The Impact of Financial Capital on Business Performance: A Comparison of Women- and Men-Owned Firms

Abstract:     
This article uses data from the Kauffman Firm Survey to explore, by gender, the relationship of start up capital for new firm performance in terms of assets, revenues, income, employment, and survival. Our results reveal that, consistent with prior research, women-owned firms start with smaller amounts of capital than men-owned firms. Our findings also indicate that women launched their firms with larger amounts of owner-provided equity and dramatically smaller amounts of outsider equity. Finally, our results reveal that, even controlling for firm size and the amount of capital at start-up, women-owned firms still underperformed firms owned by men in measures of size, profitability, employment, and survival over time. This finding suggests that differences in financial capital are just one factor associated with the gender differences in the performance outcomes of new firms.

Number of Pages in PDF File: 28

Keywords: women, financing, startups

JEL Classification: J16, M13

working papers series