The rise of the female entrepreneur
Entrepreneurship plays a critical role in powering innovation and productivity, both of which are key drivers of economic growth. And at long last, female entrepreneurs are increasingly influencing a variety of sectors worldwide, overcoming an array of obstacles along the way.
As well as a societal need to improve gender equality, encouraging and supporting more women to launch businesses could bring major benefits to the global economy. Amongst other things, it would help generate the innovation required to exploit new opportunities, promote productivity, and create employment. It would also help to address some of society’s greatest challenges, such as the United Nations Sustainable Development Goals and the economic fallout created by the COVID-19 pandemic.
Boston Consulting Group estimates that if the number of women entrepreneurs matched that of men, global GDP could rise by approximately 3% to 6%, boosting the global economy by between US$2.5 trillion and US$5 trillion.1
Breaking down the barriers
Unfortunately, unequal access to education, training, and financial services are just some of the factors preventing female entrepreneurs from fulfilling their potential.2
Thankfully, this landscape is changing. Many governments are starting to recognise the positive effect on economic growth, job creation, and income growth of promoting women’s entrepreneurship and have adopted policies to do just that.
As Shehreen Quayyum, a Director at Barclays Private Bank says, the tide is slowly turning but there’s still a long way to go: “Female entrepreneurs are making an important and growing contribution to the world’s economic prosperity. While it’s important that we celebrate this, we must also continue to create more opportunities to release women’s still-relatively-untapped entrepreneurial potential.”
The raising of finance remains a common challenge for many. Studies have shown that when the same business idea was pitched to investors, with only the voice of the presenter being changed, more than two-thirds of investors preferred to invest in the pitch given by the male voice.3
These type of headwinds for female entrepreneurs often run in parallel with domestic challenges, further compounding the difficult day-to-day reality of running a business. Broadly speaking, women often set up their own businesses because it is more compatible with their ‘role’ as primary caregiver.
This is particularly striking in Africa, which has the highest percentage of female entrepreneurs in the world. To put it into context, an astonishing one out of every four women in sub-Saharan Africa has started or manages a business. In an interview with iD4D (a World Bank Group initiative), Friederike Röder, Director of ONE, an international campaigning and advocacy NGO, pointed out that many women become entrepreneurs because they have no other choice, saying that “without access to good-quality education and often with dependent children, it is harder for them to access jobs in the traditional labour market”.2
Increasing access to wealth is liberating women
Despite the historic challenges, there are some positive trends emerging which could help to unlock the spirit of enterprise among women.
Females now control a third of global wealth and female wealth holders are outpacing the growth of the wealth market overall. In the US, which is the world’s most influential economy, the change will be particularly dramatic, according to the consultant McKinsey.
By 2030, American women are expected to control much of the $30 trillion in financial assets currently possessed by the baby boomer generation. This is close to the annual GDP of the United States.4
The growing impact of female entrepreneurs
In a further sign of the modern-day progress being made, women now account for around one in three growth-oriented entrepreneurs active in the world today.5
Across industries and geographies, there has been a notable uplift in the presence of female entrepreneurs who are driven by business excellence and the goal to leave an indelible mark on the world and inspire future generations.
A rising number of women are running hedge funds and data confirms that female-led hedge funds often outperform their male-dominated counterparts.6 Female entrepreneurs are also making inroads in the world of technology, leading to a rise in tech-enabled products that target women’s specific healthcare needs – such as fertility and birth control – which has become known as femtech7.
Back in 2008, a female software engineer also developed India’s first electric scooter from scratch. The company she founded now makes electric vehicles such as e-cycles, e-trolleys, e-scooters, special-purpose vehicles for refuse management and vehicles for differently abled individuals.8 Such companies are helping to drive the electric vehicle revolution in India, with the market forecast to grow 90% this decade.9
While the world may be creating more opportunities for women, there is still much further to go if entrepreneurialism is to be truly equal. Of the 2,668 billionaires worldwide, only 327 are women and of these only 101 are self-made.10
The global economy needs female entrepreneurs to thrive by driving innovation and growth in their own unique way, across traditional sectors and new ones.
Providing support, encouragement and finance
At Barclays Private Bank, we believe the financial sector plays a vital role in providing the encouragement, support and finance women need to launch and develop their own businesses.
As Shehreen concludes, “There’s a lot to be learned from the way female entrepreneurs are shaping industries. But in order to change tomorrow’s world for the better, much more needs to be done to give them the support and opportunities to reach their full potential at an early stage. And if that happens, we are all better off for it.”
If you would like to speak to us about these themes in more detail, please don’t hesitate to contact your Private Banker.
Alternatively, if you’re not yet a client, you can get in touch.
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