Written by: Jennifer McFadden
While women are graduating from college at ever-increasing rates, the amount of high-growth companies they start is still unacceptably low. What can we do to tip that balance?
2011 was a defining year in the United States. For the first time, the number of women earning college degrees exceeded the number of men. Thirty-four percent of the female population is now attending college. Sounds great, right? A more highly educated female populace should be great for the country. This is, of course, true. However, there is one sticking point that should be brought up?more than 82% of these women are receiving some sort of financial aid when they are in school. And, universities still receive large federal and local subsidies, in the form of research grants and tax exemptions, in order to operate.
This piece is part of a Collaborative Fund-curated series on creativity and values written by thought leaders in the for-profit, for-good business space.
Why does this matter? Because it means that there are more women not only graduating from college; but, also graduating with significant help from the government. This means that, as a country, we are currently making a significant bet on women and the potential impact that they might have on the overall, long-term economic growth of our country. How can we make sure that we get the highest overall return on our investment?
The Future of Job Growth
A comprehensive study conducted by The Kauffman Foundation found that companies younger than five years old (read: startups) are creating the majority of net new jobs in the United States. Startups are fueling our job growth, while existing organizations are counterbalancing this growth with a continued contraction in jobs. Over the long-run, high-growth companies generate the type of positive job growth that we are going to need in order to continue on the road to recovery, expand the economy, and remain an economic powerhouse. Given this information, it becomes obvious that in order to promote overall growth in the U.S. economy, we need to focus our energy and resources on developing more high-growth companies.
Herein lies the problem--there is a huge disconnect between the number of highly educated females who are entering the workforce and the number of these women who are going on to launch high-growth companies. In her inspiring talk at Silicon Prairie, Lesa Mitchell encouraged the audience to think about the implications of this paradigm and try to find new ways to help start women down the entrepreneurial path.
The question is: How can we ensure that these newly minted female graduates are going to provide us, as a country, with an appropriate return-on-investment?
The State of Women in Entrepreneurship
Who, then, is launching these types of companies now? Mostly men. Women comprise more than 50% of the U.S. adult population and yet account for only 35% of the people who are launching new ventures. Some might look at that figure and think, "not bad!" But it's worth looking more closely at the numbers to determine whether women are creating the types of new ventures that will significantly contribute to overall net job growth. And, this is where we are failing.
According, to a recent study by AMEX Open (PDF), only 1.8% of female-led firms are generating annual revenues greater than $1 million, generally considered the threshold for deeming a venture "high growth." Additionally, women-owned firms employ just 6% of the U.S. workforce and contribute just 4% of all business revenues. Women might be making overall progress in the rate at which they are launching new ventures, but are failing to launch and build high-growth ventures.
What Now?
So, if we have this situation where we know that the majority of people who are graduating from college and receiving upper-level degrees are women, and that the majority of net new job growth will be directed via an emerging class of startups, how can we make sure that these highly educated women are leading this trend? How can we create systems of innovation that change the ratio of female-led high-growth companies from 35% to 50% or more? And, how can we move these existing companies up the value chain to create a larger pool of female-lead, high-growth companies?
The Development of Radically Transparent Networks
There is an incredible amount of information available--both online and off--that can be used to help women learn the skills that they need to launch and grow a new venture. Need to know what type of legal entity you should use to launch? Take a class on Startup Law at General Assembly? Want to learn how to code Javascript? Check out Codecademy or Treehouse? Want to understand how to install Wordpress or place ads on your website? Take a look at Grovo or Appsumo. Want to learn more about Lean Startup, take a class offline or online at Skillshare. Want to learn the basics of the web and all of the wonderful things that you can do with it? Check out Skillcrush.
The information is there. It is accessible. That is not the issue. The issue is that we are struggling to get this information into the right hands. There are still huge search costs involved in finding this type of information and a need to curate it so that the best of the best is being surfaced and shared.
I propose that we create a series of radically transparent, offline and online networks that can be leveraged to move women up the path to entrepreneurship.
How can this be done?
Step 1: Coordinate: What we need is a single portal that contains reliable, unbiased sources of information that women (and, men) who are looking to launch new ventures can access to find everything that they need to get started. A natural place for this portal to become rooted is within an organization like the Kauffman Foundation, Mozilla Foundation, or Startup America. These organizations have already started down the path toward creating this type of portal and have access to the knowledge and connections to make it succeed.
This portal could be used to provide a one-stop shop for highly curated tutorials, articles, and links to additional sources of reliable information on how to launch a company. The portal could be organized to maximize the utility for all users--regardless of the type of company that they are interested in launching. The goal is to reduce search costs and to make sure that this information is useful and accessible to a broad audience.
Step 2. Educate and Mentor: Seed accelerators such as TechStars and Y Combinator are successful because of the combination of education and mentorship that they provide. However, there are some flaws in these models when it comes to inclusivity. There is an inherent geographic bias that is difficult to surmount because of scaling issues; there is a focus on very specific types of companies, which inherently creates a bias against some of the types of companies that many women may start; and, there are natural limits to the number of companies that can be accepted and funded.
However, there is still a ton of knowledge being created by these organizations that could be universally applicable and useful to a range of companies. According to a recent report by Xconomy, there are 121 incubators/accelerators in the U.S. Imagine what could happen if just a sliver of this information was aggregated on a single platform, similar to what has already been done at the Stanford Technology Ventures Program site.
Then, imagine if each of the organizers of these accelerators committed to offering two hours of online office hours one time per month. Layer onto this office hours by marketing executives from Coca-Cola; distribution experts from FedEx or Walmart; design experts from The D.school at Stanford, and sourcing experts from Nike. Create a for-profit version of Catchafire, where these experts can donate some of their time to provide assistance in their area of expertise.
Now you begin to see one place where women in rural and suburban America can come to not only learn; but also connect. It is essentially a farm league for the next generation of innovators.
Step 3: Connect Locally, Assist Virtually: We know that the information is out there. We know that this type of portal could be created relatively easily. However, we also know that a portal alone will not solve the problem of bringing more women into tech.
There needs to be some way to connect these online resources with the offline organizations that already exist to serve women. Women are particularly good at self-organizing. That is why you see such a proliferation of women's groups around the country, from good, old-fashioned sewing bees to church circles to the Junior League to the PTA to the Girl Scouts. Women know how to get together and work together.
There is no need to go out and create new networks when these other networks already exist. Connecting with existing organizations and leveraging their longstanding infrastructure and networks would provide a mechanism to accelerate the rate at which women find and begin to use this information. Once word gets out, tools such as Skillshare and Meetup can be harnessed to make sure that those women who are interested in launching new ventures have a local group of fellow entrepreneurs with whom they can work.
The Beginning, Not the End
Of course, this is just one of many potential solutions to the problem. There are many hurdles preventing women from launching and growing new ventures. However, it is a start. A stake in the ground. A path toward finding a solution to the problem; rather than simply another discussion on the problem itself.
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