8/8/2019 What makes an entrepreneur, and why so few women (and minorities)? Vivek Wadhwa, TedX Bay Area December 2010
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What makes and entrepreneur, and why
so few women (and minorities)?
2010 Vivek Wadhwa
Vivek WadhwaVisiting Scholar, UC-BerkeleyDirector of Research, Center for Entrepreneurship and ResearchCommercialization and Exec in Residence, Pratt School ofEngineering, Duke University
Senior Research Associate, Harvard Law SchoolColumnist, BusinessWeek, TechCrunch
www.Wadhwa.com Twitter: VWadhwa
http://www.wadhwa.com/http://www.wadhwa.com/8/8/2019 What makes an entrepreneur, and why so few women (and minorities)? Vivek Wadhwa, TedX Bay Area December 2010
2/23
Entrepreneurship Research
Based on 3 projects:
Survey of 652 CEOs/CTOs of 502 tech companies
Interviews with 144 Immigrant tech company founders
Detailed survey of 549+ founders of companies in 12 high-growthindustries
Common Myths:
Tech entrepreneurs: unmarried, male, rich, college-dropouts obsessed
with making money
Ivy-league education provides huge advantage
Venture Capital prerequisite for economic growth
2010Vivek Wadhwa
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Tech entrepreneurs: Not young
2010 Vivek Wadhwa
2.5%
10.5%
34.1%
37.5%
14.2%
1.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
60 - 69
50 - 59
40 - 49
30 - 39
20 - 29
0 - 19
Percentage of all Respondents
FounderAge
US Tech Founder Age at the Time of Startup Establishment
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Married with children
24.9%
69.9%
4.5%
0.7%
Single Married Divorced/Separated Widowed
40.3%
16.4%
28.0%
11.0%
3.4%
0.9%
0 1 2 3 4 5
Average Number of Children
2010 Vivek Wadhwa
Marital Status
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Entrepreneurs: Not from rich families
0.7%
36.9%
5.4%
21.8%
34.6%
0.6%
LOWER-LOWER CLASS LOWER-MIDDLE CLASS LOWER-UPPER CLASS UPPER-LOWER CLASS UPPER-MIDDLE CLASS UPPER-UPPER CLASS
2010 Vivek Wadhwa
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Tech entrepreneurs: Not college dropouts
High School
Diploma or
Lower, 5.9%
Bachelors,
44.0%
Masters,
31.0%
PhD,
10.0%
Associates
Degree,
Certification,
Some
College,
2.3%
MD,
3.8%JD,
3.5%
Highest Completed Degree
2010 Vivek Wadhwa
Applied
Sciences*,
9.0%
Engineering
27.6%
Mathematics
1.5%Computer
Science,
Information
Technology
9.0%
Business,
Accounting,
Finance,33.4%
Healthcare,
5.5%
Arts,
Humanities
and Social
Sciences,
2.8%
Economics,
1.8%
Law,
4.2%
Other,
4.6%
Fields of Highest Degree
STEM Fields 46.5%
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Even better educated than their parents
19.7%
24.5%
5.2%
27.8%
10.0%
5.6% 5.8% 5.8%
Father
19.3%
36.8%
10.0%
22.7%
8.3%
0.2%
1.0%
0.2%
Mother
2010 Vivek Wadhwa
8/8/2019 What makes an entrepreneur, and why so few women (and minorities)? Vivek Wadhwa, TedX Bay Area December 2010
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Pretty smart in high school,
but drank too much in college
51.2%
23.2%
20.1%
3.7%1.4% 0.4%
Top 10% Top 30% Average Bottom
30%
Bottom
10%
N/A
High School
36.5%
29.9%
26.1%
3.1%1.6%
2.9%
Top 10% Top 30% Average Bottom
30%
Bottom
10%
N/A
University
2010 Vivek Wadhwa
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Education countsnot necessarily ivy-league
0
10
20
30
40
50
$0
$1
$2
$3
$4
$5
$6
$7
$8
All Startups Startups w/ an Ivy-Leauge Founder Startups w/ a High School Founder
Average2005TotalEmployees
Average2005Sales
(MillionsofUSD)
Average 2005 Sales Average 2005 Employment
2010 Vivek Wadhwa
What makes the difference is higher education: not the degree or school.
8/8/2019 What makes an entrepreneur, and why so few women (and minorities)? Vivek Wadhwa, TedX Bay Area December 2010
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Entrepreneurs: Highly experienced
24.6%
27.6%
23.3%
14.3%
10.3%
0-5 years 6-10 years 11-15 years 16-20 years 20+ years
Approximately how many years did you work for another
employer prior to starting your first business?
8/8/2019 What makes an entrepreneur, and why so few women (and minorities)? Vivek Wadhwa, TedX Bay Area December 2010
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Entrepreneurship wasnt necessarily in the genes
or pre-planned
Which Members of Your FamilyStarted a Business Before You Did?
51.9%
38.8%
6.9%
15.2%
I was the first in
my immediate
family to start a
business
Father Mother Siblings
How interested were you in becoming anentrepreneur while you were completing
your higher education?
2010 Vivek Wadhwa
7.2%6.1%
34.7%
27.5%
24.5%
Not at all
interested
Not very
interested
Didn't think
about it
Somewhat
interested
Extremely
interested
8/8/2019 What makes an entrepreneur, and why so few women (and minorities)? Vivek Wadhwa, TedX Bay Area December 2010
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Reasons for becoming an entrepreneur
2010 Vivek Wadhwa
1.2
2.9
3.2
1.7
3.1
1.4
3.0
3.1
2.1
Couldn't find traditional employment
Working for someone else didn't appeal
Wanted to build wealth
Co-founder encouraged to start company
Wanted to capitalize on a business idea
Developed a technology in lab
Startup company culture appealing
Always wanted own company
Entepreneurial friend or family role model
1= Not important factor, 5 = Extremely important factor
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Bootstrapping is the norm not VC
2010 Vivek Wadhwa
7.8%
17.8%
64.4%
16.9%
14.2%
12.3%
14.6%
7.3%
Other
Friends and family
Personal savings
Business partner(s)
Venture capital
Private/angel investor(s)
Bank loan(s)
Corporate investment
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Success factors
2010 Vivek Wadhwa
1= Not at all important, 5 = Extremely important
1.3
1.7
2.2
2.5
3.0
3.2
3.2
3.3
3.3
3.8
4.0
4.1
4.4
Assistance provided by the state/region
University/alumni contacts/networks
Advice/assistance provided by company investors
Location
Personal/social networks
Your university education
Availability of financing/capital
Professional/business networks
Good fortune
Company's management team
Lessons you learned from your previous failures
Lessons you learned from your previous successes
Your prior industry/work experience
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Obstacles faced by entrepreneurs
1= Not at all a challenge, 5 = Extremely big challenge
2.9
2.6
2.5
2.3
2.2
2.0
2.0
1.9
1.8
1.6
1.0 1.5 2.0 2.5 3.0
Amount of time and effort required
Lack of available capital/financing
Lack of prior experience in running a business
Concern about protecting company's intellectual
Concern about the consequences of failure
Lack of available mentors or advisors
Lack of industry knowledge
Availability of health insurance/risk of losing
Family or financial pressures to keep a traditional,
Difficulty of co-founder(s) recruitment
1= Not at all a challenge, 2=Small challenge, 3=Somewhat of a challenge, 4= Big Challenge, 5=Extremely big challenge
8/8/2019 What makes an entrepreneur, and why so few women (and minorities)? Vivek Wadhwa, TedX Bay Area December 2010
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What stops others from becoming
entrepreneurs?
4.3
4.0
3.8
3.6
3.4
3.3
3.2
2.7
2.5
1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
Willingness or lack of ability to take risks
Amount of time and effort required
Difficulties in raising capital/financing
Lack of business management skills
Knowledge about the industry and markets
Knowledge about how to start a business
Family or financial pressures to keep a traditional,
steady job
Availability of health insurance/risk of losing existing
coverage
Difficulties in recruiting co-founders
8/8/2019 What makes an entrepreneur, and why so few women (and minorities)? Vivek Wadhwa, TedX Bay Area December 2010
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Difference between men and women
35.00
37.00
39.00
41.00
FEMALE MALE
Age
Estimated Age When Founding
Current Company
Estimated Age When
Founding Current
Company
.0%
20.0%
40.0%
60.0%
80.0%
Divorced Married Single Widowed
Marital Status When Starting
Business
FEMALE
MALE
.0%
50.0%
0 1 2 3 4 5
Number of Children
Number of Children Living in
Household When Starting
Business
FEMALE
MALE
.0%
20.0%
40.0%
60.0%
Female Male
Percent Receiving Graduate
Education
No Graduate
Education
Graduate Education
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Difference between men and women:
Motivations for starting business
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Difference between men and women:
Main sources of funding
Diff b t d
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Difference between men and women:
Perceived challenges
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Key differences
Women were much more likely than men to haveobtained funding from a business partner
Both sexes had same reasons for becomingentrepreneurs
Both sexes had the same the life circumstances
Women were more often motivated to becomeentrepreneurs when a cofounder recruited them.
Both sexes faced same obstaclestime and effort Women faced family or financial pressure to
maintain a steady, traditional job.
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But women
Start only 3% of tech firms and 1% of high-tech firms (Kauffman)
Are almost absent in high-level tech positions
Contribute to fewer than 5% of all IT patents and 1.2% ofopen-source software
While Proportion of women-led companies receiving venturecapital has dropped dramatically over the past few years
And things are even worse for minorities: Blacks and Hispanicsconstituted only 1.5% and 4.7% of the Valleys tech
population well below national averages of 7.1% and 5.3%.
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Despite the fact that:
Women-led companies more capital-efficient, and venture-backed
companies run by a woman have 12% higher revenues, than others
Organizations most inclusive of women in top management achieve 35%
higher ROE and 34% better total return to shareholders
Girls now match boys in mathematical achievement; 140 women enroll inhigher education for every 100 men; and women earn more than 50 %of
all bachelors and masters degrees and nearly 50% of all doctorates
Credit: Cindy Padnos, Illuminate Ventures
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