TRACEY LINDEMAN
Special to The Globe and Mail
Initiatives to increase the number of women in the notoriously male-dominated startup world are catching on around the world.
There are accelerators – such as the S Factory in Santiago, Chile; Upstart in Memphis, Tenn. and Prosper in St. Louis, Mo. – that give women-led startups mentorship and up to $50,000 (U.S.) in seed investment. Co-working spaces for startups with at least one female founder, such as WMN in Israel, exist too. In Canada, the Waterloo-based Communitech’s Fierce Founders programming offers women entrepreneurs hands-on training and funding of up to $30,000 (Canadian).
Then there are the investors and organizations that fund women-led startups, the informal support groups for women and the women-only networking events. 

Wall Street Journal Article by Susan Duffy


We’re right to be alarmed by the stunning amount of fem-fueled entrepreneurial potential being left on the table. At Babson College Center for Women’s Entrepreneurial Leadership, we believe the opportunities ahead far outweigh the challenges. There are three critical lessons we’ve learned from our experience working with entrepreneurs that can create greater gender balance and by extension, extraordinary economic and social impact.

http://blogs.wsj.com/accelerators/2014/08/19/susan-duffy-3-lessons-learned-in-creating-gender-balanced-entrepreneurship/

1. Rewrite the gender imbalance story

A national narrative fixated on the small percentage of equity-investable tech businesses misses a big part of the positive picture of high-growth-potential, women-owned ventures.  According to the U.S. Global Entrepreneurship Monitor (GEM) report in 2013, American women have the highest rate of entrepreneurial activity of all developed countries surveyed: one out of 10 women was starting or running a new business.

Women-led companies have outperformed all but the largest publicly traded companies in terms of growth rate, employment and revenues since 1997. In short, we have a country full of educated and experienced women churning out innovative high-potential companies only to be choked off from the capital required to catalyze growth. It’s time to write a new chapter in the startup story where investors, entrepreneurs and the economy benefit from a broader, more inclusive ideal of entrepreneurial success.


See what other startup mentors have to say about fixing the gender imbalance at startups.2. Redefine startup success. 

Gender matters. Gender-diverse boards run better performing companies; and women-led startups are on fire. The current “one size fits all” version of what attracts both capital and cultural attention is robbing our economy of entrepreneurial potential as well as the requisite role models for a new generation of entrepreneurs.

Startups need a makeover and a good place to start is by recognizing the hazard of “homophily”: the human tendency to value the familiar. In this case, it’s the familiar sector, venture type and founder profile. The current practice of privileging the status quo with access to funding, networks and resources is actually anti-entrepreneurial. Sure, if he looks like me and sounds like me he might be worth a shot, but so might she. Women entrepreneurs frequently lament that otherwise savvy investors just didn’t “get” their businesses. Actively seeking diversity on investor teams will also help.

3. Redesign One Startup Gateway: Accelerators

Venture accelerators are now a common path to startup success and they too replicate the gender-imbalanced status quo. A gender split of five men to every one woman is common in accelerators, as is an unquestioned—and likely unintentional—masculine-normed culture. From pitching criteria to mentor pools, a “bro culture” is common. At Babson, we’ve taken steps to address startup gender imbalance by creating The Women Innovating Now (WIN) Lab. The lab differentiates from traditional accelerators by focusing on both the high-potential enterprise and on the woman entrepreneur. At WIN, we’ve built a community of women entrepreneur experts, women speakers, women coaches and mentors to create a new startup success story. Next-gen entrepreneurs can identify with and learn from best-in-class women entrepreneurs who share their victories and defeats.

WIN Lab fills in the early gap. While the ideation phase of building a successful business is critical to growth intentions, most programs geared toward early-stage businesses don’t want to take this burden. Our hope is that WIN is a temporary solution that will soon be replaced by a fully gender-balanced model of entrepreneurial acceleration. Until then we will continue to create an environment in which women tap their unique blend of assets, thrive in the demanding but development-oriented environment and encourage each other to soar.

Ms. Duffy is the executive director of the Center for Women’s Entrepreneurial Leadership. She serves on the board of directors of the Tory Burch Foundation and the International Council for Small Business.  

National Women's History Museum launched its newest exhibit, "From Ideas to Independence: A Century of Entrepreneurial Women," which celebrates and chronicles the legacies of entrepreneurial women, who forged through challenges 
and setbacks to create their own paths to economic and professional independence and open their own businesses. 

View Exhibit

This month’s tips come from Facebook COO Sheryl Sandberg’s new book, “Lean In”. The book discusses not only empowerment in the workplace, but also serves as a career guide from one of Silicon Valley’s most powerful people.  Below are four examples from Sandberg of how women can overcome obstacles. To lend an entrepreneurial perspective we’ve included insights by Start ‘Her Up founder, Jill Fishbein.

1.     Sit at the table.

Sandberg: Plagued by self-doubt and "feeling like a fraud," women consistently underestimate themselves and their abilities.
Fishbein: Surprisingly, I see this frequently with young women lawyers and those few women employees of companies who get that rare invitation to a board meeting.  They just side off to the side, in effect, encouraging others to think of them as not part of the main discussion.

2.    When negotiating, "Think personally, act communally."

Sandberg: Preface salary negotiations by explaining that you know women often get paid less than men, so
you are going to "negotiate rather than accept the original offer" This way, women can position themselves as connected to a group. Whenever possible, use "we" instead of "I." 
Fishbein: While valuable advice, I may disagree with Ms. Sandberg here a bit.  If her tip helps you feel more comfortable asking for what you deserve, and then go for it.  However, and ideally, you would eventually
feel that your individual contribution stands on its own and you can ask for what your performance truly merits, especially as compared to others.

       
3. Don't sacrifice being liked for being successful. 
  
Sandberg: Facebook CEO Mark Zuckerberg said, "When you want to change things, you can't please everyone." He was right. 
Fishbein: While being liked can’t be at the top of your list, a worthwhile approach is to cultivate a style of delivery that makes your point in manner that isn’t offensive …at least to your ears, since you may face some old fashioned colleagues who think any strongly made point by a woman is offensive.

      
4. Take Risks.

Sandberg: Risk-taking is celebrated at technology companies from tiny startups to behemoths like Facebook. More men look for assignments that stretch their abilities and are high-profile. More women hang back, especially when they're working closely with men. Women need to shift from thinking 'I'm not ready to do
that' to thinking 'I want to do that and I'll learn by doing it. 
Fishbein: I couldn’t agree more with Ms. Sandberg’s advice and the spirit of Silicon Valley this tip embodies!
 

Full Associated Press Article: Career tips from Sheryl Sandberg's 'Lean In'

As your company begins to gain ground, you will soon be considering how to incorporate. A question to ask yourself: what is your company identity? You may be a company that is offering a service to its customers. Or, your company may be doing more than just providing that service and making a profit—your company’s ultimate goal may be to offer a public benefit, making a positive impact on society or the environment.  Many companies have moved towards some form of a hybrid corporate identity, and California has kept up with the movement by offering two new types of corporations: the Benefit Purpose Corporation, and the Flexible Purpose Corporation. While both corporations aim to accommodate companies who want to identify themselves by the social benefits they create, the two corporations differ not only in identity, but also in purpose.

The Benefit Purpose Corporation (Benefit Corp.) structure is made for the company that has the primary goal of creating a material change in society or the environment. This impact is evaluated by an independent third-party standard, which has no material financial relationship with the corporation or its subsidiaries. Benefit Corporations require a high level of transparency. Note that the Benefit Corp. is different from the popular B Corporation Certification. B Corporation Certification is completely voluntary for companies that incorporate as a Benefit Corp., is issued by a third party (not the government), and must meet a separate list of standards for performance, accountability, and transparency.

The Benefit Corp. is really designed for small private companies that want to pursue creating a public benefit. Examples of public benefits include services to low-income families, the environment, health, arts and sciences, or any other benefit for society or the environment. In addition to the social responsibility impact the Benefit Corp. offers, an attractive feature to this structure is director liability: there is NO liability for failure to create a public benefit, and there is NO fiduciary duty to the beneficiary of the public benefit. It really allows a company passionate in creating a benefit for the public to try to identify itself as such with relatively little liability. An example of a B Corp. in California is Patagonia, the outdoor gear and clothing company.

The Flexible Purpose Corporation (Flex Corp.) structure, on the other hand, is a hybrid structure that allows a company to create a profit and pursue some form of a social benefit purpose.  However, instead of having an independent third party standard to meet, the corporation itself (i.e., the directors and management) has to specify the standards for measuring the impact of the corporation’s pursuit of the social benefit.

The Flex Corp. is a relatively new corporate form, and it is really unknown how a company’s special purpose is going to be enforced by anyone except the company and its shareholders. Entrepreneurs be warned: even though there are fewer standards to meet, Flex Corporations will face questions from investors and shareholders about company purpose and corporate assets. Some advice: accountability, accountability, accountability. There is a greater need for “self discipline” and transparency with a Flex Corp.  Annual reports, strategies in achieving the purpose, and standards for measuring the progress and success of these efforts, are essential for success as a Flex Corp. Companies big and small can incorporate as a Flex Corp.

There is no better option between the two new corporation-structures offered in California today; neither option offers an obvious tax benefit better than the other either. Each offers a very different opportunity for a company to identify itself, to investors and customers alike. Take a look at what your company’s purpose is, and consider what your mission statement offers to society. You may be passionate about creating a social benefit; identify yourself, and incorporate accordingly.

As your company starts to grow, and you begin to hire individuals to help you keep up with expansion, there is the daunting task of determining whether you should be hiring individuals as employees, or as independent contractors. Why does it matter? I’ll tell you why: the IRS cares, and so should you. If you misclassify your new hire, you will be liable for employment taxes for that worker. To avoid the unpleasant series of consequences, we offer guidance to avoid this misstep.

Classifying a new hire means understanding the differences between independent contractors and employees. Independent contractors are usually self-employed individuals who offer their services to the general public. Services performed by independent contractors are not controlled by an employer; specifically, “what will be done and how it will be done” will not be controlled by the employer. Conversely, an employee is an individual who performs services for an employer if the employer can control “what will be done and how it will be done”. To make this point clear, let’s look at the following example:

Sally Sales is employed by a startup company. Sally works in sales, but any final deal she offers a client must be approved by her manager. Her work is very independent in nature otherwise. The company pays for her health insurance and benefits. This is an example of an employee. Had Sally done her work without approval of a manager and was not offered insurance or benefits, she would be an independent contractor. The more you find yourself controlling the work of your new hire, the more likely the new hire is an employee.

There is no clear-cut measurement of qualities or characteristics that help determine the role of your new hire. However, consideration of the following three categories can help you define the capacity in which your new hire will be integrated into your business:

    Behavioral - Will the new hire have the right to control or direct only the result of the work? Will you as an employer control the services of the new hire (specifically, “what will be done and how it will be done”)?

    Financial- Are the business aspects of the new hire’s work controlled by the employer (i.e., how the new hire is paid and reimbursed, tools provided, etc.)?

    Type of Relationship – Is there an employer-employee relationship (are benefits offered, insurance, vacation pay, etc.)?

If, after considering the categories above you are still concerned about the status of a new hire, you have the option of submitting Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding Form, to the IRS to help you classify your new hires. Please note that it may take at least six months to receive a final determination.

Once you have classified the nature of your new hire, you must prepare to collect taxes, or file the correct tax forms. If you find yourself hiring an employee, you will be withholding federal income tax from your new hire’s wages, and preparing a W-2 for your employee at the end of the year.  If you have hired an independent contractor, you will need to have the contractor fill out a Form W-9, Request for Taxpayer Identification Number and Certification. At the end of the year, you will be completing a Form 1099-MISC to report payments made to the contractor.

It seems daunting at first, but considering a few questions about the nature of your new hire can save you the headache of paying for the mistake of misclassifying them later. Happy Hiring!

   For more information on both the Federal Government and State of California's definitions of Contractors and Employees, see the links below.

IRS Website
State of California Department of Industrial Relations