Part 1: “It’s All Complicated…”
The Future is Technology! - this mantra that has been around for over a decade is fast proving to be more than just wishful thinking by bespectacled, computer geeks. Technology is revolutionizing every aspect of life; hardly is there an industry today that is not benefitting from the advancement of technology. Retail, customer service, health delivery, recruitment, law, are some of the erstwhile human-led industries that are prudently deploying various technologies. Artificial intelligence, machine learning, and data science have become lucrative solutions to improve efficiency, increase productivity, optimise processes, provide recommendations, and foster collaboration
The major development in technology is happening within the startup landscape where more small and medium scale businesses are springing up across the world at an increasing rate. Yet, the digital startup ecosystem is highly gender imbalanced where women are greatly under-represented among digital entrepreneurs. For example, according to the World Economic Forum’s & SAP’s 2020 report, in 2018 Europe had six women entrepreneurs (tech and non-tech) for every 10 men – the lowest ratio among the global regions. The disparity was even greater in tech – only 5% of Europe’s tech founders were female.
The history of data shows mostly men in a leadership seat. Whereas, the latest special report on women and entrepreneurship suggests that significant work remains to be done to encourage and support women entrepreneurs and their ability to build economic security for themselves, their families, their communities, and their countries.
And that is where WaiACCELERATE comes in. This is a novel business acceleration program by Women in AI, targeting women innovators looking to start a business in the fields of AI, Machine Learning and Data Science. With a focus on promoting ethical leadership, WaiACCELERATE has designed various modules and programs aimed at increasing the number of female-led innovative startups that use AI and are committed to the attainment of the Sustainable Development Goals 2030. To learn more about WaiACCELERATE, please read the second part of this article – “The WaiACCELERATE Method!”
WOMEN ENTREPRENEURSHIP GLOBAL TRENDS & STATISTICS
In this blog post, let’s look into the current gender state of entrepreneurship and the limiting factors for women to become more active in the ecosystem. The 2019/2020 Global Entrepreneurship Monitor Report reveals that:
Total Entrepreneurial Activity: Globally, the Total Entrepreneurial Activity (TEA) rate for women is 10.2%, approximately three-quarters of that seen for men. Low-income countries show the highest rates of women’s TEA at 15.1%. Low-income countries report the smallest TEA gender gap, in which women’s TEA is over 80% of that of men. Women’s TEA rate drops to 8.1% for high-income countries with a corresponding TEA gender gap of slightly more than two-thirds that of men. The highest rates of TEA for women are found in sub-Saharan Africa (21.8%) and Latin America (17.3%). The lowest rates are found in Europe (6%) and MENA regions (9%).
The gender gap: The gender gap for entrepreneurial intentions is closest to parity in low-income countries at 86% women-to-men ratio, increasingly substantial for middle-income and high-income countries with a gap of 26%.
Intentions to start a business: The global average for women’s intentions to start a business within the next three years is 17.6%, only about four points less than for men. The highest rates of women’s entrepreneurial intentions are found among low-income countries (37.8%), followed by middle-income (21.3%) and high-income countries (12.6%). The highest rates of women’s entrepreneurial intentions were reported in MENA (36.6%). The lowest rates were reported by women in Europe (8.5%).
Industry: Globally, 53.4% of women’s TEA is in wholesale/retail trade compared to 43.5% of men’s activity. Women entrepreneurs are more likely to be present in government/health/education and social services. The largest gender gaps are in agriculture, mining, and information and communications technology (ICT), where men entrepreneurs are more than twice as likely as women to operate.
Women in ICT: Europe and North America show the most ICT participation, although women in North America make up the largest percentage, about one-half the rate of men. Women have greatest ICT presence in Croatia, Israel, Japan, Luxembourg, and Ireland (5% compared to 10%). No women entrepreneurs are reported in this sector for 10 countries and only fractional participation is observed in another 10 countries. In five countries women are at parity or have greater presence compared to men: Cyprus, Ecuador, Japan, Switzerland, and Turkey.
Business innovation: Innovation rates tend to increase with economic development for both men and women entrepreneurs, from about 20% in low- and lower–middle-income countries to 30% in high-income countries. Men more often reported than women that their businesses are innovative, by about 30% across countries. In 24 countries women are more likely than men to describe their businesses as innovative. Eighteen countries show women being more innovative or at parity with men; most notably the Russian Federation, where women entrepreneurs are 2.1 times more likely than men to offer an innovative product.
Age groups: As in past years, the highest participation rates in entrepreneurship among women are in the 25–34 and 35–44-year-old age groups, with gender parity among 18–24-year-olds in Asia and greater than parity for women aged 25–34 in sub-Saharan Africa.
Limitations: Women reported having lower confidence levels than men in their capabilities to start a business, and there is no region in which women rank higher than men. These five countries are moving to near parity: Cyprus, Israel, Kazakhstan, Saudi Arabia, and Vietnam. Overall, men are about 10% more likely to be undeterred by fear of failure than women; and, across all regions, men have a more positive response than women. Europe is at parity, but the largest gap is in the middle-income countries (9%).
Business discontinuance: The average global rate for business discontinuance is about 10% lower for women (2.9%) than for men (3.2%). Business discontinuance rates decrease as country-level income increases. The lowest discontinuance rates for women are found in Europe (1.4%). The causes of business discontinuance are attributed to a set of reasons including lack of profit, lack of finance, other job/business opportunity, retirement, sale or acquisition, personal/family reasons, government tax/ regulations, and so on. Less than half of women’s business closure reasons are directly attributed to financial reasons (45.8%), including 29.6% reporting closure due to lack of profit and 16.2% citing lack of financing.
Business Scope: Globally, 2.5% of women entrepreneurs and 5% of men entrepreneurs have more than 20 employees. Women are more likely than men to have larger businesses (20+ employees) in 10 countries: Angola, Canada, Colombia, Estonia, Iran, Latvia, Qatar, South Africa, Turkey, and Uruguay, while the employment numbers are at parity in Argentina and the United Arab Emirates (UAE).
Investments: Statistically, women entrepreneurs are not as likely to obtain financing compared to men, making them more likely to rely on credit cards as a source of business funding. This could stem from low levels of confidence among many women entrepreneurs when it comes to business performance, with worries over sales growth, number of employees and profitability chipping away at their confidence and optimism. Furthermore, the percentage of venture capital going to European all-female teams has declined from 2.6% in 2017 to 0.4% in 2019.
Where does this leave us?
These challenges cut across industries. Female innovators looking to venture into the fields of AI and machine learning are plagued with similar concerns right from the inception stage. There is ample data to support the benefits of having more women in leadership positions, benefits such as increase in productivity, improvement in financial results and a better driven and innovative workforce. It’s why it is unacceptable to have female entrepreneurs receiving a paltry 2-3 % of VC funding annually, despite fundraising being at an all-time high.
Amplifying gloomy projections by the World Economic Forum that at this pace, it could take more than 200 years to close the gender gap globally. Additionally, if we don’t find a solution to improving the gender parity, in particular in the field of AI, the fully automated world of tomorrow will be highly biased causing a great threat to humanity’s existence.
To learn more about how Women in AI bridges the gender gap in the startup ecosystem, please read “Part 2: The WaiACCELERATE Method!”