The way in which we think about and conceptualize productivity is changing. Traditional metrics of productivity like hours worked or GDP are not necessarily reliable indicators anymore. Instead, we’re moving toward what some are calling an “innovation-based economy.”
How we think about innovation economics is less tangible than traditional notions of an economy driven by material and capital accumulation. Now, we rely on individuals exercising their knowledge, technology and business acumen to build a dynamic, competitive economy based around ideas. This spurs activity at every level, from the individual to the organization, and even to broader industries, cities and countries.
The crux of this new economy is entrepreneurship, but how do we quantify potential growth? When we’re talking about an idea-based economy, we can see patents as an index—and a key driver—of economic dynamism.
The widespread holding of patents fosters entrepreneurial skills. They give people power to innovate and keep our economy competitive on the global stage. There’s just one problem: a massive segment of our population is falling behind.
Women Inventors Underrepresented
Women represent about 51 percent of the U.S. population. However, it’s fair to say women are very underrepresented in the science and engineering fields that are vital to the new economy. While the matter is especially pronounced here in the U.S., with women representing just 13 percent of the engineering workforce , it’s not a unique matter. Rather, underrepresentation of women in developing patented inventions reflects a worldwide pattern.
A recent CNBC survey identified Shanghai, China and Bangalore, India, as the world's leading emerging technology hubs. These and other centers of innovation throughout Asia, specifically China, South Korea and India, dominate global patent filings, promising to rival or even soon surpass what tech leaders are achieving in Silicon Valley.
Even in these hot spots, patents filed by women are in the minority. We can discern this because Asian inventors often file counterpart patents in the U.S. This confirms that the key finding of a recent report by the U.S. Patent and Trademark Office—that only 12 percent of patents are held by women—reflects not just a U.S. problem, but a global one.
Women Essential to Economic Success
Overall, women's use of their creativity and business skills is crucial to our shared growth and prosperity.
Women in the tech space clearly demonstrate their skills, creativity, and business acumen daily. We can not only innovate, but also leverage innovation to create value and lead to further advancements.
In fact, as one study from the Kauffman Foundation shows, tech companies led by women are actually more capital-efficient than their male-led peers. Such organizations achieve, aa 35 percent higher return on investment compared to firms led by men.
Despite the demonstrated advantages, women are still small a minority within STEM communities. As a result, we aren’t seeing broad increases in the number of patent-holding female inventors.
While discussing the importance of the entrepreneurial mindset before, it’s ultimately just one part of the equation. Thus, having access to funding is even more important. Currently, only about 7 percent of VC funding finds its way to women-led startups. The overwhelming tendency is for VC firms to invest overwhelmingly in male-led companies.
This does an incredible disservice to young entrepreneurial women. However, given the ROI that women-led companies tend to generate, the firms may be shorting themselves of potential returns. Then, when you account for lost productivity and potential, we all pay a price.
How to Restore Balance
The continuing underrepresentation of women among the ranks of patent holders is indicative of a larger problem that mirrors the lack of women in STEM. Although women have conclusively demonstrated their value as entrepreneurs, as well as physicists, chemists, biologists and engineers, they still represent small minorities in all these fields.
This disconnect between ability and access can—and must—be resolved. Otherwise, we risk losing our position as a competitive force in the global marketplace. Not only that, we also squander an incredible well of talent and ability. To that end, I have two key pieces of advice that are vital for venture capital firms, the first of which is to simply hear the pitch. It seems like an obvious place to start, but women often have trouble even getting in the door to pitch their ideas.
In honor of International Women’s Day in 2018, a group of investment firms got together to sign-on for the #StartWithEight campaign. This campaign requested VC firms take meetings with just eight new candidates during March which, on its own, is a reasonable goal. The need for a movement like this underscores the state of the matter.
The second request is to try to funnel more money to support female entrepreneurs.
VC firms can allocate a set amount to invest in female-led businesses. They don’t have to stick only to this amount but determining a preset minimum allocation for female entrepreneurs is a great step forward. This practice helps break male-focused investing habits while seeking out promising new opportunities at the same time.
The bottom line is that there are countless promising young female tech leaders out there. They’re only waiting for someone to give them the chance to succeed. But, as long as the current balance of funding within investment circles remains the same, that talent will continue to go unleveraged.
Monica Eaton-Cardone is an entrepreneur and business leader with expertise in technology, e-Commerce, risk relativity and payment-processing solutions. She is COO of Chargebacks911 and CIO of its parent company Global Risk Technologies.
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