Why Are Fewer Than 10 Percent of Women Founding Tech Startups?

In research released in late 2009, The Guardian Life Small Business Research Institute predicted that women entrepreneurs in the United States will create more than 5 million new jobs by 2018, which is more than half of the small business jobs the Bureau of Labor Statistics expects to be created over that time period.  Unfortunately, the number of those jobs being created in the high-tech industry isn’t as overwhelmingly optimistic.

According to research from Stanford Graduate School of Business Project on Emerging Companies, fewer than 10 percent of high-tech startups have a female CEO, founder or president. And yet, women own about 40 percent of the private businesses in the United States, according to the Center for Women's Business Research.

So why aren’t women leading tech startups? This issue continues to be clouded by complexity.

Certain small business leaders cite lack of access to capital. Women-owned startup companies tend to start with less capital than male-owned startups, according to research by the Ewing Marion Kauffman Foundation. However, the first and second quarter of 2011 brought some good news for women entrepreneurs seeking capital. Recent findings by the Center for Venture Research at the University of New Hampshire report that 26 percent of women entrepreneurs seeking angel investment in the first half of 2011 received it, which is above the overall average.

Dr. Patricia Greene, the Guardian Institute’s academic advisor, believes that the hurdles that were focused on 10 years ago – including financing and creating networks to support women tech entrepreneurs – are still plaguing female tech startup founders today.  Although these challenges have eased over time, they continue to be discussed in the media.  

Others reference the steps women take (or don’t take) to prepare themselves to launch a startup. Research by the Ewing Marion Kauffman Foundation finds that women do not patent their research as often as men do.  Additionally, women do not serve on scientific advisory boards of private companies as frequently as men do (the Foundation reports that the make-up of boards in private industry is overwhelmingly male, at approximately 93 percent). The Kauffman Foundation says this gender difference in business preparation can be addressed with better mentorship and networks that will help guide women entrepreneurs in making important connections and decisions regarding their businesses. Resources like Women 2.0, a global media company that supports female entrepreneurs and hopes to increase the number of female founders in tech startups, seek to mediate this issue.

Not everyone from the small business community points to the challenges faced by women-owned tech startups as cause for the disparity. Eileen Burbidge, an early-stage tech angel investor and advisor, told TechCrunch that she believes the low number of women in tech startups has more to do with a “supply side issue rather than a demand one.”

As Burbidge addresses, there is some discussion on whether women who work in technology even want to start their own businesses and if they are actively taking advantage of tech-related opportunities.

“There is no question that women are capable of building high-tech companies,” added Greene. “There are many questions about trying to paste women into an existing system that just doesn’t look that desirable to them. Those are the more interesting questions and deserve the more innovative answers.”