Over the holiday weekend, I published "Women Are Waving the Entrepreneurial Flag and Boosting Economic Growth
" on Inc.com. The post has been tweeted, re-tweeted and generated discussion and numerous comments (mostly positive) as the bottomline of the story is economic: future GDP is likely be fueled by high growth businesses started by women.* Sara Weinheimer, an angel investor and former Wall Street executive who is not content to rest on past success is one of the change-makers funding and possibly creating the high-growth businesses of the future. Sara chatted with me, providing her insights on the three questions I asked Deborah, Jeanne and Jessica for Inc.com:
: Regarding women and the appetite for entrepreneurship, what’s different now?
: A substantial number of research studies that demonstrate that diversity is highly correlated to achieving higher financial returns on metrics such as ROE, EBITDA, stock price and as a result, smart companies are taking steps to ensure they are diverse or the companies they invest in or partner with are diverse.
There is the general recognition that climbing up the corporate ladder doesn’t necessarily solve the problem since percentage of women at senior executive level, the level required to start to begin to ‘earn’ equity, is still stuck at around 5% level.
Then there is the extraordinary power of the purse. The “first-wave” women who entered the professional/executive tracks of corporations 35-40 years ago, who now have substantial checkbooks, are motivated to address imbalance by investing in female entrepreneurs.
Finally, let’s not discount the power of the ‘next-gen’ wave of female empowerment: our daughters and/or grand-daughters entering professional ranks recognize problem of gender imbalance in terms of access to money, capital (ownership) and their generation is generally less patient with slow shifts in change as they have been brought-up knowing they can do or be anything they want.
: Why are more women taking risks to start new ventures?
: There is the growing socioeconomic awareness by women that ownership brings essential rewards: independence, freedom and control amd for women who have already succeeded in other fields, they may have a higher appetite for taking risk, where the payoff is greatest (that is these women have already ‘banked’ tangible resources, ie., savings, and amassed important intangible resources, i.e., confidence and a more robust business network, which they can put to work in new ways).
: Is this enthusiasm for entrepreneurship a temporary fad or something more?
: The ‘enthusiasm’ for entrepreneurship may be primarily a function of the cost curve. The cost curve has come down dramatically over the last decade and a half, creating lower barriers to entry, encouraging larger numbers to aspire to become founders, and feeding the ‘virtuous’ circle for entrepreneurs. The current macro environment of excess liquidity, lots of capital chasing deals, has accelerated favorable conditions for entrepreneurs, eg, who gets funded, at what price, etc. Where we are exactly in the cycle of (venture) capital may be debatable but the underlying forces driving technological change remain strong and undeniable. Even when those favorable conditions change (not a question of if but when), and the pendulum swings back to more deals chasing scarce capital, entrepreneurship will continue, if perhaps at a reduced rate.
*Read the Kauffman Foundation report "Sources Of Economic Hope: Women's Entrepreneurship" if you want to debate whether or not women will be a factor in the nation's future economic health
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