Start-up Entrepreneurs' Blog

Why Are Women Entrepreneurs Absent from Tech Start-Ups?

June 3, 2010

While the number of women small business owners is more than 50 percent, the number of women founders of hi-tech start-ups is in the low single digits. What makes the hi-tech industry different?  There are many meetings in Silicon Valley about innovation, technology, start-ups, and entrepreneurs. If one of the panelists or speakers is a woman, inevitably someone asks the question why there aren’t more women founders or more start-up women in technology and science.

So what do women venture capitalists, entrepreneurs, and founders think is the reason why there are so few women starting high tech companies, and how do they think men are different than women who start hi-tech industries? Below are some comments they’ve made when asked these questions.

• [Venture Capitalist] Women don’t ask for the money.
• [Venture Capitalist] Women undersell themselves
• [Venture Capitalist] Men dream big and propose businesses in the largest markets; women think much smaller.
• [Venture Capitalist] Men ask companies and partners for much more free equipment, software, and support than do women. A Microsoft® BizSpark evangelist said men always ask how much they can get from the program and still try to ask for more than the program offers; women wait for them to disclose what they can get and don’t push to get as much as they can.
• [Founder] As to why there are fewer women who start hi-tech companies than men, one observer said that would-be founders catch the entrepreneurial bug at about the same age women think about starting a family.
• [Founder] Several women CEOs said investors asked if they had children and how they planned on managing the family and the fledging start-up at the same time. While they weren’t insulted by the question, they felt the same question would not be asked of men, because it is assumed that their wives will manage the family affairs so the husband can devote all his energy to the start-up.
• [Senior Executive] A woman COO observed that most of her female MBA classmates had left the job market after starting families. This COO noted a study that stated, after children the average man still worked 40 hour weeks and took little responsibility for childcare while the average woman worked 40 hours and was the principal caretaker of children. After the arrival of children, the mother ended up with two jobs and the father still only had one.
• [Founders] Even though this woman CEO had taken two companies public, she felt she didn’t get as much respect as she should from venture capitalists because she had a sales background and not a technical one. Another CEO said that, with her second start-up, the venture capitalist insisted upon a co-CEO who was a man, despite the fact she had taken her first company public and she had been running this second start-up for a couple years.
•  [Executive Speech Coach]  When giving presentations about their start-ups, everyone needs to be convincing.  The listener keys on the non-verbal signals sent by the speaker.  When observing their presentations meant to convince the audience, women non-verbally beg, whereas men demand.

One of the most important criteria for an investor to fund a start-up is the team. The more senior positions a team member has held, the more credibility the team has in the eyes of the potential investors. One venture capitalist stated that to be investable, he had to be able to “connect the dots”  in the founders’ backgrounds; meaning it had to be an obvious track of college hire to staff engineer to engineering director to vice president to founder. Women are common in the entry to mid level ranks of a corporation, but few women have the right credentials to get funded. Becoming a women entrepreneur and starting a company is often the mid-point in a person’s career, maybe the part of the answer lies much earlier in the process.

There are many programs to encourage young women to enter fields of science and technology, but look at the number of women in senior technical positions. In 1989, 15 percent of engineering bachelor’s degrees were awarded to women and 39 percent of the bachelor’s degrees conferred in science were to women. These are the women that should be seen in senior management positions today. Delving into the companies listed on a recent Forbes’ Top 25 Hottest Tech Stocks, the statistics gathered on senior management teams showed no woman held the CEO position, 13 percent of the senior managers were women, and 1.9 percent of the women senior managers held a technical position. And while one can suppose that 25 tech companies will only have 25 senior technical positions, that’s not true. Many of these companies have multiple senior technical positions but virtue of the fact that they are “tech” companies. Similar statistics can be gathered from the Fortune 500 companies: 16 percent of the senior leadership teams were women and only 1.7 percent were women in senior technical positions. Business Insider’s list of the 40 Hot Start-ups in Silicon Valley and New York City showed 87 founders, of which only 3 were women, and 36 of the 40 start-ups were investor-backed companies – even a start-up focusing on women’s fashion was co-founded by three men.  

Most women who hold senior management positions have come from sales, marketing, finance, legal, or human resources; they rarely come from engineering or product development areas. Yet, founders of hi-tech companies often have technical backgrounds.  How many women hold the position of Chief Science Officer (CSO), Chief Technical Officer (CTO), Chief Information Officer (CIO), Vice President of Engineering, or Vice President of Research and Development? Not many. Women CEOs and founders tend to be from marketing and sales backgrounds.

Most venture capitalists admit that start-up investment is a high touch, personal business – investors fund people they like and everyone likes people like themselves. A recent survey showed that 70 percent of women funded by venture capitalists were funded by firms with at least one woman partner. There is a Silicon Valley angel investor group with 139 angel investors, all about the same age. Only 3 are women.

The competition for funding is always great. There are thousands of entrepreneurs proposing new technology projects to investors and only a very few get funded. Future women entrepreneurs need to mindful of their experience prior to seeking funding. Investors aren’t going to change; they are always going to put their money behind experience and successful track records.

Many studies have calculated the numbers and percentages on this subject, but facts don’t tell the stories or give insightful reasons. Are there any thoughts as to the reasons behind the noticeable few women starting technology companies?

Filed under: From Concept to Start-Up

Tags: hi-tech start-ups, new business, women entrepreneurs, women founders, women in technology