“Over the past handful of decades, more women have entered the work force, with positive outcomes for the growth of the economy,” says Jason Wiens, policy director at Kauffman. “But they have not entered entrepreneurship at the same rate, and this signals potential left on the table.”

Here are the chief obstacles women entrepreneurs face:

  • Lack of mentors: Much of entrepreneurship is experiential, so teachers are important. Yet when it comes to mentors, fewer exist for women, Wiens says. This may be a “chicken or egg” problem, he adds, as there are fewer women-owned businesses to start out with.
  • Less funding: When it comes to funding, women on average start their businesses with half as much capital as men. They also have only a 30 percent chance of attracting angel and venture capital funding.
  • Perceptual bias: Women entrepreneurs face invisible barriers, based solely on gender. One recent study, conducted by UC Santa Barbara, asked participants to evaluate nearly identical business plans from entrepreneurs whose gender was made obvious. Support for plans formulated by women was less strong than for men's, unless the women's plans had an unusual bias toward innovation.

To remedy the situation, Kauffman is urging more women to become involved as mentors, and for organizations that support entrepreneurship to include more women leaders. Federal programs, such as the Small Business Innovation Research grant program, where only 15 percent of awards have gone to women business owners in recent years, should increase their outreach to women. And public officials could also talk more about successful female entrepreneurs, and the need for more women to start to their own businesses.

“They can help turn the tide in the perceptual challenges that women entrepreneurs face,” Wiens says.

Published on: Jul 22, 2015