Family-unfriendly work policies, exclusion from networks and barriers in raising start-up finance are among the difficulties women face, writes KARLIN LILLINGTON

THE TECHNOLOGY and biotechnology industries are often cited as exemplary sectors for equal opportunities for women. Such companies value skills and expertise, goes the argument, so hiring is gender- blind and opportunities abound for the woman entrepreneur.

But is that actually the case? A recent study by the US-based Kauffman Foundation for Entrepreneurship that looks at data gathered between 2004-2007 on women entrepreneurs in these sectors indicates that women face some daunting barriers when it comes to setting up their own companies, particularly in drawing down start-up financing.

Women internationally also identify difficulties in working within the sector itself – difficulties that can block their ascent into the management positions that in turn enable entrepreneurship.

An Irish study cited in the report (Cross and Linehan, 2006) looked at 20 women working in the Irish technology sector. The researchers noted numerous occupational barriers that had a greater impact on women, such as family-unfriendly policies and informal networking events amongst the men that excluded women.

“Because of these barriers, the women interviewed felt it would be very difficult for them to reach the senior ranks,” says the report, though it adds that the authors also pinpointed a “self-imposed glass ceiling” in that a number of the women didn’t desire the stress or workload of a management role.

Other studies that set the context for the Kauffman report are similarly disheartening for women. A 2006 study of women in northwest England found, worryingly, “that dissatisfaction with the male-dominated culture in high-tech led women to leave not only technology-based jobs, but the technology industry entirely”. A 2008 US study found that women-owned technology firms were smaller in size and revenue.

“These studies suggest that women have a difficult time gaining the types of senior management level experience in high tech that would make them attractive to external providers of capital. Further, it appears that women in high tech still are largely excluded from both formal and informal networks that could provide them with either leadership experience or access to capital,” the Kauffman report states.

The Kauffman report then examines extensive data drawn from its own database of interviews with 2,000 technology companies of different sizes, run by both men and women. The results highlight some major differences between the genders.

For example, in the start-up year of a company, technology firms owned by women were more likely to be sole proprieterships or partnerships (38.7 per cent compared with 24.9 per cent for men) and less likely to be organised as corporations. Firms owned by women launch with an average of $64,638 in assets compared to $116,430 for men, and first year revenues and profits were $35,968 and $12,713 compared to $87,302 and $34,324 for men.

“Men devoted almost twice as many assets to their firms at startup to generate revenues and profits that were more than double those of women-owned firms,” says the report. Women seem to have a harder time raising capital, too. In 2004, women raised $90,000 versus $150,000 for men, with a negligible amount coming from venture funding, compared to a fourth of men-owned firms raising outside equity.

“Women may have chosen to avoid external sources of equity because they did not want to share control of the firm. Alternatively, they may have been closed out of external sources of equity financing because they lacked access to funding networks,” say the authors.

More women launched their business out of their homes than men (54.5 per cent versus 34.9 per cent) and began with less intellectual property – 9.4 per cent of women had patents versus 14.1 per cent of men and women had fewer trademarks too (17.5 per cent versus 22.2 per cent), though they were more likely to have copyrights (13.2 per cent versus 11.7 per cent).

The report’s authors found that many of the differences persisted into the fourth year of operation. About one-third of women were still running their companies as sole proprietors or partnerships compared to fewer than a fifth of men. Women also had 40 per cent fewer assets by year four – $160,887 versus $225,388 for men. Women-owned tech firms had less than half the revenue and profits were 40 per cent lower in year four too.

On the positive side, patents are fairly level by year four: 16.2 per cent of women-owned firms had them, compared to 17.9 per cent of men-owned firms. And women had more copyrights and trademarks: 15.2 per cent and 25.2 per cent for women contrasted with 10.5 per cent and 23.5 per cent for men.

Still, the report’s overall conclusions suggest women face considerable challenges as technology entrepreneurs.

“These findings suggest that, over time, women-owned high-tech firms were able to make progress in terms of developing intellectual property, which can be an advantage competitively and in raising substantial amounts of capital to sustain their firms.

“Nevertheless, women-owned firms continued to lag men-owned firms in performance measures such as revenues, profits, assets and employment and they remained unwilling or unable to develop external sources of equity capital that could be used to fund further innovations, employment, or growth.”

Kathryn Darcy, former director of technology industry group ICT Ireland, says many of the points in the report ring true. The lack of family-friendly work policies do conspire to keep women from networking events, for example – she notes that when Ibec moved events to the morning rather than after work, the number of female attendees increased.

“As to whether women find it more difficult to find funding and management experience, or whether they choose other alternatives – isn’t that the million dollar question? I think a lot of women remain the primary childminder in the family and that many women who do start technology companies choose ‘next wave’ areas like web-based businesses where it is easier to work from home, but the companies remain smaller,” she says. Also, she notes, many of the women running technology companies are not the founders but come in from a more circuitous route to be chief executive.

“But I do think the more modest performance of women-run companies is not because they’re any worse than men at doing it, but it’s because we have fewer of them doing engineering and maths – and most of the larger technology companies in Ireland that perform well quickly are set up by men from engineering backgrounds.”

The report can be downloaded at http://tinyurl.com/mvf3v5

Start-ups: how women compare to men

Women started their firms with smaller amounts of capital and relied more heavily on internal rather than external sources of equity. 

After four years of operation, women-owned firms were still more likely to be organised as sole proprietorships or partnerships and less likely to be organised as corporations or limited liability companies. 

Almost half of women-owned firms were still home-based businesses by year four, compared to less than one-third of men-owned firms. 

Women-owned firms were less likely to have some type of intellectual property in the form of patents or trademarks at the start. 

For those firms that had intellectual property, women-owned firms had fewer patents, copyrights, and trademarks on average than men- owned firms. 

But by year four, the gap closes: women and men have roughly as many patents, but a higher percentage of women have trademarks and copyrights.

Source: www.kauffman.org