Women Entrepreneurs are Catching Up

by Erin McCune on March 30, 2006

in Women Professionals

A March 29th article in FORTUNE Small Business magazine challenges the myth of women-owned businesses as small and local. Although the article cites examples of women who choose to keep their businesses small, it also refers to research from the Center for Women's Business Research (CWBR) claiming that businesses run by women tend to be more profitable than businesses run by men.

The study cites four trends that are improving performance for women owned businesses:

Women seem to be able to take better business advantage of the Internet than men.

Federal agencies may (thanks to a court order) start taking female contractors seriously.

More and more women have been quietly starting the kinds of technology-driven businesses that attract venture capital.

The rising number of female college graduates in engineering and computer science suggests that trend will accelerate. (And in the interim, bands of angels–small groups of private investors and large women-only networks for raising seed money–are swooping in.)

The article also discusses the impact venture capital (or lack of venture capital) has on the growth and continued success of women-owned businesses:

It's a cliche by now, in any discussion of woman-owned businesses, to
say that they might grow much faster–or at least a lot of them
would–if only they had access to venture capital. According to
Growthink Research of Venice, Calif., woman-run firms received only 4%,
or $784 million, of the more than $19 billion in venture funds invested
in 2003 (the latest numbers available).

That, however, oversimplifies what's going on. For one thing, women
entrepreneurs seem ambivalent about working with venture capitalists.
In one CWBR study, only 21% of female business owners expressed a
willingness to give up control in return for capital. Says Victoria
Colligan, founder of an online network for women entrepreneurs called
Ladies Who Launch (ladieswholaunch.com): "Men invented venture capital
as a vehicle for growth. But VCs want to see an exit strategy in three
to five years–and many women don't want to commit to cashing out that
soon. They want the creativity and the passion to go on and on."

Read the article in FORTUNE magazine here.

Center for Women's Business Research (CWBR)

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