So long has Hillary Clinton stalked the halls of power and pervaded the public consciousness that it’s easy to forget that her nomination for president is a truly historical moment for gender equality. She has not so much broken through the glass ceiling as she has fired a cannonball through it, and the idea that she could be leader of the free world by the end of 2016 has the potential to signal a seismic shift in gender roles for future generations.
However, as much as it feels like a big moment, there is still tremendous inequality across all aspects of society, especially in politics and business. This is particularly reflected in the tiny number of female entrepreneurs.
In the Independent’s article ’20 best cities in the world for female entrepreneurs’, Chicago ranked number one, with 30% of startups launched by women. And that’s the best in the world. By the time you get to London in 11th place, that number has fallen to 18%. Relative to the percentage of female CEOs in the Fortune 500 of course, which stands at just 4%, 18% is a veritable tidal wave, so in some ways I suppose you could say it’s a positive.
The number of female-owned businesses is, however, growing. While the financial crisis sparked a sharp decline in the number of American businesses, falling 3.8 million between 2007 and 2012, women-owned businesses rose by more than 27% during the same period. According to a Global Startup Ecosystem Ranking report, the number of new businesses started by women went up by 80% in the past three years.
This adjustment is necessary for the economy. New research by Facebook estimated that the UK alone is missing out on a potential £10.01 billion boost to the economy by not tackling the challenges facing women who want to start their own business. If a mere fifth of potential female entrepreneurs were empowered to start their own business, the UK would benefit to the tune of more than 340,000 new businesses and 425,000 jobs.
The reasons for the disparity are complex and deep rooted in unconscious bias. The Facebook research found that one in ten women want to start their own company but don’t feel confident to do so. Sociologist Sarah Thebaud ran experiments last year asking participants to evaluate a mixture of mundane and innovative entrepreneurial pitches. Some were told that women led the ventures, and others that men were in charge. She found that when it came to business ideas, those led by women were rated as ‘generally less viable and less investment-worthy than those described as spearheaded by men’ by both female and male respondents. They also ‘systematically perceived them to be less competent and/or skilled than their male counterparts.’ This was found to change when it came to more innovative ideas though, with women considered ‘more competent and skilled–and their businesses more worthy of support–than their less innovative female counterparts.’ The response to men was the same. Thebaud concluded that:
‘This finding suggests that when a man proposes a business idea, he can typically expect others to respond on the basis of a simple risk-benefit calculation, the kind any venture capitalist might make when deciding whether to help finance a project. But when a woman proposes the same idea, she can expect others to simultaneously be looking for cues that she in fact possesses the types of skills and traits needed to make a venture a success–abilities she’s often assumed to lack because of her gender.’
This is evidenced by the lack of capital available to females who run their own businesses. Companies started by women and those with female CEOs receive approximately 50% less investment than those run by men. Just 3% of start-ups to get venture capital funding in 2014 had female CEOs; a clear hinderance to any women looking to start a business, and a fact likely to put many off even trying.
Correcting this is no easy task. One obvious way is to get more women into venture capital, as currently just 6% of global VC partners are female, although that Thebaud’s study showed both genders to be guilty of preconceptions about women’s abilities suggests that this may not be as beneficial as you’d initially think. What’s needed is a whole scale change in the way we see both women in business, and business itself. Women need to be encouraged to start their own business and shown that they will not be held up, and investors need to appreciate that business does not need to fit a masculine model to succeed.
There are a number of programs attempting to empower women to start their own businesses. The Althea-Imperial Program is a personal and professional development program aimed at women studying at the UK university, Imperial. They run a series of workshops for women designed to help develop enterprising ideas, with tailored one-to-one mentoring. Facebook has also launched the SheMeansBusiness initiative alongside the British Chamber of Commerce and the Federation of Small Businesses, which is a platform with advises, online learning sessions and workshops for potential female entrepreneurs.
Ultimately, women need role models and trailblazers. Female entrepreneurs like Michelle Mone are now prominent media faces, and inspirational for young women looking to start their own businesses. However, such women are still presented as outliers. A female president would obviously go some way to showing that anything can be achieved. It is likely to be a slow process, but the sooner it can be expedited the better for everyone.