According to the comprehensive Global Entrepreneurship Monitor (GEM) 2021/2022, a third of high-growth companies worldwide are now led by women Report on female entrepreneurship.
“That’s an important statistic,” said Aileen Ionescu-Somers, executive director of GEM. “To me, that indicates that women can certainly perform at the most demanding side of entrepreneurship.”
The report defines high-growth companies as job creators with more than 20 employees who hire more than 20 people in the next five years.
The GEM reports, produced by a consortium of universities, are one of the most comprehensive collections of current data on entrepreneurship worldwide. The report on female entrepreneurs looks at data from 47 countries. It includes high-income countries (such as Canada, Chile, Japan, Saudi Arabia, South Korea, Uruguay and the US), upper middle-income countries (including Belarus, Brazil, Colombia, Jamaica, Romania, the Russian Federation, South Africa and Turkey); low-middle-income countries (such as Egypt, India, Iran and Morocco) and a low-income country, Sudan.
The Women’s Entrepreneurship Report also found that one in three innovation-driven entrepreneurs is female. According to the report’s authors, women entrepreneurs in upper-middle-income countries are currently the most prevalent among the most innovative, high-growth entrepreneurs worldwide and have kept pace with men when it comes to international market focus.
At the same time, women are more likely than men to start a company without employees, the report shows. This is the largest group of companies and often a springboard for future job creators.
Women succeed in these areas with little to no “encouraging” environment – that is, policies to support childcare and other services that help female entrepreneurs. According to experts at the national level who worked with the researchers, the enabling environment for female entrepreneurs is “very low” in most countries. Aside from that, in most countries around the world, women tend to be less affluent than men, with less of their own money to tap into, the report found.
While fewer women worldwide said they wanted to start a business or acted on those intentions in recent years, the situation was different in upper middle-income countries. There, startup rates shot up 11% between 2019 and 2021, and there was no decline in 2020.
The presence of women at the helm of so many fast-growing companies is especially remarkable given the additional demands many women faced during the pandemic, with schools moving to online learning and childcare scarce or non-existent.
“Yes, of course they were influenced, especially the budding entrepreneurs. There were a lot of corporate failures,” says Ionescu-Somers. “Women who were already more established entrepreneurs were able to juggle this challenge of suddenly not having childcare.”
A huge challenge exists for women entrepreneurs around the world, the report notes: lack of funding. “The main conclusion is that diversification of access to capital is sorely lacking,” says Ionescu-Somers.
One reason for limited access to finance is that many women are attracted to areas that investors are less likely to support, Ionescu-Somers said. “Of course we have women in high-growth industries, but women often choose different types of entrepreneurship than men,” she says. “They mostly go to retail, hospitality and other areas.”
The report calls for mobilizing funding support for women entrepreneurs; support for promising female entrepreneurs in all sectors and countries; celebration of female entrepreneurs as role models and debunking gender stereotypes related to entrepreneurship.
“We have been saying for years that there are cultural and social prejudices against women,” says Ionescu-Somers. “Obviously there are role models. But somehow we fail to highlight these role models and actually break the perception that somehow women are not going to be as committed or successful. Perception is reality.”
It is possible that as more women make successful exits, they will also invest in other women-owned businesses. The report found that women’s exit rate rose from 2.9% to 3.6% during the pandemic, while that of men rose from 3.5% to 4.4%. There was a 74% increase in female exits in upper-middle-income countries, compared to 34% for men.
The report also highlighted some interesting regional trends:
· Only 12.9% of women in high-income countries indicated that they plan to start a business, compared to a third of women in low-income countries. Early-stage startup activity is usually about half the intent to start a business, the report found.
· The highest starting rate for women was found in the Dominican Republic. Almost 44% of women reported startup activity, compared to 40.1% of men.
· The lowest starting rates for women were in Poland (1.6%) and Norway (1.7%).
· Entrepreneurship in the Middle East and Africa is becoming more accessible to women. “These societies are not only being opened up to entrepreneurs, but especially to female entrepreneurs,” says Ionescu-Somers.
· Women in Central and East Asia have the highest percentage of established entrepreneurs in the world. Kazakhstan shows some of the highest rates of both entrepreneurial intent and startup activity by women.
· Europe has the lowest rates of female entrepreneurial intention and participation.
The lead author of the Women’s Entrepreneurship Report is Amanda Elam, Ph.D., CEO/co-founder of Galaxy Diagnostics, an early stage medical diagnostics company based in Research Triangle Park, NC, and a research fellow at the Diana International Research Institute at Babson College. Other contributors are:
· Benjamin S. Baumer, PhD, of Smith College
Thomas Schott, from the American University in Cairo, the University of Agder and the University of Southern Denmark
· Mahsa Samsami at the University of Santiago de Compostela
Amit Kumar Diwivedi, PhD; at the Entrepreneurship Institute of India
· Rico Baldegger, PhD, at the University of Applied Sciences and Arts Western Switzerland
· Maribel Guerrero, PhD, at Arizona State University and Universidad de Desarrollo
· Fatima Boutaleb, PhD from Hassann II University of Casablanca, Morocco
· Karen D. Hughes, PhD at the University of Alberta and Diana Research Fellow at Babson College.
As many studies have shown, women’s economic empowerment benefits society different fronts. For policymakers looking for low-hanging fruit when it comes to boosting their GDP and the overall well-being of their communities, creating a better financing ecosystem for women entrepreneurs seems like an obvious step.