Minding the Gap: Women and Angel Investing

A woman in formal clothes is going up to the stairs which are made of golden coins. A sketch of New York on background. A red arrow duplicate the movement of the lady.

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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About the Authors

Dr. Susan Coleman is the Ansley Chair of Finance at the University of Hartford’s Barney School of Business, teaching courses in entrepreneurial and corporate finance at the undergraduate and graduate levels. The success of her co-authored book A Rising Tide: Financing Strategies for Women-Owned Firms (Stanford University Press, 2012) led to a follow-up book, The Next Wave: Financing Women’s Growth-Oriented Firms (2016) which examines the experience of women entrepreneurs in high growth sectors.

Dr. Alicia Robb is a Senior Fellow with the Ewing Marion Kauffman Foundation. She has previously worked with the Office of Economic Research in the Small Business Administration and the Federal Reserve Board of Governors. She is Founder and CEO of Next Wave Ventures, an active angel investor and mentor to startups, on the Advisory Board for Global Entrepreneurship Week and the Deming Center Venture Fund.

THE NEXT WAVE: Financing Women’s Growth-Oriented Firms (Stanford University Press, 2016) by Susan Coleman and Alicia Robb


The Securities and Exchange defines an “accredited investor” as someone who has earned income exceeding $200,000 ($300,000 with spouse) in each of the prior two years, or has a net worth of over $1 million either alone or with a spouse, excluding the value of the person’s primary residence (http:///www.investor.gov).
2. The Rising Tide Europe Fund and training program were also conducted in 2016 in partnership with Go Beyond Investing.

2007 Survey of Business Owners.  U.S. Census Bureau.
•  2012 Survey of Business Owners.  U.S. Census Bureau.
•  Amatucci, F. M. and Crawley, D. C. 2011. Financial self-efficacy among women entrepreneurs. International Journal of Gender and Entrepreneurship, 3(1), 23-37.
•  Becker-Blease, John R. and Jeffrey E. Sohl (2007). Do Women-Owned Businesses Have Equal Access to Angel Capital?  Journal of Business Venturing 22 (4), 503-521.
•  Brush, Candida, Nancy Carter, Elizabeth Gatewood, Patricia Greene, and Myra Hart (2001). The Diana Project: Women Business Owners and Equity Capital: The Myths Dispelled. Kansas City, Missouri: Kauffman Center for Entrepreneurial Leadership.
•  Ibid. (2004). Gatekeepers of Venture Growth: A Diana Project Report on the Role and Participation of Women in the Venture Capital Industry. Kansas City: • Missouri: Kauffman Center for Entrepreneurial Leadership.
•  Coleman, Susan and Alicia M. Robb (2009). A Comparison of New Firm Financing by Gender:  Evidence from the Kauffman Firm Survey Data.  Small Business Economics 33, 397-411.
•  Coleman, Susan and Alicia M. Robb (2012). A Rising Tide: Financing Strategies for Women-Owned Firms.  Stanford, California: Stanford University Press.
•  Coleman, Susan and Alicia M. Robb (2016a). The Next Wave: Financing Women’s Growth-Oriented Firms.  Stanford, California: Stanford University Press.
•  Coleman, Susan and Alicia Robb (2016b). Financing High-Growth Women-Owned Enterprises: Evidence from the United States in Díaz-García, C., Brush, C., Gatewood, E. and Welter, F. (eds), Women’s Entrepreneurship in Global and Local Contexts, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing.
•  Harrison, Richard T. and Colin M. Mason (2007). Does Gender Matter?  Women Business Angels and the Supply of Entrepreneurial Finance.  Entrepreneurship Theory and Practice 31 (3), 445-472.
•  Kirkwood, J.  (2009). Is a Lack of Self-Confidence Hindering Women Entrepreneurs?  International Journal of Gender and Entrepreneurship 1 (2), 118-133.
•  Marlow, Susan and Maura McAdam (2012). Analyzing the Influence of Gender Upon High-Technology Venturing Within the Context of Business Incubation.  Entrepreneurship Theory and Practice 36 (4), 655-676.
•  Mitchell, Lesa (2011, September). Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers. Kansas City, MO: Ewing Marion Kauffman Foundation.  Retrieved at http://www.kauffman.org on 8/22/16.
•  Ranga, M. and H. Etzkowitz (2010). Athena in the World of Techne: The Gender Dimension of Technology, Innovation, and Entrepreneurship. Journal of Technology Management and Innovation 5(1), 1-12.



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