More and more women around the world are taking on the challenge of setting up their own business. But where do women stand the best chance of success as entrepreneurs?
Top Cities In The World For Female Entrepreneurs
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According to the Global Startup Ecosystem ranking report produced by Compass, Chicago is the world’s most successful city for women to start up a business, with 30% of startups being founded by women. As might be expected, the report found that the majority of the cities ranked in the Top 20 were located in North America and Europe. Exceptions to this were Singapore, Kuala Lumpur, Sydney, Sao Paolo and Bangalore. Unfortunately, data was not available for businesses in China, Japan, Taiwan or South Korea. (1)
Global Startup for Women Top 20:
3. San Francisco
4. Los Angeles
7. Tel Aviv
10. Kuala Lumpur
13. New York
18. Sao Paolo
In contrast to the Compass report which focuses solely on the percentage of startups owned by women, Dell’s Women Entrepreneur Cities Index analyses which cities give women founders the best chance to thrive. Five areas are assessed for each city: markets, talent, capital, culture and technology (2)
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According to Dell’s 2018 report, New York is the best place for female entrepreneurs. The overall top 10 ranking is:
1. New York City
2. Bay Area
5. Los Angeles
8. Washington DC
Even though it hits the top spot in Dell’s assessment, New York scored just 62.9 out of 100, indicating there is still plenty of room for improvement. One of the challenges which female founders face is securing finance. Venture capital awarded to women-led start-up is significantly below that made available to businesses with male founders. For example, a study by Tech Crunch found that in the US in 2018 just 9% of venture dollars were invested in businesses with at least one female founder. Startups with only female founders fared even worse, receiving just 3% of venture investment. According to Forbes, the situation in the UK is much the same, with just 9 of startup funding being awarded to female founders, and just 17% of founders being women. (3)
The capital investment community has traditionally consisted predominantly of male partners, and this appears to be mirrored in their investment choices. However, efforts are being made to increase the proportion of investment in women-led businesses, with targets of up to 25% within the next five years.
However, this may change as recent research by Boston Consulting Group and MassChallenge found that seed-funded enterprises which have a female founder or female co-founder with a man were outperforming seed-funded startups with all-male founders. The study of 1,500 businesses funded by MassChallenge revealed that despite significantly lower funding, the women-led or co-led enterprises generated more revenue over time than their all-male counterparts. Startups with a female founder generated 78 cents per dollar of investment, while the companies with male-only founders generated just 31 cents per dollar of funding. Research by First Round Capital group showed a similar picture in the UK, where startups with at least one female founder outperformed male-only enterprises by 63%.
One positive, albeit gradual change is the growing number of women reaching senior positions in venture capital firms. Other aspects which could enhance the environment for women in startups include better mentoring and support networks, easier access to affordable quality childcare and general shifts in expectations and ambitions.