Our Research on Diversity in Entrepreneurship

Today’s MBA Student is Tomorrow’s Entrepreneur: Gender’s Impact on Career Choices

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Recent research by Illuminate Ventures shows that over 80% of the MBA students that participated in their survey are drawn to entrepreneurship and more than half to careers in venture capital, but most do not have the support or access they desire. As a result, there is a compelling reason for both educators and investors to better understand the aspirations and needs of these students, many of whom are likely to become the future’s most impactful entrepreneurs and investors. The research also reveals key differences between male and female attitudes toward entrepreneurship, including perceived confidence gaps, concern about the availability of funding, and barriers to their success.

Select Findings

What influences, motivates, and supports MBA student interest in entrepreneurship?

  • By far, the most selected reason for considering entrepreneurship for both men and women was to bring ideas they are passionate about to the market. This mirrors the response from our prior research of current entrepreneurs.
  • Roughly 60% of students interested in an entrepreneurial career path had an entrepreneur friend, and over two-thirds had a parent or mentor as a role model.
  • The most prized data source for MBA students was current entrepreneurs.

How do students think about entrepreneurial barriers and success attributes?

  • Across current and prior survey respondents, all agreed that the most important attribute of a successful entrepreneur is a combination of resilience and perseverance.
  • All but one of the groups surveyed also selected the ability to attract a great team as the second most important success attribute. This ranking is likely well-merited since data shows that 23% of startups fail because they lack the right team.
  • When considering barriers to entrepreneurial success, male and female MBAs both selected financial security (58%) as a very significant barrier, followed by access to startup capital (37%). These top two barriers paralleled those of both male and female founders in our prior research.
  • Female MBA students ranked “self-confidence” as a barrier to entrepreneurial success somewhat higher than the male students surveyed.

How far along are students on their entrepreneurial journey?

  • Over a third more male respondents already had a startup idea versus female.
  • Many students prefer joining an existing startup versus launching their own when starting out.
  • A much higher proportion of male students reported that they were already active in an entrepreneurial project when compared to female students (48% versus 34% of respondents).

What level of interest exists and what barriers are perceived in a venture capital career?

  • While MBAs were interested in careers in venture capital – 63% of men, and 53% of women – they believed it is very hard to break into the space. Roughly 75% of female students perceived a “high barrier to entry” and nearly 80% of male students.
  • Historically, the odds of landing a  VC role have been far worse for women and other diverse groups lacking the right networks.
  • Students believed the best way to gain exposure to VC was through an internship in the space, but few have access to these types of opportunities.
  • Research shows that even minimal exposure to VC networks substantially benefits men, but is less helpful for women.

We are pleased to be able to share the views of current MBA candidates, many of whom are likely to be tomorrow’s entrepreneurs. We hope that the data may be useful to young people considering entrepreneurship or venture capital investing as a career direction. We also encourage educators to leverage the student perspectives represented in the survey data as they design their entrepreneurship programs.

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Gender Differences in Entrepreneurship: Voices of Founders and Funders

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The level of diversity in venture-backed companies remains extremely low, with less than 5% led by a woman and only 15% with a woman co-founder (data as of 2018). In a survey of high-tech founders and venture capital investors conducted by Illuminate Ventures, a series of questions were posed to try to identify barriers that may be suppressing the growth of these numbers. High-tech founders were asked about their motivations, perceptions of attributes key to success,  and barriers to achievement. Venture capital investors responded to the same questions, and were also asked to rate the likelihood the success attributes would be displayed and barriers faced, based on the gender of an entrepreneur.

While the survey data showed that male and female startup founders think quite similarly about their entrepreneurial motivations and the personal attributes that impact success, it also revealed important differences regarding the barriers they perceive and how VCs think about each group.

Select Findings

Old Stereotypes Are Disproved:

  • The belief that entrepreneurs launch companies chiefly for financial gain is a myth. Only 15% of male and 2% of female founders consider this a primary motivation.
  • Common wisdom that you must have a STEM degree or an entrepreneurial background to be a successful tech founder was dismissed nearly unanimously by founders and VCs alike.
  • Traditional thinking that women founders are more risk-averse than men, or are unable to balance work/family, is dated. More than twice the percentage of male founders indicated that “balancing family and work” was a strong barrier (31% versus 17% of women), and they also rated the “need for financial security” as a strong barrier in slightly higher numbers than women.

Investor Thinking Needs a Refresh

  • More than half of VCs assume men are much more likely to have attributes like “prior start up experience” and the “desire to scale a business massively” when founder responses refute this.
  • VCs don’t seem to understand the importance of family in the entrepreneurial equation. Not a single VC selected “gaining the support of family” among the top 5 barriers to entrepreneurial success, when it was chosen by nearly a quarter of founders

It is Not a Level Playing Field

  • Both male and female VCs saw all of the 16 potential barriers to entrepreneurial success we measured as likely to impact women founders more than men.
  • Over 40% of women entrepreneurs consider the limited number of women VCs to be a significant barrier to their success.
  • Male VCs, on average, see less than half the number of women co-founded opportunities as female VCs.

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High-Performance Entrepreneurs: Women in High Tech

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Our research shows what many have long suspected: Women entrepreneurs are poised to lead the next wave of growth in global technology ventures. The full report, prepared by Illuminate Ventures, documents the performance of women entrepreneurs in the past decade and the trends propelling them towards a critical mass in the high-tech sector.

Select Findings

  • Efficiency, Efficiency, Efficiency: The high-tech companies women build are more capital-efficient than the norm. The average venture-backed company run by a woman achieved comparable early-year revenues, using an average of one-third less committed capital.
  • Leadership Progress: More women are serving as officers of venture-backed companies with successful exits. In 1988, only 4% of the 134 firms that went public in the U.S. had women in top management positions. Of 2009’s 19 high-tech IPOs, all but two had at least one woman officer.
  • Expanded IP Contributions: From 1985 to 2005, the annual number of female-invented fractional software patents in the U.S. increased 45-fold – three times the average growth rate in that sector.
  • Growing Influence in Tech: Women-owned or led firms are the fastest-growing sector of new venture creation in the U.S., expanding at five times the rate of all new firms between 1997 and 2006 – now representing nearly 50% of all privately-held businesses.
  • Venture-level Returns: In the past 10 years, more than 125 companies with over 200 women co-founders or officers have achieved IPOs or >$50M M&A exits in the U.S. high-tech sector alone.
  • Diversity Improves Performance: Organizations that are the most inclusive of women in top management achieve 35% higher ROE and 34% better total return to shareholders versus their peers. Research shows gender diversity is particularly valuable where innovation is key.

The bottom line: More than ever before, women are influencing the face of business. They are on the cusp of becoming a leading entrepreneurial force in technology.

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