Why Aren't There More Female-Owned Tech Businesses?

Woman in tech

Despite making up nearly half of the workforce, as of 2018 women held less than 20% of tech positions in the U.S. Though female-founded companies are among this country’s biggest entrepreneurial success stories, raking in millions (or sometimes even billions), there are still numerous industry barriers that prevent women from launching and leading companies at the same rate as men.

In 2017, only 16% of venture capital funding in the U.S. went to startups led by at least one woman, while a mere 2.5% went to companies with all-female founders. On the flip side, only 9% of venture capitalists investing in tech startups are women. Although the odds aren’t in their favor, women still founded 12.3 million companies in 2017 — and continue to create more and more every day.

The tech industry, however, is particularly hostile toward women; a problem that has developed over time and is driven by ongoing sexism, stereotyping, and the industry’s particularly segregated culture.

The History of Sexism in Tech

The interesting thing about female representation in the technology industry is that it’s a problem that has in many ways gotten worse — not better — over time.

Back before AI and Alexa and Amazon; before the technological revolution became profitable, women were actually at the forefront of the industry. The jobs they held, such as typists, were considered low status at the time. But as tech began to churn out more and more money, male executives started to push out women by developing biased workplace cultures and hiring practices.

However, the early footprints of women can still be seen. For example, the group of programmers tasked with developing the U.S. military’s first computer was more than 50% female. Additionally, Margaret Hamilton, a woman, led the team of coders that charted Apollo 11’s path to the moon.

In the 1950s, the landscape began to change, becoming increasingly male-dominated. Yet, in 1990, women still made up 35% of computing jobs in the U.S. Surprisingly, these numbers all look pretty good compared to today.

As men began to flood and overtake the industry, leadership at the top companies molded company cultures that heavily favored one gender and sometimes consciously, sometimes consequentially discriminated against the other. Because coding was a relatively new profession, hiring managers weren’t quite sure what to look for in prospective employees, so psychologists William Cannon and Dallis Corp were contracted to design an aptitude assessment for optimal programmers.

After interviewing 1,400 engineers (1,200 of whom were men), the duo released their “vocational interest scale,” a personality profile for the ideal programmer. This scale very much characterized men as favorable candidates, and to the chagrin of female engineers everywhere, came to become industry standard and “shape industry demographics for decades.” The number of women studying computer science started to steadily decline after 1984, dropping from 36% to 18% today.

How Tech Treats Women Today

Though it is easy to recognize the gender imbalance in STEM, it is not easy to dive below the surface and explain how and why this imbalance exists. There are a number of factors that have caused the industry to favor men — some spurred and propagated by those in charge; some institutionalized by the women themselves.

The first key source of discrimination comes from harmful stereotypes that affect the way women in tech are viewed. There is an ongoing stereotype that women are less assertive than men, and as a result, will not be successful leaders.

Additionally, there are unfounded stereotypes that women are not good at math and science. Consequently, women are not exposed or encouraged to pursue science or math early on and end up being less likely to major in a STEM subject. As a result, there are major gender gaps in certain industries (particularly STEM). For example, the share of women in “Information and Technology” is just 24%.

Once within the company, women are discouraged by gender wage gaps, which can be as high as 50%. Even after successfully launching a business, female founders report frequently facing sexism as they try to grow their companies.

This ties into women's confidence, another related and equally harmful barrier to entry. As most women aren’t actively encouraged to pursue STEM or become leaders from a young age, evidence shows that women can sometimes fail to advocate for themselves and have confidence in their own abilities.

A good example of this ingrained lack of confidence is the fact that men will apply for a job when they are only 60% qualified, but women will only apply when they meet 100% of the qualifications.

Of course, this could explain why there aren’t more female-founded startups. If women doubt their abilities when applying for jobs, that could rationally extend to a lack of confidence in starting businesses.

In reality, women have proven themselves to be extremely effective leaders — using qualities like better attention to detail to avoid careless mistakes that male founders often make. Though this is also a stereotype about women, it’s interesting that the negative perceptions have held much more sway over the position that women have in the industry than the positive ones.

Finally, expected societal roles, particularly motherhood, have very much determined the place of women in tech. Though laws have been formed to prevent companies from discriminating against women because of current or future child-rearing, many top tech companies lack flexible policies for women — and some veer away from hiring women to avoid dealing with maternity leaves and shifting schedules.

While the household dynamic is changing so that more men stay home to care for the children, the share of stay at home dads is still only 7%. Clearly, archaic interpretations of gender roles haven’t changed too much. Despite all of this, women still want to own and run tech companies.

Interest in owning businesses is not the issue. In fact, between 1997 and 2007, the number of women-owned businesses grew at 2x the rate and made more money than male-owned businesses. The reason why we have the misconception that women aren’t starting tech businesses is that “many of these [businesses] are significantly smaller than male-owned businesses, many stay owner/operator size, and are self-funded.”

How Do We Fix It?

Since the end of the 20th century, there have been emerging cyberfeminist movements. However, it’s taken until recently for these pushes for change to gather genuine momentum.

Public attention was drawn to the extent of the industry’s issues with reports on Silicon Valley’s women issue, the general imbalance of female to male founders, pay inequality, and various high-profile allegations of sexual harassment and assault in the workplace. Today, there are a number of efforts being made by various organizations, institutions, and governments to reverse decades of establishing sexist foundations in the tech industry.

At the university level, obviously recruiting more women into STEM majors and offering scholarships for women have been popular methods of closing the gender gap. However, there are other innovative ways universities have been pushing for equality. Hiring more female faculty members is a good place to start — that way female students have direct role models and can interact with others who understand the barriers they may face in the industry.

Universities can also create women-only STEM clubs and organizations where students can network and establish supportive communities. Leadership programs and clubs also help imbue women with the confidence they need to eventually become leaders. Some universities have turned to outside-the-box solutions like creating new research playing fields that lack established gender stereotypes and launching women-only STEM programs.

Education has clearly played an important role in the ongoing pipeline problem, so it’s vital that steps are made to eradicate gender disparities. It’s equally important that intervention happens as early as possible — before it becomes a concrete belief in the minds of young girls that they don’t have a future in tech. This can be done through teaching science, math, and computer science classes to students at a young age, and keeping an eye out for emerging talent.

Outside of the school system, governments and organizations have also been doing their part. There is an allocated $25 billion of federal funding for STEM research each year, but women usually don’t see much of it. That’s why the government conducts reviews to determine if universities are complying with Title IX in their STEM programs.

On top of that, several government agencies have programs for women in key areas like “Enhancing agency and leadership collaboration,” “Establishing family-friendly policies for grantees,” “Overseeing research proposal reviews” and “Funding and assisting academic institutions.”

There are a number of organizations outside of the government that also help women, hosting services from free classes in coding or leadership, scholarship and funding opportunities, and networking events. For example, Girls Who Code is an organization that supports hundreds of thousands of young girls, teaching them how to code from an early age and encouraging them to pursue a career in engineering.

Finally, the internet can be used as a creative tool to support current or future female tech founders. Online, women can find a breadth of resources that they likely weren’t exposed to in school or in the workplace. For example, webinars, YouTube channels, and online forums can be used to find information about the different stages and challenges of starting a business.

Many female entrepreneurs use the internet to share their own personal stories, hoping other women can find hope and motivation in their success. Women can learn how to code for free on websites like Codecademy, or enroll in courses using online universities.

Tech has become a more accepting place for women, where they can now thrive and lead, and that is predominantly because women have begun to support each other. Whether it be through making the brave decision to publically speak out against a misogynistic workplace culture, creating a medium where women can review and recommend companies based on how they treat women, or designing a highly accessible non-profit that exclusively serves other women, women have been working in the background to fill the resources gap.

Working together is the best way that women can keep propelling themselves forward in tech — and who knows? Maybe one day the divide in tech will be 50:50.

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