Why Are There So Few Female Entrepreneurs? (2024)

Only 9% of the companies who entered the summer 2022 batch of the prestigious tech startup incubator Y Combinator were founded by female entrepreneurs. This number hasn’t changed very much in the years I’ve been following entrepreneurship stats, but it continues to surprise me every year. Given all the media attention and focus over the last decade on empowering women and bringing more gender equality to America, it seems like entrepreneurship among women should be fairly high. But even looking outside the tech bubble, this isn’t the case - women-owned businesses make up just under 20% of all businesses with employees in America. There is some limited research on female entrepreneurship challenges, but most of it left me with more questions than answers. And although the percentage is rising slowly, seeing it so low left me asking the same question over and over again: Why are there so few female entrepreneurs?

In my own life I am very fortunate to have been and continue to be surrounded by amazing women, many of whom have themselves started businesses. So, to better understand some of the forces working against women pursuing entrepreneurship, I decided to ask 15 of them to share their thoughts. Their ages range from 25 to 75, all graduated college and 7 have advanced degrees. They live in 4 countries and work in a variety of fields ranging from consulting and UX design to software development and healthcare. While this is far from a significant sample size, the answers I received paint a fascinating picture of the complex interplay between social, economic, and psychological hurdles facing women not just in business, but in broader gender equality issues throughout life. Below are 5 key things I learned - topics that came up repeatedly and deserve far more attention and discussion than I think they currently receive.

Risk Aversion

Several women indicated that attitudes and experiences toward risk were a big factor in pushing them away from entrepreneurship, but in ways I didn’t expect. Gender differences in risk-taking behavior have been fairly well-studied and tend to indicate men are bigger risk-takers in many behaviors, but multiple women explained that in their own lives both family and friends often treat women and men differently when it comes to risks. Male children are encouraged to take risks, whether it be climbing trees or starting a “side hustle” while female children are encouraged to be more cautious and pursue “sure bet” careers, become mothers, and generally support their communities. Whether social or innate, this starts early in life with research showing boys under age 11 about twice as likely to engage in supervised “risky” behaviors than girls of the same age. By adulthood, this compounds into a significant headwind for women who might otherwise pursue entrepreneurship, especially because of my next learning.

Lack of Support

Women tend to get significantly less support if they do decide to start a business. Not only did several women tell me that friends & family tried to steer them away from entrepreneurship, but when they did start a business, they received almost no help from friends, family, and even spouses. This is in strong opposition to traditional stories of male entrepreneurs (and my own personal experience) where families, friends, and mentors provide not only emotional, but often financial and network support as well. Some research even shows that men tend to assume spousal support will simply happen, while women more carefully consider impacts to their spouse/family and weigh this against their motivations. This applies more broadly to business funding as well, with significantly fewer female-owned businesses pursuing and receiving funding than male-owned businesses. In the tech startup world, anecdotal evidence also points to female founders receiving less consideration and support from venture capitalists and advisors than their male counterparts.

Goals & Roles

Many women I talked to also indicated that for them, starting a family was simply more important than being massively successful in their career. Some research backs this up as well, with women being significantly less likely to be “work-oriented” and more likely to be “family-oriented” than men in similar work positions. This comes with two major effects - primary caretaker role assumptions and work-life balance prioritization. To quote a summary from the University of Missouri, “Up to 81% of all caregivers, formal and informal, are female, and they may spend as much as 50% more time giving care than males. Even in heterosexual relationships where both partners work full time, women still spend a whopping 40% more time caregiving than their male partner.” For most women who want to start a family, the massive time and effort requirements of entrepreneurship are simply incompatible with traditional gender roles in families. I also heard from several women that having seen the levels of stress and overwork present in many successful entrepreneurs, they simply decided that having a more balanced life with a lower-stress career was more important than pursuing fame and riches.

Missing Network Effects

Another topic that came up multiple times related to a variety of network effects that support male entrepreneurs, but are significantly lacking for women. And network effects are certainly important. Whether starting a tech company in Silicon Valley with the help of an incubator like Y Combinator, or starting new ventures in Germany, research shows that strong networks significantly help new businesses. Key drivers of this effect seem to be access to capital, access to guidance from people who have “been there before”, and peer groups of similar-stage entrepreneurs who can encourage and share learnings. Given that there have historically been so few female-run businesses and most celebrated founders and CEOs are men (only about 10% of Fortune 500 CEOs are women), there is a distinct lack of female role models and mentors for women who might wish to start a business. Women growing up simply don’t have many high-profile female examples to look up to, and might not even consider entrepreneurship as a viable career path. This extends even further into corporate leadership roles where women represent only about 30% of Vice President and higher employees. For would-be female entrepreneurs, this translates to fewer compatriots in positions to help support and mentor them, and a smaller network of like-minded people to learn from and lean on when starting and growing a business.

Implicit Barriers

For many men, the idea of becoming a kindergarten teacher or nurse is a tough proposition. These jobs are so female-dominated (about 91% and 87% respectively) that men face discrimination and social stigma if they decide to pursue these careers. But for women, the same barriers apply to virtually any business they might start. From facing bank and venture funding boards, composed mostly of men, to selling to male-dominated businesses and facing rooms full of men in leadership groups, many of the women I talked to explained that they are constantly made to feel out of place. It’s no surprise then that women who do start businesses tend to do so in traditionally female-friendly industries like healthcare, retail, food service, and beauty - it’s simply more difficult for women to get started in massively male-dominated sectors like software and construction. But this also means that barriers are self-perpetuating as fewer women starting businesses in male-dominated industries maintain the male-dominated nature of those industries over time. On top of this, almost all the women I talked to expressed that in the workplace they face often-impossible double standards where actions and working styles that gain men praise result in women being labeled as “bitches”. And research backs this up, showing that women are expected to be both nice and tough, and are often criticized for levels of assertiveness that are accepted in men.

It’s worth considering that most, if not all of these factors go beyond entrepreneurship. Many of the women I talked to shared how these experiences impacted their college major choices, career paths, family decisions, and friend interactions. I learned that entrepreneurship is simply a readily-apparent microcosm of broader society as a whole. It’s not possible to separate challenges in female entrepreneurship from challenges in gender equality - they are intertwined and must be addressed together.

So what can we do if we want to see more women starting businesses? I believe there is no simple answer since all of the issues above have complex underpinnings that might take generations to resolve, if they ever do. However, there are a few bright spots if you look closely. For example, black women are more likely to start a business than white men and even though female-started businesses tend to have lower revenue than those of men, their survival rates are about the same. Given all the headwinds above, I find this quite heartening. Personally, I’m taking a few lessons from this research that I can incorporate into my own life and others may be able to as well:

• Encourage young girls to take calculated risks the same way we do for boys. It’s easy to ask, “If this child were a boy instead of a girl, what would I encourage them to do?” and then act accordingly. Whether it be on the playground, in school, or when setting out in the working world, encouraging risk-taking shouldn’t be limited to one gender.
• Normalize shared responsibilities between parents and men as primary caregivers. Even today, too many men don’t share equal responsibility for parenting and far too many men lack any kind of support if they choose to be a stay-at-home dad. Women can’t make the same choices around entrepreneurship if they have to choose between starting a business and starting a family.
• Especially for men in influential corporate positions, reach out to more women to offer mentorship and support in starting businesses. Until there are more female executives and entrepreneurs to form strong networks, it rests on our shoulders to support women as much as possible when they want to explore leadership and entrepreneurial roles.
• Focus more on the life side of work-life balance. This already appears to be a growing trend in the post-pandemic world, but bringing male and female attitudes toward working hours and life priorities more in line would go a long way toward addressing several gender equality issues as well as some of the top regrets in life.
• Celebrate the successes of great female entrepreneurs and CEOs. Men tend to get the spotlight, but there are many amazing women leading businesses who deserve more recognition than they get. The more well-known role models there are for young girls to look up to, the more inspiration there will be for women to pursue these paths.

I doubt we will ever see true parity among the genders in the world of entrepreneurship, but I think these steps can definitely help close the gap, with the added bonus of helping lessen other gender equality gaps along the way.