what makes an entrepreneur, and why so few women (and minorities)? vivek wadhwa, tedx bay area...

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/


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


3/23

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


6/23

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


8/23

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


9/23

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.


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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?


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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


12/23

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


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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


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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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Main sources of funding

Diff b t d


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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

what makes an entrepreneur, and why so few women (and minorities)? vivek wadhwa, tedx bay area...

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