If you regularly read the HubSpot Sales Blog, you know we talk a lot about entrepreneurship.
We have covered everything from how to start a business to the ins and outs of social entrepreneurship and everything in between. One topic we haven't discussed is who is starting and running successful businesses.
When you think of a successful entrepreneur, what image comes to mind? Do you think of an individual of a certain age, gender, or ethnic background? If so, that could be due to implicit bias because research supports the significance of diversity in entrepreneurship.
According to research commissioned by American Express, four million new jobs and $981 billion in revenue could be added to the U.S. economy if the average revenue of women of color-owned businesses matched those of white women-owned businesses. Additionally, this study showed women-owned businesses are a source of new jobs in U.S. cities that experienced slow job growth between 2014 and 2019.
When people from diverse backgrounds and perspectives are building successful businesses to solve relevant problems there are significant economic advantages. For instance, in the Minneapolis metro alone, increasing the number of businesses owned by people of color could add as many as 87,000 new jobs to the region.
But is there a level playing field for people of all backgrounds who want to launch and run their own business? Let’s see what the research has to say.
In addition to the personal traits of the entrepreneur that contribute to success, there are also a number of external factors that contribute to one’s likelihood to create and run a profitable business. These factors include economic resources, distribution of wealth, and environmental factors that are not equally accessible to everyone who has a desire to pursue entrepreneurship.
For example, it’s no secret that small business owners have been severely impacted by the economic fallout from COVID-19. But The Small Business Administration has reported that minority business owners may not have received critical funding from the Paycheck Protection Program, which would negatively impact one’s ability to keep their business afloat regardless of their work ethic or other personal traits.
Want to educate yourself to better support and/or build more diverse businesses? Check out these stats to better understand the gaps that can impact success between different demographic groups of entrepreneurs.
Stats About Diversity In Entrepreneurship
Gender Diversity Stats
1. In 2019, female-founded companies received 2.7% of the total capital invested in venture-backed businesses in the U.S.
2. During the first quarter of 2020, 4.3% of VC deals went to companies founded by women, compared to 7.1% during the first quarter of 2019.
3. In 2019, female-founded companies received 2.7% of the total capital invested in venture-backed businesses in the U.S.
4. In the first quarter of 2020, 4.3% of VC deals went to companies founded by women, compared to 7.1% during the first quarter of 2019.
5. On average, women-owned companies employ 0.7 people compared to an average of 3.8 employees for all companies.
6. For every dollar generated by a privately held company, women-owned companies generated 30 cents in 2019.
7. Half of all women-owned businesses are in the following three categories: personal services, healthcare, and social assistance, and professional and technical services.
8. The growth rate in the number of women-owned firms between 2014 and 2019 increased the most for these five industries: utilities (160%), construction (68%), information (36%), other services (29%), and arts, entertainment, and recreation (23%).
9. As of 2019, women-owned businesses in the U.S. employed 9.4 million workers and generated $1.9 trillion in revenue.
10. Between 2014 and 2019, the greatest growth in women-owned businesses happened at the two extremes of the spectrum: low-revenue companies and million-dollar-plus businesses.
11. According to The Secret Life of Entrepreneurs Study commissioned by NPR’s “How I Built This”, 41% of women entrepreneurs report experiencing gender bias, and 33% of women of color entrepreneurs report experiencing racial bias.
12. During the first quarter of 2020, 4.3% of VC deals went to companies founded by women, compared to 7.1% during the first quarter of 2019.
13. $20 billion in global capital was invested in female-run businesses in 2019.
14. Male founders represent 6.5% of equity founders, yet men own 64% of all equity.
15. For every dollar of equity owned by male employees, female employees own 49 cents of equity.
16. Women founders own 48 cents in equity for every dollar men own.
17. 53% of women of color founders and 41% of white women founders report experiencing gender bias.
18. Over one-third of women entrepreneurs report improvements in their mental health since founding their businesses.
19. In 2019, the number of women-owned businesses in the U.S. increased by 21%, while the total number of businesses increased by only 9%.
20. The annual growth rate for women-owned businesses in 2019 was 5%, while the average growth rate for U.S.-based businesses was only 1.7%.
21. Between 2014 and 2019, the number of women-owned businesses grew 3.9% annually, and the number of businesses owned by women of color grew 7% annually.
22. According to Round Capital, companies with a female founder performed 63% better than companies with all-male founding teams.
23. In Australia, people with a disability have a higher rate of entrepreneurship at 13% than people without a disability (10%).
24. As of 2019, in the U.S. employed people with a disability were more likely to be self-employed (10%) than employed people without a disability (5.9%).
Age Diversity Stats
25. 60% of entrepreneurs between the ages of 18-25 report age bias as a significant barrier.
26. The average age of a successful startup founder is 45.
27. Nearly 25% of female founders over the age of 54 report experiencing age bias.
28. Of the companies Round Capital invested in during their 10-year study, founding teams with an average age under 25 performed 30% better than average.
Racial/Ethnic Diversity Stats
29. Women of color founders receive less than 1% of venture capital funds in the U.S. each year.
30. As of 2019, Latinx women-owned businesses accounted for 18% of all women-owned businesses in the U.S.
31. Cities with more diverse populations are more likely to generate innovation.
32. The more diversity a region has, the higher the volume of entrepreneurship.
34. Although Latinx women make up 17.6% of the U.S. population, only 2% of startups founded in 2017 were led by Latinx women.
35. Entrepreneurs of color are 30% more likely to experience a lack of capital and relevant networks.
36. As of 2019, Asian American women-owned businesses outearned all other women-owned businesses, with average revenue of $191,200 compared to the total woman-owned business average of $142,900.
37. From 2014 to 2019, the number of businesses owned by women of color in the U.S. grew by 43%. Here’s a breakdown by ethnic group:
- Number of Black women-owned businesses grew by 50%
- Number of Native Hawaiian/Pacific Islander women-owned businesses grew by 41%
- Number of Latinx women-owned businesses grew by 40%
- Number of Asian-American women-owned businesses grew by 37%
- Number of Native American/Alaska Native women-owned businesses grew by 26%
38. As of 2019, women of color account for 50% of all women-owned businesses.
39. Black/African American women-owned businesses represented the highest rate of growth compared to any group in the number of companies founded between 2014 and 2019.
As more information emerges about diversity in entrepreneurship we will add to this list. Which of these statistics stick out to you the most?