The Center for an Urban Future today published a new study that reveals a dramatic surge in women entrepreneurs in New York City.
It shows that the number of women-owned businesses grew four times as fast as male-owned businesses during the past five years.
The study, which was funded by Capital One’s Future Edge initiative, also shows that the number of women-owned firms increased by at least 20 percent in nearly every major industry and that women are starting a greater share of the tech companies in New York than in Silicon Valley and Boston, the nation’s other leading tech hubs.
While the report finds that women entrepreneurs are having an increasingly large impact on the city’s economy, it also concludes that New York has only begun to harness the full potential of women entrepreneurs.
The study, titled Breaking Through: The Economic Impact of Women Entrepreneurs, reveals that 91 percent of all women-owned firms in the five boroughs have no paid employees, suggesting that too few women-led firms are growing to the next level.
It also shows that the ranks of women entrepreneurs in New York are growing more slowly and are delivering less economic impact than sister businesses in other cities. According to the 2012 U.S. Census, New York City ranks 19th among the nation’s 25 largest cities in the growth of women-owned firms and 18th in average sales.
The number of women-owned businesses in NYC has increased dramatically in recent years. Women-owned businesses now make up more than 40 percent of private companies in New York City, up from 33 percent five years ago and 32 percent a decade ago.
Over the last 5 years, the number of women-owned businesses increased by 36 percent, while the number of male-owned businesses increased by just 8 percent during the same period.
New York City has more women-owned businesses, by far, than any other American city. With a total of 413,899 women-owned firms, New York has more than double the nearest competitor, Los Angeles (which has 192,358). Brooklyn alone has more women-owned businesses than all but three other U.S. cities (NYC, Los Angeles and Chicago).
Women entrepreneurs are starting and growing businesses in every sector.
Over the past 5 years, the number of women-owned firms increased by at least 20 percent in nearly every major industry sector, including: educational services (55 percent); transportation and warehousing (50 percent); accommodation and food services (50 percent); professional, scientific, and technical services (38 percent); construction (33 percent); retail trade (26 percent); health care and social assistance (26 percent); manufacturing (23 percent); information (21 percent); real estate (20 percent) and wholesale trade (20 percent).
Businesses owned by women make up 72 percent of all businesses in the Health Care & Social Assistance sector and 62 percent of businesses in the Educational Services sector. Women-owned firms make up a much smaller share of the businesses in Transportation & Warehousing (8 percent), Construction (15 percent) and Finance & Insurance (20 percent).
The number of women-founded tech startups has exploded in recent years, and NYC is ahead of other leading tech hubs in creating a supportive environment for women tech entrepreneurs.
In the third quarter of 2015, 16.9 percent of New York City companies receiving venture capital had a woman founder, compared to 14.8 percent in Boston and 12.1 percent in San Francisco.
Every borough experienced a major increase in women-owned businesses over the last 5 years
The Bronx had the fastest growth in the number of women-owned businesses over the past five years, with a 53 percent increase. Queens had the second highest growth rate (40 percent), followed by Brooklyn (39 percent), Staten Island (27 percent) and Manhattan (22 percent)
Brooklyn has the most women-owned businesses in the city (118,489), followed by Manhattan (114,896), Queens (97,982), the Bronx (68,705) and Staten Island (13,921).
Relatively few women-owned firms in New York scale up their businesses
Just 37,494 (9 percent) of the city’s 413,899 women-owned businesses have paid employees.
The average women-owned business in NYC has sales of $128,268, lower than female-owned firms in Dallas ($198,599), Houston ($181,122), San Francisco ($175,766), Boston ($169,020), Seattle ($162,948), Los Angeles ($142,378) and several other large cities.
Just 17 of the 150 largest private companies in NYC are headed by or were founded by a woman.
Many women entrepreneurs struggle to access capital
In fiscal year 2014, women business owners received just 20 percent of all SBA loans in the New York metro area and 12 percent of the dollars lent.
While 16.9 percent of New York City companies receiving VC funds in the third quarter of 2015 had a female founder, those firms accounted for just 8.7 percent of the total VC funds received that quarter—$122 million out of $1.41 billion.
The report, which was authored by Judy Messina, documents several other challenges that women face as they start and grow businesses and features more than 20 actionable recommendations to support women entrepreneurs in the city.
The report concludes that if just one quarter of the existing 376,405 women-owned businesses in the city with no paid employees added a single employee in the next three years, it would result in more than 94,000 new jobs.
“Women entrepreneurs have become a major force in New York City’s economy, but we have only begun to harness their tremendous economic potential,” says Jonathan Bowles, executive director of the Center for an Urban Future.
“Women are making significant strides as business leaders and entrepreneurs, yet many continue to face common challenges related to managing and securing financing, as well as adopting technology,” said Keri Gohman, Head of Small Business Banking at Capital One.
“The great news is there are a variety of quality, accessible resources—through organizations and programs like Grameen America, Business Advising.org and others—designed to help business owners understand, plan and communicate their financials effectively.”
The study was made possible through Capital One’s Future Edge initiative, a $150 million, five-year effort to help more American workers and entrepreneurs succeed in the 21st century economy. The Center for an Urban Future is a New York City-based think tank.