Women Entrepreneurship in Germany and Access to Capital

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1 Summary Slide Women Entrepreneurship in Germany and Access to Capital

2 Women Entrepreneurship in Germany and Access to Capital Presentation at ESTRAD Lecture Exploring Growth Financing for Women Entrepreneurs, 27 May 2004

3 Structure of Presentation 1. Women Entrepreneurship in Germany in the 1990s: Context and Developments 2. Finding Capital A Problem for German Women Entrepreneurs? 3. Are there Lessons to be Learned from Germany?

4 Women Entrepreneurship in Germany in the 1990s: Context & Developments

5 Policy & Society Context Policy Gender equality codified in German Constitution tax & family policies favour male employment & housewife model Childcare: only 9% of children attend all-day institutions Society (West-)German society still defines role of women mainly connected to family and household responsibilities Entrepreneurs have ambivalent image (West-)German society values male role stereotypes higher than female ones

6 Institutional Settings in fostering Women Entrepreneurship in Germany federal level: division of labour between BMBF: graduate & innovative e-ship BMWA: (SME support) BMFSFJ: focus on creating awareness on different organisational and institutional levels shifting paradigm in supporting women entrepreneurship, as institutional actors recognise need to foster business growth Mentoring, role models: prizes Pilot project in NRW: business certificate

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10 Finding Capital - a Problem for German Women Entrepreneurs?

11 Financing a Business in Germany Characteristics - variety of external finance with focus on loan financing - growing awareness wrt women entrepreneurs - innovative support measures Problem areas - fundamental change in German banking system - Basel II & lending practices - possible gate keeper role of housebank - gender discrimination by banking clerks?

12 Access to Capital - Problem: limited evidence to assess whether access to capital is restricted & gender-biased - few studies with small samples - results not conclusive - Patterns emerging from these few studies: - less women approach banks - women more often feel as petitioners - women sometimes could not find capital for their business idea - only 30% of all German SMEs engage VC, mainly stock-holding companies - most women entrepreneurs registered as sole proprietors, i.e., of no interest for VC

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14 Access to Financial Support - Some states have gender-specific regulations - State investment bank hands out loans to women entrepreneurs rejected by banks (M-V) - Women entrepreneurs without industry knowledge can apply to state programme (NRW) - Access to financial support gender biased - no part-time entrepreneurship - no access for certain professions - no micro credits - VC programmes restricted to certain sectors - Micro credit programmes better suited - allow for part-time entrepreneurship - hand out smaller credits - Problem here: - Support only for temporary part-time entrepreneurship - Sustainability & long-term business development

15 Are there Lessons to be Learned from the German Experiences?

16 Critical Points Does the German government follow the right strategy for fostering women entrepreneurship, particularly looking at growth? Is there a need for specific policy and/or support measures in order to get more women interested in starting and growing their business? Is access to finance a critical issue for a woman entrepreneur in not growing her business?