Financing Female Entrepreneurs: Analysis of Characteristics that Lead to Successful Fundraising

Abstract

This study uses data from the Kauffman Firm Survey to examine and compare characteristics of male and female entrepreneurs that lead to successful fundraising in the first year of operation. This research was motivated by an observation that current research in entrepreneurship often regards female entrepreneurs as a homogenous group, and that female entrepreneurs’ characteristics are not studied at the same granular level as the broader population of entrepreneurs. The results of the present study found that female entrepreneurs exhibited characteristics very similar to those of their male counterparts, and those characteristics were comparably predictive in securing equity, personal debt, and corporate debt funding. Results further showed that firm characteristics such as firm size, whether the firm sells a product or a service, the firm’s legal status, and the location of the firm had the strongest impact on which type(s) of funding the firm was able to acquire in the first year. Importantly, the firm characteristics that negatively impacted all entrepreneurs’ ability to secure funding were also representative of the kinds of firms that female entrepreneurs most commonly chose to launch. These findings suggest that female entrepreneurs experience difficulties in securing funding due to their choices in firm characteristics rather than gender discrimination.