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Women Entrepreneurs Are Trapped Within Glass Walls

Women who could be high-growth entrepreneurs make up our most crucial source of untapped talent. It's time to start tapping on those glass walls.
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This much is known: The next round of economic recovery and growth in the U.S. will be led by new companies. The statistical evidence on that point is clear. While big, established firms employ the most people, it's the high-growth startups -- the new firms on their way to becoming big -- that create the lion's share of new jobs, and become the anchors for new industries. So it has been through every wave of growth in the country's history, from the days of Thomas Edison and Henry Ford to the IT boom of the late twentieth century.

Now here is the lesser known fact: If we want a real recovery, the next cohort of high-growth entrepreneurs cannot just be people with names like Thomas and Henry, or Bill and Steve. We need the women to get involved. The American growth engine can no longer afford to run on half of its cylinders.

Yes, women are starting plenty of new businesses. However if you look closely at the picture, as we have done at the Kauffman Foundation, where I work, you find a vast amount of potential left on the table. In our demographic data, the overall rate of entrepreneurial activity among women is less than 2/3 the rate for men.

And, as other sources along with Kauffman have found, womens' startups under-perform on key measures of growth. Comparatively, few of them even grow to $1 million per year in revenues. Very few build or hire on the kind of scale that can boost a region's economy, let alone show up on the national radar screen.

Part of the disparity stems from the types of companies many women start, such as local retail shops or professional service firms and consultancies. Serious growth and value creation tend to come from innovative startups in science- and technology-based industries. But this is where the gender gap becomes blindingly apparent.

Can you name one woman founder or co-founder who has taken a tech-based company from inception to true global scale? Several already-big firms, such as Oracle and Xerox, have women as CEOs. Meg Whitman joined eBay when it was growing and led it the rest of the way to the top, which is the closest example I can think of.

When you survey the technology fields where our economic future will be decided, it is hard to find women planting the seeds of the new growth companies we'll need.

In the past, there was a convenient excuse. Female engineers and scientists were scarce to begin with. Today that excuse is wearing thin, as women have made dramatic inroads into these fields. Nearly half of the undergraduates at MIT are women. It is now common to see women holding professorships at universities, or high posts in industry, as well as winning research grants, making discoveries and publishing papers.

So why, then, are we not seeing the next Intels or Genentechs founded by women? The answers do not appear to be simple. Drawing from what the best minds on the subject have learned so far, here are some clues.

• The slippage begins at the early stages of moving research and ideas from university labs into the private sector. One major study found that women faculty excel at research but lag far behind their male counterparts in patenting the results -- which of course makes them far less able to launch spinout companies based on their findings.

• And why should that be? Lack of contact with industry is cited as a big factor. While the men on the research faculty are networking with people at private firms, and serving on the scientific advisory boards of for-profit companies, the women tend to stay within the academic sphere and serve on nonprofit boards or government panels. The result: very little exposure to the connections and the commercial thinking that can help a person recognize a high-potential idea, and then bring it to market.

• Thus, instead of bumping up against a glass ceiling, today's female engineers and scientists tend to be trapped within glass walls. They can move up the ladder within a university or a big company, but the walls of isolation keep them from moving over into high-growth startup mode. One could debate whether this is their own doing or the work of exclusionary males, but the salient point is that the glass-wall effect isn't confined to our campuses. It operates out in the private sector as well.

Women who do start high-tech firms are not as likely as men to have outside equity investors or boards of directors (which can provide valuable expertise and contacts). Moreover, in tech startups that have multiple co-founders, as most do, rarely does the founding team consist of X men plus a woman or two.

Recently in TechCrunch, Aileen Lee wrote a column called "Why Women Rule the Internet." She noted that women are the primary users of the new social-networking services such as Facebook, Twitter and Tumblr, not to mention high-growth shopping sites like Zappos and Groupon. Ironically, see if you can find a woman among the co-founders of the firms mentioned. I could not.

The first step to a solution is to re-frame the problem statement. Instead of asking "Why aren't women becoming high-growth entrepreneurs?", start asking "What will it take?" Surely there is a woman in your circle who could do it. Find out what she needs to shift into growth gear. Support her however you can.

And when you do, remember we all have a huge stake in this issue. Women who could be high-growth entrepreneurs make up our most crucial source of untapped talent. It's time to start tapping on those glass walls.

I will be in London next month for the annual We Own It Summit, a conference aimed at helping women build high-growth companies worldwide. There we plan to proclaim this decade as The Decade of the Woman Entrepreneur. Given the global economic climate, it has to be.