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The entrepreneurial process is a complex journey. A smooth liftoff when starting a new business is essential; but founders’ exits are just as vital. Healthy exits - meaning ones that result in IPOs and mergers acquisitions -  give founders and VCs a return on their human capital and financial investment.

Prior research has explored the influence of a founder’s gender on their motivations and how they operate, but few studies have explored how gender impacts exit routes, including IPOs and M&As. Along with my colleagues at Bryant University - Sonal Kumar, Leile Zbib, and Peter Nigro - we set out to determine how the differences between men and women entrepreneurs, particularly in their motivations and values, shape the way their businesses exit.

Our forthcoming study uses a Crunchbase dataset and examines a sample of 18,849 privately owned companies, 15% of which are female-owned, with an average age of 9.8 years and an average size of 205 employees. In terms of the distribution of exits, 76.5% of the companies are continuing the business as of 2021, 7% are out of business, 2.5% exit via IPOs, and 14% exit via M&As.

By conducting a multinomial logit analysis, our study discovered that female founders are significantly more likely to continue their businesses. However, they are significantly less likely to acquire venture capital financing, which can lead to fewer exits via M&As or IPOs.

The findings also suggest that male founders have a strong preference for growth, profit, and performance, and they tend to create growth-oriented companies that are more likely to exit via M&As or IPOs. This is compared to female entrepreneurs, who tend to pursue a niche strategy and focus on continuity rather than growth. 

Additionally, if they are not achieving higher growth, male founders are more likely to discontinue their firms. These results are consistent with prior research that has shown that female entrepreneurs tend to value non-economic goals more than male entrepreneurs and prefer to remain in control of their businesses, even if the growth rate is slower.

Overall, our study provides insights into how a founder’s gender shapes their business’s exit routes. The results suggest that a founder’s motivations and values have a significant impact on how their businesses exit. Female entrepreneurs tend to focus on continuity and non-economic goals, which can limit their potential for high growth and exits via M&As or IPOs. However the lack of available VC funding for women is also a contributing factor. 

These findings have important implications for policymakers seeking to promote gender equality and diversity in entrepreneurship. Policies that aim to increase access to capital and resources for female entrepreneurs, while promoting diversity in leadership and decision-making, can help to reduce gender disparities in entrepreneurship and increase potential for positive exits.