In recent years, the landscape of entrepreneurship has undergone a significant transformation with the emergence of female entrepreneurs who are breaking barriers and shattering glass ceilings. The growth of female-led businesses has not only added diversity to the entrepreneurial ecosystem, but has also contributed to economic development and social change. This blog explores the remarkable rise of female entrepreneurship across the world, highlighting its growth, achievements, as well as the challenges that women entrepreneurs still continue to face.
The rise of women entrepreneurs and start-ups
One of the remarkable economic transformations following the pandemic has been an unparalleled rise in entrepreneurship, particularly driven by women, as evidenced by Gusto data. In their 2020 survey of entrepreneurs, it was revealed that women constituted nearly half (47%) of new business owners, marking a significant increase from 29% in 2019, as per comparable pre-pandemic estimates from the US Census. This elevated trend in women’s entrepreneurship has persisted over the subsequent years, with women accounting for 49% of new business owners in 2021 and 47% in 2022. Women-led businesses comprise almost half of all businesses in the USA. The digital age, through social media and online marketplaces, has significantly levelled the playing field for female entrepreneurs, offering them greater opportunities to showcase their offerings and reach global audiences.
The rise of women-led start-ups and innovative businesses has contributed to a more inclusive and dynamic business environment. Female entrepreneurs are not only creating jobs but are also fostering a culture of collaboration and empathy in the workplace.
What are female entrepreneurs good at?
The recently released Global Entrepreneurship Monitor (GEM) Report on Female Entrepreneurship reveals very interesting and encouraging facts about enterprising women all around the world.
Women represent one in four high-growth entrepreneurs globally. Interestingly, low-income countries have higher proportion, i.e. one in three, than in North America, i.e. two in five. This may be related to higher GDP growth rates observed in developing parts of the world in the last decades compared to higher income countries with slowing growth rates. Yet, recent statistics also tell us about those women in low- and middle-income countries are more likely to offer innovative new products and services than women in high-income contexts. In fact, women comprise the majority of innovation entrepreneurs in Togo (58.7%), Indonesia (55.3%), Romania (54.5%), Colombia (53.3%) and Iran (52%). We do not know why in these countries women entrepreneurs tend to be more innovative. It may be that with the effect of globalisation and the Internet women might be more proactive in identifying interesting ideas that are launched around the world and simply take it to their own country grasping the opportunities by exploiting place arbitrage.
From an internationalisation perspective, GEM data informs us that women are highly active in targeting international markets. This is clearest in Latin America and the Caribbean (43.1%), and Europe (41.3%), where women make up over two-fifths of entrepreneurs serving international markets.
From a sectoral perspective, globally, most of the start-up activity was observed in the Wholesale and Retail sector for both women (48.6%) and men (40.1%) in 2022. Women were also highly active in Government, Health, Education and Social Services (17.6%) and at much higher rates than men (10.9%). Together, these two sectors account for nearly two-thirds of women entrepreneurs and one-half of men. However, women were typically far less active than men in the ICT sector, with just 2.3% of women operating in ICT compared to 5.3% of men. Yet, in some countries, women are very active in ICT for example, in Panama, women are six times more active than men in ICT start-ups. In fact, almost half of women in low-income countries said digital tools were not necessary for their business operations (45.4%) compared to less than one quarter in high income countries (23%). This trend of non-technical focus among women entrepreneurs in low-income economies, often driven by necessity rather than choice and hindered by limited infrastructure like stable internet, could impede their business growth and needs monitoring.
Going for it alone
GEM data reveals one interesting point about women entrepreneurs: they are not team players. Globally, women were more likely than men to be solopreneurs (36%), especially in Latin America and the Caribbean (44.5%) and in Europe (39.3%). This highlights the autonomy seeking behaviour in entrepreneurship and women being less prone to teamworking which may prove negative effects in the future on women-led businesses.
From an environmental awareness perspective, only about one in five women reported awareness of Sustainable Development Goals (SDGs) and this was slightly less often than men on average. SDG awareness is much lower among women and also men in middle- and low-income countries, but with a lower awareness among women than men. Despite a high level of SDG unawareness, about half of women entrepreneurs reported taking steps to maximise the social impact and about four fifths had taken steps to minimize the environmental impact of their business. Yet, these actions need to be further elaborated and investigated to better understand the degree of activity and its impact.
There needs to be more research into why in some areas women perform better and, in some others perform inferiorly to men in different parts of the world.
The ongoing struggles of female entrepreneurs in the modern business landscape
One area female entrepreneurs find very challenging is securing funding. GEM data (2023) supports that women often depend on personal savings or informal financing, limiting the growth potential of their businesses due to restricted access to formal funding. Research featured in the April 2018 edition of the Academy of Management Journal revealed that male entrepreneurs were frequently posed questions by investors that increased the likelihood of securing funding, in contrast to female entrepreneurs. For instance, in the case of India, a mere 0.3% of the country’s venture capital funding was directed towards women entrepreneurs in 2021. Furthermore, findings from a 2022 survey conducted by a non-governmental organization (NGO) indicate that nearly 85% of female entrepreneurs encountered difficulties accessing loans from public sector banks. These statistics underscore the existing challenges faced by women in securing financial support for their entrepreneurial endeavours.
An Organisation for Economic Co-operation and Development (OECD) report in 2022 sheds light on the ongoing problem of gender bias and discrimination in the entrepreneurial landscape. Despite progress in gender equality, female entrepreneurs may still encounter stereotypes and biases that impact their networking, negotiation, and overall access to equal opportunities in the business sphere. These may be due to different reasons, such as level of education or cultural norms in different parts of the world. For example, in low-income countries, women entrepreneurs were less inclined than their male counterparts to possess post-secondary education (28.7% women versus 31.6% men) and graduate education (5.4% women versus 6.3% men). European Parliament data in 2021 highlights the influence of societal perspectives on women’s engagement in entrepreneurial endeavours. According to GEM data in 2023, in some regions, cultural norms and biases create additional challenges for female entrepreneurs, affecting their confidence and hindering their ability to navigate the business landscape.
Pressed by these challenges, it is not surprising that 29% of women entrepreneurs find it challenging to strike a work-life balance, in contrast to 17% of their male counterparts. Additionally, 22% of female entrepreneurs report that the stress of work amid the pandemic has negatively affected their relationships with family and friends (GEM,2023). Women entrepreneurs often struggle to balance business demands with personal responsibilities, exacerbated by limited childcare options, leading to tough choices between family and work.
UK Government data highlights the critical role of networking and mentorship in entrepreneurship, noting that female entrepreneurs often face challenges in accessing these key resources for business growth and learning. GEM insights indicate that the gender gap in mentorship can impact the confidence and skills development of women entrepreneurs. A considerable gender gap exists in terms of preparedness to start a business based on skills and knowledge, with only 52.1% of women feeling ready compared to 61.9% of men. This represents the most significant disparity among all indicators. A lack of role models and mentors can limit the knowledge transfer and support systems available to female-led ventures. Furthermore, The World Bank Data, 2022 underscore the challenges women face in gaining equal access to markets and industry representation. Female entrepreneurs may encounter barriers when trying to enter male-dominated industries or when seeking partnerships and collaborations. GEM data also highlights that women-led businesses might face scepticism or stereotyping, impacting their ability to establish a foothold in certain sectors. Overcoming these challenges requires concerted efforts to promote diversity and inclusion in various industries.
With the growth of female entrepreneurship evident across the world, addressing the challenges is crucial for ensuring sustained progress. Database insights call for strategies and policies to ensure women’s equal access to funding, address gender biases, and support women’s success in entrepreneurship.
Through understanding the impact of organisations’ activities, behaviours and policies, the Centre for Business in Society at Coventry University seeks to promote responsibility, to change behaviours, and to achieve better outcomes for economies, societies and the individual.