Often hailed as Michigan’s Silicon Valley, Ann Arbor is home to a variety of entrepreneurs and up-and-coming tech firms. Recently published research now indicates the city is a major hub for women-led startups.

A study published by the Center for American Entrepreneurship found Ann Arbor was one of the top cities in the U.S. for female-founded startups. The study is based on the number of these startups — with a criteria of at least one female founder — raising initial venture investments over the past 20 years.

In recent years, there has been an increase in women-founded venture-backed startups in the U.S, according to the study. It looked at the number of startups in the U.S. that raised their first round of venture capital financing between 2005 and 2017. From this information, the researchers concluded the share of women-led startups that were able to raise a first round has improved from 7 percent to 21 percent of the total share.

LSA freshman Rubani Walia, a member of MPowered, said she welcomes the results of the study, feeling empowered by the increased opportunity.  

“I definitely have seen a gender disparity in the business fields,” Walia said. “But when I joined MPowered and started gaining exposure to venture capitalists as well as those working in startups, I began to see a potential for that gender gap to close. Though I have always been confident in my ability to succeed in business regardless of my gender, it helps to know that there are women in Ann Arbor that I can look up to and turn to.”

While female investors and women-owned businesses are still underrepresented on the venture market, the study found the climate was steadily improving. After examining how startups with female founders performed after their first round of capital compared with those that did not, the study determined most had raised a second and third round within three to five years, some eventually going public. Those who went public did so at about the same rate as other startups without a female founder.

According to the study, Ann Arbor is the metro area with the largest share of these “first financings” secured by female startups.

Among the 19 cities with above-average shares of women-founded startup activity, Ann Arbor topped the list. Between 2005 and 2017, 29 percent of female startups secured a first round, compared to the national average of 16 percent. Holding 58 percent of first financings, Ann Arbor had almost three times the national average of 21 percent of women-founded shares between 2016 and 2017. Memphis, Boulder, and Honolulu had shares of about 40 percent and St. Louis; Providence, Rhode Island; Tampa, Florida; and New Orleans were all around 30 percent.

The cities identified in the study all had women-founded shares of startup activity greater than the country’s average percent and an average of at least four first financings each year from 2017 to 2016 or from 2017 to 2005.

The study’s author, Ian Hathaway, noted in the report the bigger cities benefited from large established startup communities.

“Because these four cities are both large and gender diverse, they drive a substantial portion of women-founded startup activity overall,” Hathaway wrote.

Hathaway said this disparity could be because the number of female investors located in the region is much higher than a smaller city, or because the city supports industries that historically have had more companies founded by women. Sectors like consumer products and services, health care and software are among the industries with a larger share of female founders with venture-backed financing.

Lucy Sanders, co-founder and CEO of the National Center for Women & Information Technology and author of the CAE report’s foreword, encouraged startup cities to create a more amenable community for female-founded companies.

“Technology investors and other leaders, both men and women, must perform as champions for female technologists and entrepreneurs,” Sanders wrote in the report. “They must be informed and equipped to pass along their guidance and encouragement effectively, with a clear understanding of both the values and unique challenges to gender inclusion embedded in our current systems and operations.”

According to Hathaway, mentorship programs or support groups to inspire young female entrepreneurs may be a way to start improvement. Business senior Hayley Rogers, co-president of Michigan Business Women, said a strong network of women is essential for aspiring entrepreneurs.

“Both the academic curriculum as well as the community in MBW push individuals to try and innovate,” Rogers said. “You feel like you can do anything, you are taught the basic skills of starting a business, and you have the resources and experiences of those around you — it makes starting a business seem like less of an obstacle.”

Rogers said it made sense Ann Arbor was one of the top places for women-led startups to prosper.

“I am not surprised by the findings of the study,” Rogers said. “Ann Arbor is and will always be a hotspot for learning. Given this atmosphere and the support available from the University of Michigan, I understand why female entrepreneurs can succeed.”

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