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Want to add trillions to the global economy? Back female founders

by Sarah Shearman | @shearmans | Thomson Reuters Foundation
Tuesday, 30 July 2019 09:17 GMT

ARCHIVE PHOTO A Businesswoman is silhouetted as she makes her way under the Arche de la Defense, in the financial district west of Paris, November 20, 2012.. REUTERS/Christian Hartmann

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There is a growing trend for investors to back businesses, such as those founded or lead by women, as a way of closing the gender gap, known as "gender lens" or "gender-smart" investing

By Sarah Shearman

LONDON, July 30 (Thomson Reuters Foundation) - Increasing support for female entrepreneurs could boost the global economy by trillions of dollars, according to research released on Tuesday that found women who start businesses face more challenges than men.

Helping women start their own businesses could immediately increase global economic output by as much as $5 trillion, about the size of Japan's economy, said the study, which found there are more male than female entrepreneurs in almost every country.

The study, by consulting firm Boston Consulting Group (BCG) and the Cherie Blair Foundation for Women, found more working-age men start businesses than women in every country except Vietnam, Mexico, Indonesia and the Philippines.

"It is a gap that has been there for a long time – and not just in start-ups but women's ability and access to resources to keep those businesses running and to sustain and grow those businesses," said BCG Managing Director and Partner Shalini Unnikrishnan.

"Unleashing that power" can be achieved quickly with the right government support and also deliver positive social impact, Unnikrishnan told the Thomson Reuters Foundation.

The gender gap in entrepreneurship has narrowed in half of the countries analysed, with the biggest gains made in Turkey, South Korea and Slovakia, according to the study, based on 2016 data compared to 2014 data.

In 40% of the countries analysed, including Switzerland, Uruguay and South Africa, however, the gap has widened.

Unequal access to finance is one of the key factors holding women back, with companies founded or co-founded by women averaging $935,000, less than half the $2.1 million invested in companies started by men, according to BCG analysis of 2018 data from MassChallenge, a US-based global network of accelerators.

There is a growing trend for investors to back businesses, such as those founded or lead by women, as a way of closing the gender gap, known as "gender lens" or "gender-smart" investing.

However, a lack of support networks is another challenge holding female entrepreneurship back, according to the study.

"It is not just about access to credit or training ... the importance of networks for technical knowledge, access to business resources, as well as role models and support elements, shouldn't be overlooked," said Unnikrishnan. (Reporting by Sarah Shearman @Shearmans, Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's and LGBT+ rights, human trafficking and slavery, property rights, social innovation, resilience and climate change. Visit http://news.trust.org to see more stories)

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