Guest Column: In communities, small investments are showing some big gains
WEDC Secretary and CEO Missy Hughes
As Women’s History Month draws to a close, I’ve been thinking about some of the roles women play in Wisconsin’s economy and how our state can help them move ahead.
As most of us in the economic development field have learned, women have been among the hardest-hit by the pandemic and its aftermath, in some cases erasing gains made by generations of working women. Women-owned businesses, especially restaurants and service businesses such as hair and nail salons, saw huge drops in business in the early phases of the pandemic; now that demand for workers has heated up again, these same businesses also have had trouble attracting and retaining workers.
At the same time, women were often among the first to lose jobs or to leave jobs to take care of children, elderly or ill family members. Many still have not returned to work.
The last few years have also demonstrated how getting and keeping a job involves more than just showing up for work: It’s tied to being able to access quality, affordable child care — which is an issue facing both men and women – as well as housing, health care, and transportation. It’s difficult – if not impossible – to go to work if there’s no safe or affordable place to leave your kids, or if the bus stop is a mile away from your employer, or if you live two or three towns away because there’s no affordable housing near your job.
The most successful employers and communities these days are looking at workers not just as laborers but as individuals with specific needs — and finding ways to meet those needs. Thanks to the $100 million Governor Evers has allocated for the Wisconsin Innovation Grants, local governments, businesses, educators, and nonprofits all over the state are all pulling together to develop local solutions to workforce needs. We’re making unprecedented investments in worker training and education, child care, health care, and other areas to ensure our workforce needs are met for years to come.
Meanwhile, as our economy shifts toward recovery, there are broader issues of equity our state needs to address if we’re going to ensure everyone has the chance to achieve economic well-being. One of those issues is investing in women entrepreneurs and women-owned startups.
WEDC has been looking at how our state invests in these businesses, and while we’re keeping pace with national trends, we can do better. A recent WEDC review of investments made through our Qualified New Business Venture program, which provides tax benefits to investors in Wisconsin start-ups, shows that from 2017 to 2020, women-founded companies received a little less than 5.5% of the money invested in Wisconsin QNBV companies. That’s about half the national figure for comparable investments that go to companies with all-women or mixed-gender founding teams.
Wisconsin needs to do some catching up if we’re going to really ensure that all businesses in our state have what it takes to succeed. WEDC has begun talking with the venture capital and funding communities about these disparities, and investors seem open to taking a closer look at many of these start-ups. Their reasoning is simple: investing in women-founded and owned businesses makes economic sense.
National studies show startups with a woman founder on the team generate 10% more cumulative revenue over five years. At the same time, investment groups with more woman investing partner hires make more successful investments at the portfolio company level, achieving higher fund returns and more profitable exits.
But the really big wins are happening in our communities. One of the trends we’re seeing in the Great Resignation is that as people have left their jobs, they’ve started following their dreams and creating new businesses. We’re seeing this trend when businesses apply for WEDC’s Main Street Bounceback Grants and other assistance.
As I’ve traveled the state, I’ve seen that many of these new businesses are being started by women – like PLUSH in Kenosha, which opened to serve women of color -and women of any size – who wanted to feel beautiful. Or Argentum et Aurum in Fond du Lac, where the owner decided to leave her job as a marine biologist and start commercially producing the jewelry she’d been making as a hobby.
We also see this growth reflected in our surveys of the state’s 34 Main Street communities. A new survey from 2019-2021 – which included the first two years of the pandemic – found that women remain major players in downtown entrepreneurship.
Women owners account for more than 38% of all Main Street startups, and more than half if you include jointly owned businesses, such as those with spouses or other male partners.
The Main Street numbers bear out what we’re seeing in communities – that many first-time entrepreneurs are women, and they’re more likely to be found in rural areas running shops and restaurants. What we need to do as a state is to harness that entrepreneurial initiative and make sure these new businesses have the resources they need to succeed – both in the early days as well as when they start to scale up.
Broadening the base of which businesses get funding as they grow has many benefits: more Wisconsinites are empowered to start new businesses, which creates a more robust pipeline of projects worth funding and more high-tech, high-wage job opportunities. Those opportunities, in turn generate higher returns to investors that result in increased capital availability in Wisconsin. It’s a classic win-win scenario.
Missy Hughes is Secretary and CEO of the Wisconsin Economic Development Corporation, the state’s leading economic development organization.