DIRECTORATE GENERAL FOR INTERNAL POLICIES

1 DIRECTORATE GENERALFOR INTERNAL POLICIESPOLICY DEPARTMENTC:CITIZENS' RIGHTS ANDCONSTITUTIONAL AFFAIRSWOMEN S RIGHTS & GENDER EQUALITYW omen s Entrepreneurship:closing the gender gap in access tofinancial and other servicesandin social entrepreneurshipSTUDYA bstractThis study explores differences between men and women entrepreneurs andsocial entrepreneurs. It explores the barriers and discriminatory effects thathinder women s entrepreneurship, including access to finance in the EuropeanUnion. The study includes four case studies covering the situation in the CzechRepublic, Italy, Sweden, and the United REQUESTED BY THECOMMITTEE ON WOMEN S RIGHTS AND GENDER EQUALITYAUTHOR(S)Katie McCracken, Opcit Research, UKSergio Marquez, Opcit Research, UKDr. Caleb Kwong, University of Essex, UKProfessor Ute Stephan, Aston Business School, UKProfessor Adriana Castagnoli, University of Turin, ItalyMarie Dlouh , The Institute of Sociology of theAcademy of Sciences, Czech RepublicRESPONSIBLE ADMINISTRATORMs Erika SCHULZEP olicy DepartmentCitizens' Rights and Constitutional AffairsEuropean ParliamentB-1047 assistantMs.

2 Lucia-Cristina ACHIHAEILINGUISTIC VERSIONSO riginal: ENTranslation: DE, FRABOUT THE EDITORP olicy Departments provide in-house and external expertise to support EP committees andother parliamentary bodies in shaping legislation and exercising democratic contact the policy Department or to subscribe to its monthly newsletter please write Parliament,manuscript completed inJune 2015. European Union, Brussels, document is available on the Internet at: opinions expressedin this document are the sole responsibility of the author and donot necessarily represent the official position of the European and translation for non-commercial purposes are authorised, provided thesource is acknowledged andthe publisher is given prior notice and sent a s Entrepreneurship:closing the gender gapin access to financial and other services andin social entrepreneurship3 CONTENTSLIST OF ABBREVIATIONS6 EXECUTIVE of the REVIEW.

3 FACTORS AFFECTING WOMEN ENTREPRENEURSAND SOCIAL gender gap in GENERAL entrepreneurship in the of accessing finance for men and women entrepreneursin the behind the perceived difficulties in accessing side side, self-selected capital aversion of strategies for addressing barriers to women entrepreneurs andsocial enterprises and access to OF MAIN EUPOLICIES AND LEGISLATION RELEVANT TOFEMALE OF CASE STUDIES CONDUCTED IN THECZECH REPUBLIC,ITALY, SWEDEN AND THE factorsaffecting women entrepreneurs and socialentrepreneurs, including access to to side side capital and experience26 policy Department C: Citizens' Rights and Constitutional constructed gender factors affecting women entrepreneurs and factors affecting women entrepreneurs and impact of EU AND side barriers to women accessing side barriers to women accessing factors affecting women entrepreneurs and social factors affecting women entrepreneurs and social affecting women social REPUBLIC factors affecting women entrepreneurs and social entrepreneurs,including access to factors affecting women entrepreneurs and factors affecting women entrepreneurs and and CASE factors affecting women entrepreneurs and socialentrepreneurs, including access to factors affecting women entrepreneurs and factors affecting women entrepreneurs and socialWomen s Entrepreneurship.

4 Closing the gender gapin access to financial and other services andin social and CASE factors affecting women entrepreneurs and social entrepreneurs,including access to factors affecting women entrepreneurs and factors affecting women entrepreneurs and and KINGDOM factors affecting women entrepreneurs and social entrepreneurs,including access to factors affecting women entrepreneurs and and conclusions54 REFERENCES55 policy Department C: Citizens' Rights and Constitutional Affairs6 LIST OF ABBREVIATIONSCZKC zech KorunaECEuropean CommissionEUEuropean UnionGEMG lobal Entrepreneurship MonitorOECDO rganisation for Economic Cooperation and DevelopmentSAERGS wedish Agency for Economic and Regional GrowthSMES mall toMedium EnterprisesSTEMS cience Technology Engineering and MathsUKUnited KingdomVCVenture CapitalWomen s Entrepreneurship:closing the gender gapin access to financial and other services andin social entrepreneurship7 EXECUTIVE SUMMARYAims of the studyThemain aims of the study includeidentifyingdifferences inratesof entrepreneurial activitybetween men andwomen as well as thebarriers,which might explain the differences.

5 Thereis a particular focus on how women and men entrepreneurs and social was conducted using a combination ofliterature reviewand fieldresearchconducted in fourcase studycountries in the EU: the Czech Republic, Italy, Sweden and theUnited Kingdom (UK).Literature review findingsWomen accounted for only29%of the million entrepreneurs in the EU in 2012. Womenentrepreneurs tendto operate insmaller businesses; usually gosolo; tend toconcentrate on sectorsthat are considered by financiers to beless profitable; tend tohavelower growth and turnovercompared to male-owned entrepreneurs tend toself-assessthe level of innovationof their own businesslower than male counterparts. They tend to start off with less capital, borrow less and usefamily, rather than debt or equity circumstancesoften forcewomen into periods of intermission; this hinders theirability to accumulate social, cultural, and financialcapital,and constrains the generation of arespectable credit entrepreneurs are more reluctant to assume aposition of debtcompared to is down largely to lower levels of self-confidence in their business.

6 Women entrepreneursgenerally haveless powerful professional networks, compared to gender gap forsocial entrepreneurshiptends to be smaller than for of mainEU POLICIES and legislation relevant toentrepreneurshipTwo keypieces of legislationare relevant for the theEuropean Parliamentextends the right to maternity benefits to self-employed women orspouses, or partners of those who are the first, case studiessuggest that women continue to struggle balancingraising a familywith the demands ofrunning Directive 2004/113/ECprohibits gender , aproblem is that indirect discrimination isdifficult to prove,even though there appears to beevidence that indirect discrimination does Department C: Citizens' Rights and Constitutional Affairs8 Summary of Case Studies conducted in the Czech Republic, Italy,Sweden and the UKAll case studies suggested that women set up businesses that are predominantly insectorsthatare female-dominated.

7 These sectors areless attractiveto investors or entrepreneurs tend to seeklower loan or investment makes themless attractive to both equity and debt financiers who will achieve lower returns as a result oflower debt the case studies, it was identified that banks and equity funders are less attracted tobusinesses that are run byindividualswith alower level of women at a structural disadvantage. It was also suggested in the Czech Republic thatsome banksdirectly discriminateagainstwomen who are on parental all case studiessociallyconstructed gender roleswere reported to act as a barrier towomen setting up and running was noted in all case study countries that there was a lack ofangel investors(seedefinition in point ) who could be a benefit to women , oneof the key factors that affect women s chances of accessing funding and growing business isthe size of theirprofessional all case studies, women were reported to be predominantly responsible for thecare ofchildren or other dependents.

8 This was a substantial barrier for women who wish to case study respondent reported thatEU legislationhad made much of a difference to thesituationof womenentrepreneurs in their number of ways were identified throughout this study which would tackle some of thebarriers for women entrepreneurs and social entrepreneurs: National and/or European schemes are needed to encourage banks to lend money tobusiness in predominantly female sectors, including potentialmicro financeorgovernmentloan guarantees Further researchcomparing thegrowth trajectories and return on investmentin women-dominated sectors compared to male-dominated would be instructive, aswell as an exploration of how differentassessment tools used to review loanapplicationsaffect men and women entrepreneurs differently Setting up and reinforcing the schemes that grow women entrepreneurs networks ofbusinessand finance contacts would be a direct boost to their opportunities as wellas develop women s confidence and skills Whilstalternative financeoptions such as crowdfunding may be an opportunity towomen.

9 This should not be seen as an alternative to mainstream lending and equity Member States should invest inaffordable childcareas a necessary condition forwomen entrepreneurs to run their businesses and to have a family at the same time Girls should be encouraged to considerrunning businesses from ayoung age, tochallenge gender stereotypes that limit women s confidence as business professionalsWomen s Entrepreneurship:closing the gender gapin access to financial and other services andin social entrepreneurship9 Girls and young women should be encouraged to take upSTEM subjects at schooland university, as these tend to be areas of high growth Further research wouldbe useful to understand under what conditions thetransitionfrom unemployment to entrepreneurshipcan be successful for women The Commission should investigate to what extent women entrepreneurs are subjectofindirect discriminationin the sense of Directive 2004/113/EC in the area offinancial servicesPolicy Department C: Citizens' Rights and Constitutional FINDINGS This study aims to identifydifferences in rates, barriersand enablersbetweenwomen and men entrepreneurs and social entrepreneurs.

10 The study also attempts to identify theimpacts of EU legislationconcerning genderdiscrimination in access to finance. This study was conducted using a combination ofliterature review and fieldresearchcarried outinfour case study countriesin the EU: the Czech Republic,Italy, Sweden and the United Kingdom (UK).This study was commissioned by the Committee on Women s Rights and Gender Equality ofthe European Parliament (FEMM Committee).It should be read as a complement to the studies carried out by the European GenderEquality Insitute(EIGE), also together with the Greek presidency, on women's economicindependence and of the studyThe study aims to achieve the following: Identify differences inratesof entrepreneurial activity between men and womenacross theEuropean Union (EU), including mainstream and social entrepreneurship Identify differences between men and women entrepreneurs and social entrepreneursin terms of how theyaccess finance To explore whether there are anydiscriminatory effectsin terms ofhow male andfemale entrepreneurs and social entrepreneurs are able to access finance for theirbusinesses To identifystructural barriersthat particularly affect women entrepreneurs andsocial entrepreneurs To identifyindividual barriersthat particularly affect women entrepreneurs andsocial entrepreneurs To identifysituational barriersthat particularly affect women entrepreneurs andsocial entrepreneurs To explore the impact ofEU legislationon gender-equal access to financial was conducted using a combination ofliterature reviewand field researchconducted in fourcase