Why Aren’t There More Female Entrepreneurs?

I’m often asked the question about why there aren’t more women who are entrepreneurs. On my blog I’ve been hesitant to take the topic head on. Somehow it seems kind of strange for a man to answer this question that obviously comes from a man’s point of view.

But last week I noticed a blog post by a woman, Tara Tiger Brown, that asked the question, “Why Aren’t More Women Commenting on VC Blog Posts?” [it's short, you should read it] . In it she observes that only 3% of the comments on this blog are from women. I would love to see Tara follow up with blog posts on: why she believes this is the case & what we can do about it.

The truth is I have been thinking a lot about the topic, I just haven’t been writing about it. And when asked about the topic, I definitely don’t shy away from the topic as you can see in this 8-minute YouTube interview that Pemo Theodore asked me to do on the subject of Women in Entrepreneurship.

She also does a wonderful 9-minute collage of the best-and-brightest in our industry talking about the topic. Please watch this. She has a quote from literally every major VC from whom you’d want to hear. Every single one. And many of the best women founders.

My inspiration to become an entrepreneur came from my mom, not my dad. She was the dominant figure in my family and was both an entrepreneur and a community leader. She opened a bakery and a restaurant. She was president of the UJA (United Jewish Appeal). She bought our first computer – an IBM XT with a 10MB hard drive – in order to do her books electronically. It’s how I learned to build spreadsheets. She encouraged me to get a job when I was 14. She encouraged me to take acting classes as a child, which gave me confidence as a public speaker.

I love my dad equally, of course. But he was a doctor and a long-distance runner and cared little about business.

So the role is a strong woman leader has always been a comfortable idea for me.

Even more interesting is that at GRP Partners (the VC firm where I’m a partner) our two most successful returns from our previous fund [which is ranked as the top performing fund in the country for its 2000 vintage according to Prequin] were both run by women!

But then the truth sets in. My guess is that probably only 2-3 out of every hundred pitches I receive are from women. This certainly isn’t anything conscious on my side. It’s just the facts.

I’ve tried to ask some strong women whose opinions I greatly respect what can be done about it as a way to get to answers without my having to weigh in directly. That’s the basis of this awesome discussion with Joanne Wilson, aka “the Gotham Gal.” But given her background as a successful salesperson and entrepreneur I didn’t want to make the whole discussion about women.

The thought that I keep returning to in my head is that the future is likely to be much better for female entrepreneurs than that past has been. At least that’s my hope. We need to start encouraging it in our youth. In colleges. In recent grads.

The genesis of my thinking came from my discussion with Joanne. She noted that in our generation everybody wanted to be a lawyer. Perhaps it’s because everybody used to watch LA Law. But this coming generation is much more likely to be inspired by The Social Network and want to be entrepreneurs.

The environmental factors are likely to have an even bigger positive impact than just the inspiring movie.

In my post on what has changed the venture capital industry more than any other factor I talked about Amazon.com’s role. AWS helped lower the cost of starting a company by 90%.

When I started my first company at 31 year’s old I had to raise at least $5 million. The infrastructure alone cost $2.5 million to launch a SaaS software company and we took $2.5 million in costs over 18 months to launch our products. On AWS and with open source you can achieve amazing results for $500k. Heck, you can launch your company if you’re a developer for $50,000.

And I believe these price points are pushing entrepreneurs to start at a much younger age. I plan to write about this phenomenon soon. But think about it – if you only need to risk $250,000 as an investor (or $50,000 across 5 people) to get an entrepreneur started then why wouldn’t you back younger teams [in addition to more experienced ones.]

So I’m increasingly seeing entrepreneurs getting funded at 22. At 20. Even at 18. The latest entrepreneur who has been pitching me, Shahed Khan, is only 16! And truthfully he’s pretty impressive.

And more groups are focused on furthering this cause. You have “Teens in Tech” founded by Daniel Brusilovky. You have the super impressive Cory Levy who founded the NextGen Conferences (as well as One, Inc.)

Back to women.

If women can get funded to run startups at 22-25 then they can get well into their experiences as entrepreneurs before having to navigate the tricky years of balancing being a mommy with running a company. If your first chance at being a startup founder coincides with your first child it’s really difficult for either gender. But for women it’s probably even more challenging.

I speak a lot on college campuses. My crusade has been to correct my biggest mistake as an entrepreneur: That I didn’t start younger. I talk about the minuscule costs of starting a company these days. I talk about the benefits of real world experiences over paying money to get advanced degrees but I still believe fervently in undergraduate educate for most (but not all).

And I talk about women. And why starting young isn’t as scary as it once was.

Peter Thiel started the “20 Under 20″ program to encourage young, talented people to give entrepreneurship a shot. Perhaps somebody will champion a similar initiative to get more young women funded straight out of college to start to reverse the trend and help lead our next generation of innovation.

Reprinted from Both Sides of the Table

Mark Suster is a 2x entrepreneur who has gone to the Dark Side of VC. He joined GRP Partners in 2007 as a General Partner after selling his company to Salesforce.com. He focuses on early-stage technology companies. Follow him at twitter.com/msuster.

 

Add New Comment

6 Comments

  • leigh

     - i think that's a fair comment. There are many women who are out there doing their thing and starting very successful companies.  
    I do wonder though, how many of those women have managed to raise VC capital in particular? And if the business you are creating is in digital or tech, the barriers are even more significant.

    I would hope that initiatives like #changetheratio don't limit the conversations we can be having but instead expand them.  Supportive networks have always been an important part of any small business growth and success.  I'd personally like to see more women join that conversation (vs. being frustrated by it) and figure out how we can take the successes from other areas and apply them to those that see such a problematic divide.  

  • Monica Ostby

    Thanks for your post Mark.  I can tell you there are also many old dogs
    like me.  I'm a 40 something woman, have 15+ years of hard core
    corporate experience, AND the precious and challenging experience of
    being a mother - as well as PTO president, community activist, etc.  
    I
    started a web-based business with another neighboring mom.  We had an
    issue, were frustrated that there 'wasn't a better way', so damn it
    all we built it.  And like your mom, my kids live through my experience.  In fact, in
    one moment of "good God why am I doing this" my son said "Mom, you can't
    quit.  I want to be president of Inlu when I grow up!"

    I, like
    many of the 20 somethings you speak of, am really good at what I
    do, but I'm not necessarily great at pitching investors.  With my life
    experience my business is not a game to me.  We've exceeded many of our
    goals, and are perhaps more determined to see our success than other
    entrepreneurs who look for the short return.  Quite honestly, we spend the
    majority of our time making our business great.  Not our business pitch
    great. This, as well as not having a connected inner circle in the investment world may be the culprit.

    Words of wisdom from THIS Entrepreneurial Crone... As
    David Ogilvy said, "The consumer is not a moron, she is your wife."  
    I'd say that women starting businesses are worth listening to.  They are
    your wife, your mother, your favorite teacher...
    the list goes on.  Give us a chance.
    IF you want to see the solution that THIS FEMALE LED entrepreneurial team has built by bootstrapping, go to: www.inlu.com

  • Jacoline

    Agree with the observation of LA Law influencing women to go into law. Medical profession was attractive while business has been the last frontier. Women are accepted into VC world by men and a good business will be judged fairly. I think it is women themselves learning to navigate it, that learning that being assertive can be fine. The movie Social Network's image of females was poor in my books. I thought the girls had jumped backwards to the stone age. Here is a TV show with a female VC doing a deal with a female business owner and a female blogging about it. http://www.cbc.ca/dragonsden/2...

  • Tiffany Wheeler

    Agree - there are so many female entrepreneurs, spawining women-owned businesses: Bakeries, spas, salons, book shops, cafes, hotels, makeup companies, mommyblogger, PR agencies (WaggenerEdstrom), clothiers, tea makers, Columbia Sportswear, Forbes, medicine/health (there are as many or more female MDs graduating today as men), several Silicon Valley propertties, real-estate agencies, consulting firms, the list goes on. Perhaps the author is too focused on hot new, young techie start-ups rather than the bigger picture of business today. Unfortunately this is only a tiny slice of the overall business landscape. I also agree that the media, and perhaps investors, prioritize male-owned ventures - which is one reason I'm happy to add this post. Traditionally, too, women may have had greater difficulty than men accessing funding for large projects. Internationally, however, a key to global economic recovery may reside with women. Read this article for an interesting POV: http://content.dell.com/us/en/... 

  • Callie Works-Leary

    There ARE plenty of female entrepreneurs. The reason people think there aren't? Because the media's current portrayal of an "entrepreneur" is a 20-something white kid with a tech start-up. Entrepreneurs are not limited to the tech or web arena. As a young, female entrepreneur, I am frustrated by lack of intelligent discussion of entrepreneurship that exists beyond a computer screen.