From joiners to founders: Startup employment and underrepresented entrepreneurs

Abstract

Research Summary: Black women are drastically underrepresented in entrepreneurship, prompting questions about what factors may increase their representation. In this study, we focus on one factor: working as an employee in a startup. While research shows that employment in startups increases the likelihood of founding one's own company, we explore whether this effect differs for Black women. Using abductive methods and a proprietary dataset from Venture For America, we find that the relationship between being a joiner and later becoming a founder is much stronger for Black women compared to other demographic groups. We complement our quantitative analysis with in-depth qualitative data to better understand what is driving this effect. Overall, our findings contribute novel theoretical and practical insights to entrepreneurship. Managerial Summary: Representation among technology founders is very skewed by race and gender. In this study, we suggest one way that may help a very underrepresented group, Black women, create startups at higher rates. By analyzing the careers of 8000+ individuals interested in entrepreneurship, we show that working as a startup employee encourages many to start their own companies. However, this effect is stronger for Black women than for those from other demographic groups. Our rich, in-depth qualitative data suggest that, compared to other groups, Black women engage in greater levels of self-reflection and so become more motivated to transition from being a joiner in a startup to a founder of one.