Entrepreneurship Policies through a Gender Lens

Ireland

By Colette Henry, Dundalk Institute of Technology and Griffith University

Background

According to the Global Entrepreneurship Monitor (GEM), one in five people in Ireland are aspiring or planning to start a business within the next three years. This means that Ireland ranks 10^th across the OECD in terms of early stage entrepreneurship, and fourth in Europe (GEM, 2020). Men are three times more likely to be self-employed than women (21% for men vs 7% for women) (OECD/EU, 2019), and there are currently 1.8 men for every woman who is an early stage entrepreneur (GEM, 2020). While there is growing interest in women’s entrepreneurship at national and regional levels in Ireland, and growing policy awareness of the gender gap in entrepreneurship and the unique challenges facing women entrepreneurs,1 until recently, there has been no dedicated policy or strategy for women’s entrepreneurship.2

The Irish Government’s overarching entrepreneurship policy – the National Policy Statement on Entrepreneurship in Ireland (2014) – set out a vision for Ireland to be “amongst the most entrepreneurial nations in the world and a world class environment in which to start and grow a business” (DJEI, 2014). The policy outlined a number of key actions that needed to be taken to realise this vision, each linked to key components of the entrepreneurial ecosystem. Although the policy discussed gender throughout, there was no dedicated section on women’s entrepreneurship. Women were positioned as part of a broad under-represented or disadvantaged group, with untapped entrepreneurial potential and facing particular barriers in their efforts to start and grow a business. Barriers specific to women entrepreneurs in Ireland were identified within the policy as: few role models, poor access to finance, low levels of risk taking, low self-confidence, limited networking opportunities, and a lack of technical expertise (DJEI, 2014). In highlighting the gender gap in entrepreneurship, the policy noted that, in 2014, Irish men were much more likely than Irish women to be early stage entrepreneurs, and that women-led businesses accounted for just 7% of the State’s high potential start-up (HPSU) investment.

From a gender perspective, by consistently comparing women to men, focusing supports on men-dominated and growth-oriented industry sectors, and contextualising women within minority groups, Ireland’s 2014 National Entrepreneurship Policy Statement could be viewed as inadvertently reinforcing the established view of women as “other”, in “deficit” and needing to be “fixed” (Ahl, 2004; Henry et al., 2016; Etzkowitz et al., 2020). Accordingly, notwithstanding the presence of some valuable women-targeted support initiatives in operation on the ground3 at the time, “fixing” mechanisms proposed by the National Policy to increase women’s participation in entrepreneurship (and potentially bring them up to the same level as men) were mainly in the form of soft supports such as mentoring, role models and networks. This approach did not appropriately identify and directly address the different needs of women entrepreneurs, as well as the different challenges they faced. It viewed women mainly as a homogenous group. It also did not recognise that some of the differential characteristics of women-led businesses may have reflected different sectoral choices and business models, as well as different entrepreneurial motivations, management styles and growth aspirations.

In January 2020, Enterprise Ireland introduced its Action Plan for Women in Business (Enterprise Ireland, 2020), Ireland’s first national government agency strategy to focus exclusively on women entrepreneurs. In contrast to the 2014 National Policy Statement, the Plan acknowledges the multiple and complex factors contributing to women’s under-representation in economic development. Its aim is to promote gender diversity more broadly - in leadership, senior management and board level roles – in order to increase the participation of women founding, leading and growing enterprises. The Plan sets out four key objectives and a total of 24 actions specifically designed to increase the number of: women-led established companies growing internationally; women in middle and senior management roles; aspiring women entrepreneurs, and women-led HPSUs. The Action Plan is a welcome development in women’s entrepreneurship support; it will be interesting to see how it is incorporated into the Government’s overarching National Policy Statement on Entrepreneurship (2014), which is due to be updated, and more importantly, how it impacts on women’s entrepreneurial aspirations, especially in light of the COVID-19 crisis.

The recently published Entrepreneurship and SME Growth Plan (DETE, 2021) is another welcome addition to Ireland’s general entrepreneurship policy agenda. While not including a specific focus on women’s entrepreneurship4, the report maps out an ambitious long-term strategic blueprint beyond COVID-19 for all SMEs and entrepreneurs. The report offers recommendations in four key areas: Entrepreneurship; Productivity, Digitalisation and Competitiveness; Internationalisation; and Clustering and Networks. The recommendations in the Growth Plan will be reviewed and taken forward, as appropriate, by a Ministerial-led SME and Entrepreneurship Implementation Group during 2021, in conjunction with relevant Departments and Agencies.

Policy issue: Women entrepreneurs continue to struggle accessing start-up finance

Although the rate of informal investment increased in Ireland during 2019 (to 5.6%), it is still below the OECD average of 6.3% (GEM, 2020). Currently, less than 10% of venture capital funding in Ireland goes to women-founded companies (Enterprise Ireland, 2020). This could be because, in Ireland, men are more likely than women to be investors – whether formal or informal (GEM, 2020). Furthermore, micro and smaller enterprises tend to make less use of external financing instruments than their larger peers (OECD/EU, 2019), and the majority of women’s businesses fall into this category. This is also the case for low-tech ventures that could be perceived as having low or no growth potential. In Ireland, the majority of women’s businesses are in the consumer services (60%), with very few women reporting being involved in medium or high-tech businesses (4% women compared to 12% men) (GEM, 2020).

Within Irish entrepreneurship policy, access to finance is recognised as a critical issue for all businesses, especially at the start-up and growth stages. There is also increasing recognition that women entrepreneurs face greater challenges than their male counterparts in accessing financial capital (OECD, 2016; OECD/EU, 2019; Coleman et al., 2019). This is often attributed to women having shorter credit histories and less collateral; being less aware of financial supports; being less inclined to approach formal capital providers with substantive investment projects; being less financially secure and relying more on their own funding than their male counterparts (OECD/EU, 2019). At start-up, Irish entrepreneurs - especially women - have tended to rely on bank loans and cash flow to get their businesses off the ground (DJEI, 2014). Both these sources were adversely affected by the 2008 recession5 (The Irish Times, 2016). Over the last few years, a number of policy reports and action plans have been introduced to improve the availability and range of finance to entrepreneurs. These include: The Joint Committee on Jobs, Enterprise and Innovation’s Report on access to finance for small and medium enterprises (July, 2014); the National Policy Statement on Entrepreneurship in Ireland (October, 2014) discussed above; the Action Plan for Jobs (APJ) (January, 2015), and the Joint Committee on Jobs, Enterprise and Innovation’s Report on key issues for women entrepreneurs (July, 2015). Collectively, these reports highlighted the need for a wider range of financing options; recommended developing the non-banking sector to fund SME growth, and suggested that Credit Unions could play a greater role in supporting SMEs. Specific recommendations with regard to women entrepreneurs included: increasing the number of competitive start funds; establishing a women seed and early seed capital fund; creating business angel networks managed by women, and introducing a national financial mentoring scheme for women entrepreneurs.

Consistent with the recent Entrepreneurship and SME Growth Plan (DETE, 2021), Ireland’s current National Entrepreneurship Policy (2014) – which, at the time of writing, had been reviewed but not formally updated (DBEI, 2018)6 – places considerable focus on financial support, with a dedicated section on finance. The 2014 policy outlines the various types of finance available, including bank lending, micro-finance and credit guarantee schemes, venture capital, EU initiatives, and alternative and innovative sources of finance. It identifies a series of specific actions in relation to improving access to finance for entrepreneurs, which focus mainly on competitive funding. Most are targeted at all entrepreneurs. Only one is dedicated to women entrepreneurs specifically – the Competitive Start-Fund for Women Entrepreneurs (CSFWE). The CSFWE is focused on business ideas and early-stage start-ups that have the potential to become HPSUs in the manufacturing and internationally-traded services, including a broad range of sub-sectors in Agtech, Cleantech, Fintech, Software, Lifesciences, Food, and Medical, Digital and Renewable Technologies. Most of these sectors are not among those typically dominated by women. Eligible projects must be capable of becoming “high potential start-ups”, generating sales of EUR 1 million and creating ten new jobs within three years. Applicants must have revenues of less than EUR 100 000 and not be in receipt of other equity investment (more than EUR 150 000) prior to applying. A maximum of EUR 50 000 is available to successful applicants, delivered in two equal tranches for 10% shareholding by the State agency. Successful applicants are required to secure EUR 5 000 cash investment before funds are awarded; ten mentoring sessions are also provided.

Information evenings for potential applicants are held in Business Innovation Centres (BICs) in Dublin, Cork, the South East and West of the country, and successful applicants take part in the Dublin BIC’s accelerator programme over a twelve week period. This type of arrangement may not suit all women entrepreneurs, especially those with childcare responsibilities or those based in rural areas. That said, Enterprise Ireland’s new Action Plan for Women in Business (Enterprise Ireland, 2020) promises to not only improve the financial landscape for women entrepreneurs, but also to ensure all of their support programmes are designed to maximise women’s participation.

Conclusions and recommendations

Policy makers in Ireland have paid increasing attention to the gender gap in entrepreneurship (including among high-potential start-up founders) and highlighted major obstacles (including access to finance). The need to exploit untapped women’s entrepreneurial potential is included in strategic documents, along with a recent stated commitment to the promotion of women’s entrepreneurship (Enterprise Ireland, 2020). However, the availability of financial support dedicated to women entrepreneurs remains limited. While the CSFWE has been successful in raising the number of women-led HPSUs (DBEI, 2020), it continues to be focused on growth-oriented, internationally-traded businesses and does not cover the typical sectors and business sizes in which women operate. More and broader funding initiatives dedicated to women entrepreneurs are needed. The following recommendations are offered for policy makers seeking to improve access to finance for women entrepreneurs.

Recommendations for Ireland

• Increase the number of dedicated funds for women entrepreneurs.

• Widen the range of eligible sectors and business categories that can receive mainstream finance support to include those in which women typically operate and/or predominate, including those with modest growth trajectories and those focusing on the domestic market.

• Contextualise and stagger high potential start-up targets to avoid high growth targets being seen as unrealistic or unachievable – and hence off-putting – to early-stage women entrepreneurs.

• Ensure substantive financial support packages are accessible to women entrepreneurs in all regions of the country, especially in rural and remote areas.

References

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