Evaluation of the Sectoral Employment Demonstration

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• Capital Access for Women
• Profile and Analysis of U.S. Best Practice
  Programs
• Stepping Stones Research Briefing
• May 11, 2007
• Washington, DC
• Nancy Pindus
• The Urban Institute
• www.urban.org
• This study was funded by the Kauffman Foundation

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Why capital access programs?

• Women-owned businesses tend to be smaller and
  have slower growth.
• Less than 5 of venture capital goes to
  women-owned businesses most rely on personal
  borrowing.
• In the past decade, programs have been started to
  help women access capital from micro enterprise
  to large venture capital investments .

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Importance of women-owned Businesses

• Economic
• 6.5 million non-farm businesses
• 7.1 million employees
• 940.8 billion in revenues
• (2002 Survey of Business owners)
• Social Welfare and Opportunity
• Career opportunities (no glass ceiling)
• Flexibility for child care and eldercare
• Income patching/supplement to low-wage,
  standard employment
• Women use increased earnings to spend more on
  children

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Barriers faced by women entrepreneurs

• Myths and stereotypes
• Income and credit history less consistent, gaps
  in career
• Personal networks provide limited access to
  mentoring and capital
• Less exposure to financial institutions and
  financial education
• Business potential often underestimated by banks
  and venture capitalists

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Origin of this study

• Focus on U.S. programs funded by the Kauffman
  Foundation
• Parallel, concurrent study of international
  programs funded by the World Banks International
  Finance Corporation program on Gender
  Entrepreneurship Markets
• Authors of U.S. study Hal Salzman, Signe-Mary
  McKernan, Nancy Pindus, Rosa Maria Castañeda
• http//www.urban.org/publications/1001061.html

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Study purpose and methods

• Criteria for inclusion
• client base more than 50 women
• directly provide capital or access to equity
• named as best practice by at least 2 experts
• 13 programs met the screening criteria
• 3 additional promising practice programs were
  identified
• Factors that make for best practices
• Challenges faced
• Gaps in programs and policy

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Types of programs

• Micro enterprise (4)
• focus on low-income clients
• combine training, education, and support services
  with capital
• Small business programs and loans
• bank outreach programs (3)
• non-profit small business programs (3)
• Equity capital funds and programs (3)
• Promising new programs (3)

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What makes a best practice microenterprise
program?

• Help low-income women develop subsistence
  businesses
• Provide more flexibility than standard employment
• Supplement other employment
• Provide technical and educational services
• Assist in personal financial management
• May not lead to business start-up
• Address self-sufficiency
• Partner with larger business organizations
• Pathway for clients with high-growth businesses

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What makes a best practice small business
program?

• Serve two clients
• Women applying for loans
• Bankers evaluating creditworthiness
• Supplement standard credit scoring information
• Build alumnae networks and provide ongoing
  support
• Link clients with larger businesses

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Innovations

• Must complete training course to qualify for a
  grant (Trickle Up, WISE)
• Women-friendly credit scoring (Count Me In)
• Counseling and Mentoring (Athena PowerLink)
• Dequity ? Debt/Equity hybrid no principal
  payments for 5 years can retain control and
  ownership (Texas Women Ventures Fund)
• Make Mine a Million? competition for existing
  high growth women-owned businesses (Count Me In
  and American Express)

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Policy recommendations micro enterprise programs

• Policy and funding community should support
  programs to go to scale
• Evaluate effectiveness and efficiency, not
  program self sufficiency
• Develop entrepreneurial pathways through linkages
  and partnerships
• Work with large financial institutions
• Assist small business clients with sales and
  marketing (business success services use
  networks to develop markets)