Of all American cities, NYC boasts the most female-owned businesses according to Breaking Through, a new report by the Center for Urban Future (CUF). By CUF’s count, the number of women-owned businesses in NYC was 413,899 in 2012, compared to 305,198 five years earlier. Today women-owned businesses comprise more than 40% of all private companies in the city.
When women succeed in business, everyone benefits. Revenues generated by female-owned firms totaled $53 billion, up 25% over 2007. These firms employed 273,000 people, 36% more than in 2007.
And they are succeeding in all different kinds of industries, from tech to construction. Innovation is on display in full force. CUF mentions Daniela Perdomo’s GoTenna, a smartphone device connecting users without cellular coverage using radio waves, or Limor Fried’s Ada Fruit, a DIY electronic manufacturer that sells kits to make virtually an electronics item (including an armored Night Wing costume). These women are the unsung Elon Musk’s of NYC.
But it is not easy for them to get the start-up funds necessary for opening a business. Venture capital firms have a long history of favoring male-owned start-ups. The U.S. Small Business Administration attributes this to “women’s lack of education in high technology, their underrepresentation among investors, or a lack of experience required by venture investors.” Venture capital firms low risk start-ups with people they are familiar with. This is understandable, but short-sighted. Many of the women seeking to launch businesses have more education and more experience than their male counterparts, but lack social capital. The SBA notes that venture capital firms that took a chance on a female-led business saw improvement in their own firm’s performance and received a positive return on their investment.
Bank loans are the preferred source for funding these new businesses. But banks earn smaller profits on smaller loans, which are exactly the kind needed. Experts interviewed by CUF said the main financing gap is for loans under $150,000. This leaves many of these women financing their business through savings, credit cards, and loans from family and friends.
A common theme throughout the Breaking Through report and other articles on gender bias is how much harder women have to work for credibility in their industry. Stereotypes abound and genuine talent is discounted as luck. Slate magazine shared a study by UC Santa Barbara researcher, Sarah Thébaud, which found that most people view entrepreneurs as “aggressive risk-takers” and don’t perceive women as fitting that role. “That stereotype is particularly damaging for women in entrepreneurship,” Thébaud said.