The COVID-19 pandemic has sparked a remarkable surge in new businesses, particularly led by women leaving traditional employment. This trend reversed decades of entrepreneurial decline, raising questions about its sustainability and the lessons we can learn from it. According to recent data, half of all businesses started during the pandemic era were founded by women, a significant increase from the 29% in 2019.
The Pandemic’s Impact on Female Entrepreneurship
The pandemic disrupted traditional work environments and opened new opportunities for many women. Omi Bell, founder and CEO of Black Girl Ventures, noted, “The pandemic just opened up a huge window for people to be able to do their thing, no holds barred. It shifted how we think everything has to happen.” This shift led to a notable increase in business incorporations, particularly among women and minority groups. Nearly four years later, rates of new business incorporation remain elevated, with Black women being a significant driver of this trend.
However, while more women are becoming entrepreneurs, many are sole proprietors or supplementing their income through side hustles. This trend contributes heavily to the $1.3 trillion freelancer economy. According to a survey by payroll provider Gusto, 27% of new firms were launched as side hustles. These businesses, often small with little revenue and no employees, highlight the growing entrepreneurial spirit but also the challenges of scaling and sustaining these ventures.
Factors Driving the Entrepreneurial Boom
Several factors have contributed to the rise in women’s entrepreneurship during the pandemic. Claudia Goldin, a Harvard University professor and Nobel Prize-winning economist, has extensively researched the historical data on American women in the workforce. Her findings suggest that the increase in women entrepreneurs is partly due to dissatisfaction with traditional workplaces, which often fail to accommodate family life and domestic responsibilities. Goldin’s research indicates that the gender pay gap is less about outright discrimination and more about the structure of high-paying jobs that demand long hours, making them less compatible with household responsibilities traditionally managed by women.
Jamie Sears, co-head of impact at UBS, explains that many women realized traditional work environments were not working for them, leading them to bet on themselves and start their businesses. The pandemic uprooted many habits and prompted a reevaluation of work-life balance, pushing women towards entrepreneurship as a viable and flexible alternative.
Sustaining the Entrepreneurial Momentum
As we look to the future, the key question is whether this entrepreneurial boom will continue. The pandemic has shown that women can successfully transition to entrepreneurship, but sustaining this momentum requires ongoing support and resources. Programs and networks established to support inclusive entrepreneurship have played a crucial role in this surge. Technical.ly’s report, “The Inclusion Edge,” funded by UBS, highlights the importance of these resources in enabling women to take the entrepreneurial leap.
Economic and labor market shifts may impact the entrepreneurial landscape, but the foundational elements for continued growth are in place. Entrepreneurs like Bell and investors like Sears emphasize the need for network building, capital readiness, and effective storytelling to encourage more women to pursue entrepreneurship and grow their businesses.
Lessons from the Pandemic Entrepreneurial Boom
The entrepreneurial surge among women during the pandemic reflects broader historical trends. Before the Industrial Revolution, many working-class American households relied on dual incomes, with women balancing paid work and domestic responsibilities. The current trend mirrors this flexibility, with women using entrepreneurship to create the lives they want.
However, while increased business starts are positive, it is essential to address the underlying issues in traditional workplaces. Inflexible work environments have driven many women to entrepreneurship, but this should not overshadow the need for supportive and economically vibrant workplaces. Employers must recognize that they are now competing for talent not just with other firms but with independent practices.
Geographically, the entrepreneurial boom is uneven. Washington DC, for example, has the highest number of women-owned businesses per capita, while states like Pennsylvania and Delaware lag significantly behind. This disparity underscores the need for targeted support and resources to foster entrepreneurship in underserved areas.
In conclusion, the rise of women’s entrepreneurship during the pandemic presents both opportunities and challenges. The focus must now be on sustaining this growth, widening the boom, and strengthening these new businesses. As Bell aptly puts it, “The world needs what women are building.”