Minding the Gap: Women and Angel Investing

March 9, 2017 • STRATEGY & MANAGEMENT, INNOVATION, Finance & Economics, Entrepreneurship

By Susan Coleman and Alicia Robb

In spite of the impressive growth of women-owned firms in the United States in the recent years, they are still considered in the minority. In this article, the authors explore the opportunity, challenges, and a solution on closing the gender gap in angel investing.


The Opportunity

Women-owned firms have made great strides in recent years. The US Census Bureau estimated that there were 9.9 million women-owned firms in the United States in 2012 representing 36% of all firms, a dramatic increase over 28.7% just five years earlier. In fact, the number of women-owned firms grew by 27% from 2007 to 2012, compared with a growth rate of 2% for firms overall (Survey of Business Owners, 2012; Ibid, 2007). These numbers suggest that a growing number of women are choosing entrepreneurship as career path and as a means for putting their talents, creativity, and initiative to work.


The Challenge

In spite of these impressive statistics, however, women-owned firms are still in the minority, and there are roughly two male entrepreneurs for every woman entrepreneur in the United States (Survey of Business Owners, 2012). Similarly, for those women who do pursue the entrepreneurial path, the vast majority launch small rather than growth-oriented firms. The same 2012 US Census data reveals that fewer than 20% of women-owned firms have any employees aside from the entrepreneur herself, and collectively, women employ only 7.5% of all employees. This is an important consideration in an economy that is still feeling the effects of the “Great Recession” and the ensuing focus on job creation.

Similarly, research that we have conducted ourselves using the Kauffman Firm Survey confirms that women are less likely to launch growth-oriented firms, the kind that create a substantial number of jobs (Coleman & Robb, 2016b). This persistent gender gap in entrepreneurial activity prompted the Kauffman Foundation’s Lesa Mitchell to write:

With nearly half of the workforce and more than half of our college students now being women, their lag in building high-growth firms has become a major economic deficit. The nation has fewer jobs – and less strength in emerging industries – than it could if women’s entrepreneurship were on a par with men’s. Women capable of starting growth companies may well be our greatest under-utilised economic resource. (Mitchell, 2011, p. 2).

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