Six global trends that show how to support female entrepreneurs

Although women make up roughly one-half of the world’s population, they only contribute to 37% of global GDP. And so encouraging more women to become entrepreneurs is not just important for making economies more fair, it could actually increase global economic development in general.

The unique motivations and aspirations of female entrepreneurs can tell us a lot about how to foster their participation in greater numbers. The Global Entrepreneurship Monitor (GEM) 2022/23 Women’s Entrepreneurship Report: Challenging Bias and Stereotypes surveyed about 175,000 people in 49 countries to find out more about this.

The results revealed six major global trends among female entrepreneurs. Examining these trends shows how to create more opportunities for budding women entrepreneurs, as well as how that could bring local, regional and even global economic benefits for all.

Women in low-income countries had the highest entrepreneurial intentions (28.2%), while those in high-income countries were least likely to want to start a business (11%). More specifically, women from two regions – Latin America and the Caribbean, and the Middle East and Africa – are leading globally in this area, with one in three women polled in these areas reporting entrepreneurial intentions.

If policymakers nurture the entrepreneurial intent of women in low-income countries and encourage their ventures, it could help kickstart the next phase of economic development in these regions.

Globally, one in four women entrepreneurs expect to see growth within five years by employing six or more people. This proportion rises in low-income countries (one in three) and North America (two in five). Women comprise the majority of innovation entrepreneurs in Togo (58.7%), Indonesia (55.3%), Romania (54.5%), Colombia (53.3%) and Iran (52%).

This suggests women are challenging common stereotypes that portray them as disadvantaged in business leadership. In fact, they are building successful, innovative businesses. Gender-specific obstacles such as societal norms, access to finance and imposter syndrome act as a glass ceiling that prevents female entrepreneurs from reaching their full potential. These barriers must be removed.

Female entrepreneurs tend to be younger, on average, than men, especially in low-income countries. Youth entrepreneurship among women is particularly strong in North America, the Middle East and Africa, as well as in low-income countries where women under the age of 34 were more likely to be involved in high-growth startups.

By fostering youth entrepreneurship through support programmes and early-stage financing that specifically targets women, policymakers can help to grow economies for everyone.

Globally, women are more likely than men to go it alone when setting up a business, particularly in Latin America and the Caribbean (44.5%) and Europe (39.3%). In fact, Slovenia has the highest global rate of female “solopreneurship”, with more than four out of five women (81.8%) in this country starting a business without a partner.

Having said that, the bulk of women solopreneurs (between 50-55%) have less than 5 employees. So, while there are more, most of them tend to stay small. Targeted attention could help these female solopreneurs to grow their businesses and employ more people, boosting the economy.

More women in middle and low-income countries exited entrepreneurship than started a business in 2022. High exit-to-entry rates for women reflect what are often more volatile economic contexts, in which establishing a stable business can be very challenging.

This could be addressed by looking into the root causes of such exits which are often specific to family and local or regional barriers. Tailor-made interventions could support female entrepreneurs to survive the troughs of the business and economic lifecycle.

Almost three in four women (72.9%) cite job scarcity as the main reason for their business startup, compared to about two-thirds of men (67.2%). Regionally, rates were highest for women in Latin America and the Caribbean (82.2%).

On one hand, this trend suggests self-employment offers livelihood opportunities and financial independence for many women when jobs are scarce. However, it’s also a somewhat worrying trend because, as evident in the graph below, female entrepreneurs rank lower compared to men on other more proactive (and thus less reactive) motivations such as building wealth.

A focus on entrepreneurial mindset-building could help with this problem, including training schemes and support for women’s entrepreneurship that is more opportunity-driven and less motivated by job scarcity.

Overall, there are multiple silver linings for female entrepreneurs, particularly the rise in high-growth and youth entrepreneurship in low-income countries. This augers well for economic growth.

However, there are still barriers to female entrepreneurship in terms of finance, skills and mindset. Overcoming these will require interventions from policymakers and other actors in the entrepreneurship ecosystem, including the creation of mentoring programmes, as well as providing targeted financing and growth support strategies to female entrepreneurs.