Diversity and inclusion in
scientific entrepreneurship
Your guide to inclusive and diverse startup support
General challenges and obstacles for women startup entrepreneurs
Entrepreneurship is a male-dominated endeavour. Among the challenges entrepreneurs face when launching and maintaining their businesses, some barriers are in many cases more significant for female entrepreneurs. The challenges they face have been found to span the following:
- Less support of women’s entrepreneurship is rooted in culture and society. Women’s entrepreneurship is in general perceived with a lower level of legitimacy due to the fact that historically entrepreneurship has been constructed as a masculine phenomenon. This perception affects the image of companies owned by women and represents an obstacle to access critical resources that might rather be attributed to male entrepreneurs.
- Lack of trust in having the entrepreneurship skills it takes to succeed. In comparison to men, women are less likely to attribute themselves the skills, knowledge and experience to start a venture. Moreover, it is more difficult for them to acquire entrepreneurship skills, due to perceived barriers to accessing relevant training.
- Less effective and smaller entrepreneurial networks. Women are less likely than men to have interacted with individuals controlling critical resources or having higher social and economic power, which is due to prior work experience and socio-cultural norms. However, lower quality networks can prevent the development and growth of businesses. (The inconvenience of networking hours for women, another aspect in this context, will be mentioned here as well)
- Obstacles to getting access to finance. One of the problems that emerge when looking at the data concerning investment ratios in women-led ventures is that only 7% of all accounted investments go to women entrepreneurs, 2.7% of companies founded with venture capital investments have women as CEOs, 86% of venture-founded businesses have zero women in management positions. The disparity between investments that go to all-male teams is 6 times bigger than women-led ventures [sources].
A range of factors accumulated to create the obstacles that women face in obtaining respect, building deep networks, and accessing capital, talent, and customers can be noted, such as:
- Potential investors implicit gender bias. In Dr Dana Kanze (assistant professor of organisational behaviour at London Business School) TED talk (October 2017), titled “The real reason female entrepreneurs get less funding”, based on an analysis of all the videos of both the pitches and the Q&A sessions from TechCrunch, she argued that this bias is presented in the questioning while pitching to potential investors. While analysing her source, she spotted that questions aimed at male entrepreneurs were focused on the ways and potential of the new venture to maximise profit and returns, while female counterparts questioning was aimed at explaining what things could potentially go wrong and how could that be prevented (67% of questions posed to males were promotion-focused, while 66% of questions posed to female entrepreneurs were prevention-focused). Promotion-focused questions give an advantage on the basis that the answers could further reinforce the association with favourable outcomes, while prevention-focused questions are associated with the domain of potential losses.
- Bias in the startup ecosystem. Albeit sometimes unconsciously, women’s business ideas are seen as with less potential than their male counterparts are. Tools to identify and address unconscious bias are not easily accessible in ecosystems and that leads to a big portion of them going unchecked. This in turn leads women away from contributing in networking events and marginalises their role while discussing topics of interest for ventures and projects.
- Inconvenient networking hours. The emancipation of women has still not solved the problem that the role of children-carers is delegated to them. Considering they take that role, the hours in which networking usually takes place is of great inconvenience. For women that do attend networking events, those events often seem as male-dominated, because many of their female coworkers are absent due to the fact mentioned above. This drives these women to become self-conscious and eventually grow detached, which prevents them in their effort to build deep networks. Those deep networks are crucial when it comes to fundraising and future cooperation opportunities.
- Leadership characteristics: female vs muscular. While assertiveness, pragmatism, space-domination and determination are often categorised as male leadership characteristics, females are characterised as empathic, patient, generous and balanced. The leadership skills needed in workspaces usually fall in the male category. When female entrepreneurs or workers display preconceived male characteristics, they get branded as too ambitious or displaced. This trend leads them away from striving to high positions in a workplace and disarms them before the “fight” even begins.
- Children factor. Women in the childbearing phase of life, or women with children (especially in one-parent households) are not incentivised to take up entrepreneurial roles and leading positions, they usually enrol in stable corporate environments because of financial security. This, however, makes them more dependent on the long run as well as further distorts the landscape of entrepreneurial ecosystems.
Academic entrepreneurship among women: Barriers to overcome
Concerning academic entrepreneurship, there is evidence that rates are higher in disciplines/fields with a lower representation of female academics. It is a path mostly followed by senior academics with wide-ranging networks and experience of commercialisation, and an overwhelmingly large proportion of those academics are male. [Abreu] What are the factors behind these circumstances and which barriers do women researchers face in this area?
- Professional challenges. Women researchers establish university spinoffs or register patents more infrequently than their male counterparts. According to a literature review relating to women engaged in entrepreneurship, academic science, and commercialisation activities, biases within society about the ability of women to succeed within the STEM fields are reflected through the hierarchy within universities. The bias starts operating at the hiring stage, influencing for example applicant rating, salary and mentoring offers. Women also spend more time than men teaching and conducting services, whereas men spend more time on their research and related consulting opportunities. This in turn provides them better access to resources and networks important to commercially-oriented activities. Women engage with industry less than men, while patenting activity is positively correlated with industry engagement. This interrelationship could help explain why academic entrepreneurship levels among women in academia are also relatively low.
- Broader tensions between academic responsibilities and commercial opportunities within institutions. Commercially-oriented behaviour (patenting) is not required for tenure and promotion in academia, but so is publishing. Neglecting publications to engage in commercial work presents a risk for men and women researchers alike. It was found that women engage in commercially-oriented behaviour when they can fully separate themselves from their day-to-day academic responsibilities (sabbatical, academic leave, departure from academia). Another interesting finding is that researchers become involved in commercial ventures through requests from graduate students. This circumstance disadvantages women again since they generally train fewer graduate students and postdocs than men.
- Commercial opportunity structures in academia / Representation of women in specific research areas. Women researchers do not necessarily pursue research focus areas, possibly easier to translate into commercial application. This applies to engineering or life sciences where fundamental research and applied work tend to co-evolve. Conventional measures of academic entrepreneurship such as disclosures, patents, licences and spin-outs are often lower in the arts and humanities. If women are over-represented in these disciplines and/or under-represented in areas of the sciences that are more conducive to commercialisation, this might help to explain the gender gap in the more traditional measures of academic entrepreneurship. [Read more]
- Networks. Women are less likely to have diversified research networks and hold less central positions in academic collaboration networks. Networks are, however, not only critical for traditional academic responsibilities, they are also important for enabling commercially-oriented behaviour. To become involved in commercial opportunities, women rely on referrals from close network ties. Some findings show that they are also more likely to rely on the TTO for industry contacts [Read more]. Men have a higher number of and stronger network ties and attract opportunities to get involved in commercial activities based on generalised reputations. This might be due to the lower likelihood of women engaging in industry consulting activities or joining company advisory boards.
The Initiative Young Entrepreneurs in Science by the Falling Walls Foundation offers workshops to support female science-preneurs.
Towards more inclusive, gender-balanced startup entrepreneurship
There are many ways by which the position of women could be improved in the entrepreneurial environment, such as:
- Strategic guidance. The strategic guidance can take many forms from the events that are focused on collaboration between individuals with similar roles in an effort to gain insight and address knowledge gaps specific to various stages of startup creation; over functional advisory boards; to mentorships that focus on dealing with overlapping issues which women may experience.
- Investment. Early investment is sometimes all that is needed for a startup to get off the ground. Experiences from entrepreneurial women suggest that, in opposition to men, for the investors to agree on investing funds in female-led startups, there usually should be a final product in place. Their male counterparts have a higher chance to get those funds with no more than an MVP. Sponsorship is another component that could empower female entrepreneurs. In particular, investors can sponsor women-led startups to get a place in established coworking spaces. Strategic partnerships can play an invaluable role in getting female startups traction with potential customers, thus reinforcing the trust building characteristics between women-led startups and the wider community. IFundWomen Inc., with the mission to close the funding gap for women-owned businesses, can be cited among the initiatives acting in this direction. It provides access to capital through an online fundraising experience, access to small business grants from corporate partners as well as expert business coaching to women founders [Read more].
- Quality recruitment. The difficulty in recruiting and retaining quality co-founders and team members is particularly hard for women when one considers unconscious bias currently present in the entrepreneurship world. Additional education and empowerment should overcome this.
- Educating investors about female founders. This can be a step in the right direction when one wants to deal with problems that entrepreneurial women endure and try to overcome. This education should be focused on creating a realistic picture, as data suggests that women are as efficient as men in the business world. Startup ecosystems should be able to provide educational material and even courses in an effort to encourage investors to approach women-led enterprises in the same way that they approach male-led ones. This will be to a mutual benefit, as investors naturally strive for better returns, while women want a chance to prove themselves and become one more success story in the wider community in the already established female-led ventures.
Online courses for female entrepreneurs
There exist a number of online courses specifically designed for female entrepreneurs. Some of the examples of such training programmes are:
- 10.000 Women by Goldman Sachs – spanning all aspects of growing a business
- Risk-taking and entrepreneurship by Entrepreneur – teaching how to take better risks with advice from founders, innovators and leaders
- The Bank of America Institute for Women's Entrepreneurship at Cornell – providing women entrepreneurs with the skills, knowledge and resources to build, manage, and scale a successful business
- Women helping women to succeed on Udemy – strengthening of self-esteem as a foundation for success & business planning/skills
Which academic programmes produce the most startups by female entrepreneurs?
The list below shows the top 5 university undergraduate programmes producing most startups founded by female entrepreneurs, in the period from 2016 to mid 2020 [source]:
- Stanford University, California, US (197 companies founded/out of 1448 overall, 3.4 billion dollars raised/out of 47.8 billion dollars overall);
- University of California, Berkeley, US (156/1258 companies founded, 2.2 billion dollars/36.3 billion dollars raised);
- Harvard University, Massachusetts, US (146/988 companies founded, 4.2/41.2 billion dollars raised);
- University of Pennsylvania, Philadelphia, US (146/932 companies founded, 1.7/22.6 billion dollars raised);
- Cornell University, New York, US (117/888 companies founded, 2.2/28.6 billion dollars raised);
Only two universities that are not from the US are listed at PitchBook rankings of universities that produce the largest number of companies founded by female entrepreneurs:
- McGill University, Quebec, Canada (62/403 companies founded, 801 million dollars/10.7 billion dollars raised);
- Tel Aviv University, Tel Aviv, Israel (50/807 companies founded, 717 million dollars/16.1 billion dollars raised);
And if we look at MBA programmes, some of the European schools are also doing great at producing companies founded by females:
- INSEAD, Fontainebleau, France (61/631 companies founded, 793 million dollars/14.1 billion dollars raised);
- London Business School, London, UK (35/309 companies founded, 366 million dollars/4.7 billion dollars raised);
- The University of Oxford, Oxford, England (21/144 companies founded, 188 million dollars/1.5 billion dollars raised);
- ESADE Business School, Barcelona, Spain (13 companies founded, 20 million dollars raised);
Non-profit organisations supporting women entrepreneurship
There are many organisations that see the potential in investing, supporting, and encouraging women for success. Find below some examples of non-profit organisations that help women around the world to build up their ideas through providing resources, offering mentorship programmes, training, micro-financing, and advocacy:
European organisations:
- Women’s Business Initiative International (WBII)
- Women’s Business Centre
- Women Entrepreneurship Platform
- Impulse4women
- European Women Association
- Womenpreneur Initiative
- Global Invest Her
- Femmes chefs d’entreprises mondiales
U.S. organisations:
- National Association of Women Business Owners (NAWBO)
- Center for Women & Enterprise (CWE)
- Grand Rapids Opportunities for Women (GROW)
- Association of Women’s Business Centres (AWBC)
- Women’s Business Development Centre (WBDC)
- Women’s Global Empowerment Fund
- Catalyst
- Forum for Women Entrepreneurs (FWE)
Youth entrepreneurship
Considering impediments such as underdeveloped educational systems and the resultant skill gap, cultural barriers, and poorly designed policies, young people consistently face higher rates of unemployment and underemployment than the populace as a whole. If one strives to facilitate sustainable economic growth and output, one should be focused on fostering the entrepreneurial mentality in the youth and thus make a long-lasting impact on the future.
Some key features to be aware of when considering joining entrepreneurship programmes focused on youth:
- Education and training. For the overwhelming majority of future entrepreneurs, knowledge of basic administrative skills, management, legal procedures and business model development is of great importance. Thus, various internships, vocational training programmes, specialisation programmes are useful and sometimes even present themselves as a necessity.
- Applied skills. Building the practical knowledge upon the theoretical one is one more step on the road to a successful venture project. Programmes that put knowledge and skills accumulated through education to practical use in simulated business environments can test and encourage future entrepreneurs to try different approaches and develop disruptive ways to develop their business models, while taking risks in a safe environment. Entrepreneurial competitions have proven to be a good option for grooming the next generation of business owners and entrepreneurs.
- Mentorship. Mentorship programmes are viable options for those young entrepreneurs who have already developed the basic skill-set needed to run a business. Those programmes tend to work as some kind of specialisation as mentors have knowledge in a specific area of the industry. Mentors, while providing their “students” with their experience on the topic, can also steer them toward other sources from which one can further explore various opportunities for improvement. Mentors are also useful in linking younger entrepreneurs with others who partake in the specific industry, thus creating a network that is always useful.
- Networking. Networking encouragement is also a great way to support young entrepreneurs. Taking part in networking activities facilitates better interconnectedness among individuals and thus develops healthy relations between them. Those relationships could potentially mean a lot in the process of sustainable firm development and future business opportunities, even making a viable ecosystem of local entrepreneurs.
Minorities in startup entrepreneurship
It is relatively easy to see and acknowledge the scale of underrepresentation of women in startup entrepreneurship. However, when it comes to minorities, the situation can be a bit trickier, as their presence in the overall population of the West varies from one country to another and there are various minority groups that are incorporated in the structure of the wider minority landscape. Data suggests that there is certainly a great underrepresentation of minorities in the startup entrepreneurship community. CB Insights states that 87% of venture capital-backed founders are white and 83% of the founding teams for these were all white. In addition during the first half of 2013, minority entrepreneurs made up just 8.5% of the people pitching their businesses to angel investors [Source].
From the information stated above, one can clearly see that, as with female-led ventures, minority-led enterprises could present the untapped potential for further economic growth and development, as well as innovation potential in the tech industry, which is considered the bread and butter of startup entrepreneurship.
There are many obstacles, objective and subjective, which can explain that scale of underrepresentation among minorities.
- Low-income primary households. An overwhelming percentage of minorities are close descendants (second or third generation) of immigrant families that moved westwards for varying reasons (security, stability, higher living standards) and an extremely high percentage of them were blue-collar workers. When one considers that the initial phase of fundraising is often dependent on the amount of money family and friends can provide, one can easily spot the first barrier minorities face in their new venture project development. For example, Jeff Bezos’s first “investors” for Amazon were his parents.
- Media representation of an entrepreneur. Rashmi Menon, entrepreneur in residence at the University of Michigan’s Ross School of Business, states that the image which the media promotes when it comes to entrepreneurs themselves is that of white, highly educated male, often with an Ivy League degree. As minorities cannot link their identity with the media-created entrepreneur identity, they often develop an inferiority complex and are limited on a subjective level, which does not correspond to the potential reality but corresponds with the media created one.
- Venture capital conservatism. Venture Capital firms and organisations have a “safe” investment path as their primary pool for finding new investment opportunities are well-established universities. Minorities, due to the objective factors being descendants of immigrants, or being immigrants themselves, are dramatically underrepresented in those communities. There are some of them in those kinds of “networks”, but the number of them is marginal at best. Basic logic suggests that if the group is marginal in a category from which another category derives, the marginal status of the group will be even greater in the newly derived category. Minorities are thus placed on the lower level of the hierarchy of primary VC investing choices. When minorities get funding from VC organisations, money allocated to those startups gets invested in tranches, unlike when VC invest in white-led startups [Read more].
As the minorities present the untapped potential in the startup entrepreneurship community, the upscale of improving and promoting their ventures could be of great importance to the private sector as well as for governments. Thus there should be an individual effort as well as a systemic one for the empowerment of minority-led ventures.
The systemic approach could be diverse and broad but the main point is the reform of the school system which would be more inclusive for marginalised groups, especially in higher education, so the knowledge transfer and university networking could be more easily available to minority students.
The main problem in the private sector is the conservatism of VC companies which reasonably take the safe approach due to high volatility of the startup market. Funds could be allocated for marginalised groups via special investing programmes. There are some VC organisations which specialise in supporting diversity in the startup community such as Diversity VC based in London.
Here, you can access the list of 120 diversity promoting organisations which aim to empower minorities and women in the startup entrepreneurship landscape of Europe.
Towards equal opportunities for startup entrepreneurship among entrepreneurs of colour
The concept of inclusive entrepreneurship states the necessity of equal opportunities for all people, regardless of their personal characteristics and background, to start and run a venture.
Governments can do their share to unlock the entrepreneurial potential among groups such as women, immigrants, youth, seniors, the unemployed and people with disabilities. This is set out in the policy briefs on youth entrepreneurship, senior entrepreneurship, social entrepreneurship, entrepreneurship by the disabled, etc., published by the OECD and the European Commission [source].
Entrepreneurship centres are a privileged place to support disadvantaged minorities on their entrepreneurial journey, thus ensuring such centres are diverse and inclusive is a desirable goal. Best practices of how this can be achieved to help entrepreneurs of colour are described in a playbook published by the International Business Innovation Association. Some of the applicable practices are shared here:
- Create communities and networks that encourage connections to access talent and funding. Entrepreneurs of colour have a disadvantage in accessing funds and resources. Moreover, they often do not have the right connections, whereas networks in which founders are connected foster entrepreneurial success.
- Help startups secure government funding and/or leverage government resources. Provide established businesses with training development and strategic planning to help them improve operations and key connections.
- Create funds specifically designed for entrepreneurs in the disadvantaged group. The venture development organisation JumpStart Inc., for example, combines the principles of (private) venture capital and (non-profit) economic development to help entrepreneurs start and grow companies. Moreover, they provide businesses with technical assistance to problem-solving. [Source]
- Advocate for and facilitate customer connections and relationships. Helping entrepreneurs understand their markets and develop customer relationships can be crucial for success and in some cases, the entrepreneurs may not know the markets even exist. To address this, Entrepreneurship Centres could create appropriate measures for drawing attention accordingly and encouraging critical relationship building.
