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THE TECHNOLOGY START-UP SCENE IN SLOVAKIA: NO WOMAN’S LAND?



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THE TECHNOLOGY START-UP SCENE IN SLOVAKIA: NO WOMAN’S LAND?

162.Janka Kottulová - Ľudmila Mitková



Abstract

Low representation of women on the technological start-up scene is broadly addressed by both academics and policy makers. While academics focus on analysing the different causes of this phenomenon (varying from gender differences in abilities and behaviour patterns, through the role of education to the gender biased funding and support mechanisms, etc.), policy makers call for the better use of talents of the ever-increasing pool of highly qualified women. This paper contributes to this discussion by providing evidence from Slovakia. To collect this evidence analysis of the web-sites of the main start-up initiatives was carried out to investigate the level and forms of women’s´ involvement in the Slovak start-up scene. Additionally, state funded programmes and tools promoting technologically oriented start-ups were evaluated to explore their potential to encourage or hinder higher participation of women in this type of entrepreneurial activities. The outcomes of the research confirmed assumption about low entrepreneurial activity of women in the technologically oriented start-ups and revealed mostly gender neutral (if not gender blind) character of existing funding and support measures. The last part of the paper therefore formulates a set of recommendations on how to make these measures more gender-inclusive.


Key words: technological entrepreneurship, gender equality, start-ups
JEL Code: M13, J16, L26

163.Introduction


Start-up culture has been booming in the region of East-Central Europe over the last few years. Technological entrepreneurship is believed to become one of the main boosters of the economic growth and therefore given a lot of attention by both business community and public sector policy makers. Number of support measures has been introduced to encourage the start-ups creation and further growth of technological entrepreneurship. But while increasing the number of female entrepreneurs in general is already an accepted policy goal getting more women into technological start-ups does not seem to be high on the policy agenda. This “gender blind” approach bears two potential risks: it can foster the gender segregation and widen the gender gaps in the labour market and, as women’s educational achievements are growing, result in the loss of substantial economic potential.

This paper therefore aims to explore the level and forms of women’s involvement in the Slovak start-up scene and to find out how various funding and support measures promoting technologically oriented start-ups encourage or hinder higher participation of women in this type of entrepreneurial activities. The analysis will be centred around the several key topics as identified in the literature and briefly described below.

First, the article will focus on the specifics of female start-ups demographics. Women are not only less represented among the start-uppers, they also focus on different business opportunities. This is conditioned by their different educational and occupational backgrounds but can also be related to different motivations women have when setting up the businesses. Gender segregation patterns can be observed in the start-up scene: when women enter the technology sector they are more visible in the “soft” high-technology sectors like software publishing, computer systems design services, management and consulting services rather than in the very-high-technology manufacturing sectors (Dautzenberg, 2012, Mayer, 2006).

Another key issue broadly discussed in the relation to female underrepresentation in the technological start-ups entrepreneurship is an access to finance. Several studies suggest that female entrepreneurs face more obstacles in access to capital than men. Women tend to acquire less external equity sources such as angel investments or venture capital, which can be related to investors’ preference for the investments in certain sectors on one side and higher risk aversion and stronger preference women have for maintaining the control of their firm on the other (Coleman & Robb, 2006). Women are also often confronted with the lack of trust from the investors which can be to a high extent related to the persistence of gender stereotypes and discrimination. E. g. Bigelow and Parks (2014) report that investors are willing to invest considerably more in male-led firms than in the ones led by women. Finally provision of funding depends on those who decide about its distribution and these are mostly men, especially in the venture capital industry.

Besides the financial tools the whole range of non-financial support measures is used to encourage the creation of innovative start-ups: these are mostly provided by business accelerators and incubators and include services such as office space, business advice and training, introducing to potential investors, technical support or assistance in building up a start-up team etc. (Roštárová, 2015). The findings of Dahlstrand and Politis (2013) suggest that this type of start-ups support might be effective in its general goal but does not show any evidence of being able to decrease gender gap in the technological entrepreneurship. On the other hand McAdam and Marlow (2010) argue that non-financial support measures such as networking events and business incubators can help women gain the access to male networks and get familiar with “male” way of business thinking which might help them to succeed in the male dominated start up scene.

164.1 Women on the start-up scene in Slovakia: hardly visible and unexplored?


Before focusing on the participation of women in Slovak start-up scene, a brief look on their representation among the entrepreneurs in general might be useful. Slovakia has one of the lowest entrepreneurial activity of women among the EU countries. Only 29.1 % of Slovak SME’s were owned by women in 2014 and women constituted for only 28.3 % of Slovak entrepreneurs in total (SBA, 2015). Women dominate among the entrepreneurs in the health, social work and education sectors, and represent also relatively high share of entrepreneurs in other services sectors. They are strongly underrepresented in the sectors such as construction and transportation and constitute approximately 20% of entrepreneurs in the ICT and manufacturing sector (European Commission, 2014). Women show considerably lower early stage entrepreneurial activity than men. Only 7.4 % of women in the age between 18 and 64 compared to 14.4 % of men in this age group were early stage entrepreneurs in 2014 according to Pilková et al (2015).

If we focus on the start-up scene, the picture is even less optimistic for women. The typical Slovak “start-upper” is young, graduate of technological or business oriented school and, unsurprisingly, man. Findings from the KPMG Slovak Start-up Survey (2014) are showing, that 76 % start-ups from their sample were without a female founder. They were mostly set up by younger people (79 % between 25-34 years) with at least master degree (79 %) in computer science and/or business/management (82%). Recent survey on 33 Slovak start-ups carried out by Kravec (2016) also confirmed women’s low participation in the start-ups creation. Only 15 % of the companies in his survey had a women as a founder or cofounder. The overview of 125 start-ups registered on the startitup.sk portal showed that only 25 had a women as a team member. Women were involved as cofounder of the start-up in half of the cases, the rest were involved mostly as PR and communication, marketing or sales managers (Vojtášová, 2015). The strong underrepresentation of women is obvious also among the finalists of the Startaupwards.sk, the main award for the Slovak start-up entrepreneurs. Only 8 out of 63 companies shortlisted as finalists for the award during the last five years had a women among the cofounders, and only in the single case women was the only founder.

Women are involved mainly in the start-ups that develop platforms and software applications responding to the needs of specific groups (such as Speekle – learning software for children with speech disorders or Prosenior.sk – online vendor with products for seniors and people with specific health problems) or applications related to HR (Corobim, InHiro, Staffino) and interaction with customers (Reklamacie.sk, Youstice.com, Divano.sk). When they get involved in the “hard” technologies manufacturing they focus on innovative design (such as Fosali, Tarquini) or environmentally friendly technologies (Ecocapsule, Biodegradable Polymers). The several of these start-ups were awarded different prizes including the above mentioned Startupawards.sk.

The Startupawards.sk helps us to illustrate another problem of the (not only Slovak) start up scene: very low visibility of women in the whole start up ecosystem. Not a single women was invited as a speaker during the five years of the award existence. The jury, consisting of the renowned start up supporters and investors, included only one women in the each of the last four years and was completely male dominated during the first year. Similar pattern can be followed in other events. However there are reasons for the cautious optimism: Some of the start-up initiatives have a number of women in their mentors and advisors teams and organise the activities for women start-uppers (see e. g. impacthub.sk). Media (both sector specific and general) started to play more active role in the promotion of female start-uppers and helped to raise their visibility over the last two years.

Hopefully, higher visibility of the role models could help to unlock the potential that Slovak start up scene could find in girls and women and that could be higher in Slovakia than in many other countries for two reasons: first there are more women than men graduating in business and economics and second, there is high share of women among the STEM graduates.

The start-up survey (KPMG, 2014) shows that majority of start-up entrepreneurs in Slovakia have IT or business education. Women are strongly underrepresented among the IT graduates (Szapuová et al, 2013) but they dominate in business schools (more than 68 % of graduates in management and economics were women in 2014 according to the statistics of UIPS). One of the possible explanations why this is not reflected in their higher entrepreneurial activity might be that the majority of start-ups is established by two or more (KPMG, 2014) persons and we might assume that number of teams combines both types of expertise: one member brings in technological and other business know-how and they use informal networking to set up the team.

As for the STEM graduates, the share of women is above the EU average in all fields excluding the IT, were only 13 % of graduates, compared to 21 % in EU were women. 28 % of graduates in engineering were women which is slightly above the EU average. On the other hand 63 % of graduates in life sciences, 43% in physical sciences and 48 % in mathematics and statistics were women. Slovakia is also one of the EU countries with the highest proportion of women in R&D with over 40 % in the long term (all information from European Commission, 2016). While the ICT and engineering offer the possibilities for faster commercial exploitation of research, other STEM disciplines with higher share of basic research could bring even more promising business ideas in the long run. And female researchers could help to bring them to the market. This should not be overlooked by the policy makers.

165.2 Start-up and women entrepreneurship support in Slovakia: parallel tracks divided by the wall?


Several public sector programmes and initiatives focusing on both start-ups and women entrepreneurs exist. However, as the following text will show there are no interconnections between them and possible synergies are not exploited.

The Slovak start-up support scene consisted of the private and non-profit actors for the long time. The government decided to take a more substantial role in the start-up scene in 2014 when Programme of start up support was introduced by Ministry of Economy of the Slovak republic (MHSR, 2014). The Programme introduces the whole range of non-financial support measures such as counselling, support services and assistance. Comprehensive Concept for Support and Development of start-ups and start-up ecosystem in Slovak Republic was adopted by Government in 2015. The concept identifies the main problems of the start-up scene in Slovakia, outlines the government’s priorities in supporting start up entrepreneurs’ activities and introduces set of measures that should contribute to improving the start-up environment in Slovakia. Unfortunately low representation of women did not make it on the list of key issues and not a single mention of attracting more women into start-ups is included in any of these documents. The state also offers various funding possibilities for start-ups. National Investment and Technology Fund (part of the National Holding Fund) was established to provide the equity and venture capital for innovative start-up companies. The Fund should support the business ideas in the field of environment, renewable energy sources, industrial innovations, e-commerce, information technologies, telecommunications, life-improving technologies or software solutions. As most private investors search for the ICT based project (KPMG, 2014), the Fund could help to rebalance this and develop the ideas also in other fields, including those where women are more represented. However up to this point only the ICT projects were supported according to the Fund website. Not surprisingly, not a single women is represented in the management board of the fund. Other funding possibilities include the microfinancing scheme operated by National Holding Fund or investments provided by the Slovakia Business Angels Club (SBA, 2015) which is the association of private business angels established by Slovak Business Agency. No specific granting scheme for women entrepreneurs exists.

The funding tool which is very important as it should not only provide funding directly to businesses but also help developing the investors’ ecosystem is the Operational Programme Research and Innovation, funded by the EU Structural Funds. Gender mainstreaming is one of the principles that have to be applied across the Structural Funds, the Programme therefore stresses the need to increase the share of female entrepreneurs. However, it only relates to women as one of disadvantaged groups and does not see them as a potential pool of innovative start-uppers (SBA, 2015; MHSR, 2014).

Beside the support mechanism for start-ups, programmes and networks supporting female entrepreneurs could have a positive role in increasing the share of women in start-up entrepreneurship. The public sector initiatives are covered by Slovak Business Agency. The Agency in runs women’s mentors program called Ambassadors in collaboration with Women’s platform and organises The Female Entrepreneur of the Year Award. However, despite the fact the same Agency implements the support initiatives for start-ups development, hardly any synergies exist between the two areas of support. E. g. The Female Entrepreneur of the Year Award does not have any specific category which would award technological or innovative entrepreneurs although introducing such category could help to increase the visibility of women in technological entrepreneurship.


166.Conclusion


The map of participation of women in Slovak start-up scene confirms what the numerous studies on this topic describe: women are strongly underrepresented among the start-uppers but also among those who create the start-up ecosystem. On the same time potential represented by that large group of women graduating in business or STEM disciplines remains unnoticed by those who design policies on start-up support. The number of tools and initiatives exists focusing on start-ups on the one hand and female entrepreneurs on the other. Searching for synergies among these tools could be an effective way how public sector initiatives could contribute to higher participation of women in start-ups.

This would mean incorporating the technological entrepreneurship in the activities of women entrepreneurs support on the one hand and mainstreaming gender into the start-up support initiatives on the other. The Operational programme Research and Innovation including both areas among its priorities, could provide an ideal possibility for testing such approach.


167.References


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Bigelow, L., Lundmark, L., McLean Parks, J. & Wuebker, R. (2014) Skirting the Issues Experimental Evidence of Gender Bias in IPO Prospectus Evaluations. Journal of Management, 40 (6), 1732-1759

Coleman, S. & Robb, A. (2012). Chapter 4: Gender-based Firm Performance Differences in the United States: Examining the Roles of Financial Capital and Motivations. In Hughes, K. D. & Jennings J. E. (Eds.), Global Women’s Entrepreneurship Research Diverse Settings, Questions and Approaches. Massachuates: Edward Elgar

Dahlstrand, Å. L., & Politis, D. (2013). Women business ventures in Swedish university incubators. International Journal of Gender and Entrepreneurship, 5(1), 78–96.

Dautzenberg, K. (2012). Gender differences of business owners in technology‐based firms. International Journal of Gender and Entrepreneurship, 4(1), 79–98.

European Commission. (2016). She Figures 2015. Retrieved from http://ec.europa.eu/research/swafs/pdf/pub_gender_equality/she_figures_2015-final.pdf#view=fit&pagemode=none

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Kravec, P. (2016). Tvorba konkurenčných výhod startupov v slovenskom startupovom prostredí. Presented at the Management in Theory and Practice. 15. medzinárodná vedecká konferencia doktorandov a mladých vedeckých pracovníkov, Bratislava: Fakulta managementu UK.

Mayer, H. (2006). Economic trends and location patterns of women high-tech entrepreneurs. Frontiers of Entrepreneurship Research, 26(11), 1.

McAdam, M., & Marlow, S. (2010). Chapter 4 Female entrepreneurship in the context of high technology business incubation: Strategic approaches to managing challenges and celebrating success. In P. Wynarczyk & S. Marlow (Eds.), Innovating Women: Contributions to Technological Advancement (Vol. 1, pp. 55–75). Emerald Group Publishing Limited.

MERS&S (2014). Operačný program Výskum a inovácie. Retrieved from https://www.minedu.sk/operacny-program-vyskum-a-inovacie/

MFSR. (2015) Koncepcia pre podporu startupov a rozvoj startupového ekosystému v Slovenskej republike. Retrieved from http://www.rokovania.sk/Rokovanie.aspx/NezaradenyMaterialDetail?idMaterial=24603

MHSR (2014, October 28). Program na podporu start upov. Retrieved from http://www.economy.gov.sk/22544-ext_dok/145350c?ext=orig

Pilková, A., Holienka, M. Kovačičová, Z., Rehák, J. (2015). Podnikanie na Slovensku: aktivita, inkluzivita, prostredie. Bratislava: Univerzita Komenského v Bratislave.

Roštárová, M. (2015). Nefinančné formy podpory startupov. In Š. Slávik (Ed.), Podnikateľské modely a podnikateľské stratégie startupov I. (pp. 227–245). Bratislava: Vydavateľstvo EKONÓM.

SBA. (2015). Správa o stave malého a stredného podnikania v Slovenskej republike v roku 2014. Slovak Business Agency.

Szapuová, M., Kiczková, Z., Kottulová, J., & Mitková, Ľ. (2013). Ženy v IT: nové šance, staré riziká? Bratislava: Univerzita Komenského v Bratislave.

Vojtášová, K. (2105). Ženy a inovácie – podpora žien v inovačnom podnikaní (Diplomová práca). Bratislava: Univerzita Komenského v Bratislave.
Contact

Janka Kottulová

Faculty of Management, Comenius University in Bratislava

Odbojárov 10, P.O.Box 95, 820 05 Bratislava 25, Slovak republic

janka.kottulova@fm.uniba.sk
Ľudmila Mitková

Faculty of Management, Comenius University in Bratislava

Odbojárov 10, P.O.Box 95, 820 05 Bratislava 25, Slovak republic

ludmila.mitkova@fm.uniba.sk





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