The contradictory but promising picture of female entrepreneurship and the activity of the Hungarian business angels from a gender-perspective

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DOI: 10.18427/iri-2018-0054
The contradictory but promising picture of
female entrepreneurship and the activity of
the Hungarian business angels from a
gender-perspective
Kata K
EVEHÁZI
JOL-LET Foundation
kevehazi.kata@phd.uni-obuda.hu
Behind the global problems are basically the power aspirations that lead to
the irresponsible use of resources, the choice of values that are in the way
of sustainable development. The greater participation of women in decision-
making due to their different priorities is decisive in mitigating the
increasing social inequalities, the preservation of the environment, the
elimination of war conflicts and their consequences.
The main obstacle to women's empowerment is their low weight on the
economy, and the limitation of their economic independence. To increase
the influence in existing power structures, it is essential to strengthen their
autonomy, autonomy and social needs, which is an effective tool for
women's own businesses to grow. Modern IT and communication
technologies overcome the mobility constraints stemming from the
reconciliation of family and work, so women's businesses that build on their
use can be set to grow. For this, the angel investment, which is the most
dynamically developing model of early-stage development in the last
decade, can be an excellent aid.
At the same time, however, societies in which political decision-makers
and opinion-forming actors strive to maintain a subordinate position among
women, strengthen social stereotypes affecting women and the traditional
gender roles, gender-specific income - and thus ultimately power
inequalities (Blau, 2012).
It is therefore of the utmost importance to create an angel investor circle
familiar with the characteristics of women's entrepreneurial activities. The
aim of my article is to present – as part of my doctoral thesis is
comprehensive, dealing with women's safety issues - what is happening
today in Hungary between women's businesses and angel investors.

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Introduction
The business angel activity started from America in the early 20th century.
The contemporaries attached this name to the financiers of cultural
programs.
1
Today's business angels are informal risk investors who invest
their own money into start-up businesses with promising growth potential
and - very rarely - invest in social enterprises.
In decision-making for angels in investing, unlike purely venture capital
investors, rationality and emotion mix in different proportions: on the one
hand, they strive to make good their money's money and, on the other,
they are guided by beliefs „of faith”. It's no coincidence that in the
international literature 3F is called "friends, family and fools" (Clercq et al.,
2006).
The motivations of business angels may be quite mixed. Some people
specifically and primarily have their own business interests in mind,
benefiting from a very favorable tax incentive in some countries (such as
UK, 100%). Others strive to gain social benefits, as they represent a great
deal of prestige in some countries and strata, entail community recognition
if they are business angels. But the same relevant motivation may be the
satisfaction of one's own interest, the desire to utilize the acquired
knowledge, and the simple play of the game. And it is also common to help
others, friends or even talents, and contribute to the spread of something
socially useful product or service (Harrison & Mason, 2007).
The different motivations behind the angelic activity may vary according
to their effect, their significance extends beyond the personal level. Indeed,
the activity of a business angel based on risk-taking and ownership of an
autonomous individual can also be a responsible, socially responsible,
business-oriented business that can represent a huge potential for social,
economic and environmental sustainability.
The value choices of business angel communities can therefore be of
great significance in shaping societies. If social responsibility has a
meaningful role in the motivation of business angel activity, wealthy layers
can generate a real change in a society, even globally.
Recognizing the severity of global and local social, economic and
environmental problems, the development of awareness and relevance for
relationships in the social and financial position is of particular importance.
My scientific activity, as well as my civil organization leadership, is aimed
at contributing to the growth of this awareness and responsibility, to
empowering women. A series of research proves that the aspects of
sustainability and equal opportunities are close to the priorities
2
of women,
so that these aspects can be more widely used with greater social influence.
1
A brief history of angel investing,
https://www.syndicateroom.com/learn/overview/angel-investing
2
http://www.hbs.edu/faculty/conferences/2013-w50-research-
symposium/Documents/eagly.pdf

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The business angel, therefore, is an important issue for the social utility
of an activity, how do investments promote the social role of women, and
how do they support women to support other women as their social role.
In my present paper, I present the importance of women's
entrepreneurial activity for the role of women in society, which can be
deduced from gender-based stereotypes, and the specificities of the
entrepreneurial activity, the characteristics of the business angel
investment, the current Hungarian tendencies, the organization of female
business angels. At the same time, I give consideration to analyzing who
and what steps could be taken to enable business angels to play their social
role in promoting sustainability and gender equality.
To this end, we summarize facts related to domestic women's businesses,
data on the prevalence and sectoral distribution of women's businesses and
their access to finance. A recent 187 people, non-representative survey
3
of
some of our data was obtained. In order to explore the activities of
Hungarian business angels, business angels (women and men) supporting
women's businesses, we conducted primary and secondary research: we
studied Hungarian and international literature, we conducted interviews
with angels, and improved access to and knowledge of active and potential
angels. we have prepared an online questionnaire
4
for themes.
The characteristics of women entrepreneurs and
women entrepreneurs
The importance of women's businesses
The possibility of realizing full life is not equally guaranteed for women and
men - as shown by the gender inequalities present in all levels of society
and economyThe changes of female gender roles did not result the same
transformation of male roles: most of the world's societies are still based
on the male breadwinner model. Having a decent income is still a secondary
social expectation for women. The primary basis for the appreciation of
women is to comply with biological roles: an attractive appearance,
maternity and care, which captures a significant part of women's energies.
Therefore, although they are more educated today than men (64% of
university and college students in Hungary are women), their participation
in the labour market or business, and their economic independence is
limited, their earnings, pension and wealth are significantly smaller.
Women's income is a great necessity for families and society as well.
Women's participation in the labor market is growing, and the importance
of women leaders in the profit-maximizing companies is also increasing.
However, these organizations are limited in building and maintaining culture
and practices that hinder the reproduction of women's disadvantages.
Female leaders are advancing in these companies by developing their own
3
https://goo.gl/forms/0NO1tnJnUHj3HnTm1
4
https://goo.gl/forms/5uBfRqvhC4XlOcRk2

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coping techniques and few have a real power position. Research shows that
if they succeed in stabilizing their leading role, female leaders are more
likely to represent equal opportunities, welfare, environmental aspects,
tolerance, understanding values, engagement, democratic participation-
based leadership style.
5
Women's own businesses, their economic power, their self-defeating
skills, their self-responsibility and their own fate, can increasingly represent
values beyond the patriarchal value system: the welfare of children and
other vulnerable people, care, the environment and the protection of global
security. Thus, the key element of social, economic and environmental
sustainability is the extension of the personal autonomy and rights of
women and the strengthening of their businesses.
The impact of gender-based stereotypes and gender roles on
business
The word enterpreneur is evoking a picture overall in the world of a man,
typically in Hungary we imagine a decisive, pushy man in his mid 1940s.
Women's enterprise, as a definiton, is hardly known: even for some experts
on enterprising interviewed in our previous research on women
entrepreneurs, it was not clear how to define a female entrepreneur. The
basic criterion for an enterprise is the ownership: at least 51% of the
ownership should be in the hands of one or several woman, who hold(s) the
majority for making key decisions on strategy and operation
Types of women entrepreneurs in the light of gender roles. The women's
life strategies offered by the patriarchal society all over the world are
fundamentally divided into three distinct groups among entrepreneurial
women as well:
 Dependency: the provision of homework, long-term absence from
the labor market.
 Combination strategy: limited participation in the labor market
subject to private life.
 Career strategy: the aim is to have a lasting presence on the labor
market, exploiting the abilities, and earning on their own
(Bernhardt, 2000:10).
Women enterpreneurs following the „dependency strategy” (their priority
is the home) contribute to the development of their husband’s/partner’s
firm, they are perceived by the environment, often by even themselves as
the helper. Their business activity is basically related to the men’s activity.
Those who are choosing the combination strategy can also work in a joint
venture with a husband/partner but they are less likely to remain in the
background, their involvement can be based on skill-based division of labor,
and their contribution to the success of the business is recognized by their
5
http://www.hbs.edu/faculty/conferences/2013-w50-research-
symposium/Documents/eagly.pdf

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associates and the outside world. In this case, another form of the
combination strategy is the enterprise as an ancillary activity.
A significant part of female businesses is one-person enterprise, their
majority are also following the combination strategy (self-limitation of the
work activity with the aim to fulfill family obligations): the decisive aspect
of the day-to-day operation of the enterprise and one of the main obstacles
to their growth is the pursuit of family and work compatibility.
Women entrepreneurs with a career strategy do not limit the
development of their business: if they need more working hours, they work
more hours, they are ready to hire employees, they may also travel, etc.
These are usually childless young women or, in very small numbers, women
with elder children, and with outstanding professional and time
management skills, and also supportive family backgrounds.
Gender-based stereotypes and sexist culture and behavior are present in
all the arenas of life, including in business. Thus, how a female entrepreneur
can build his or her entrepreneurial activity along the strategy depends
largely on the degree of rigidity of views on the biological determinations of
gender roles in a given society, the level of discrimination awareness, the
social need for eliminating gender inequalities and support.
Disadvantages of women enterpreneurs. The gender roles, the stiffness
of the female image and the socialization that sustains it, are the result of
the existence of many stereotypes of female entrepreneurship, which
determine the conditions for starting a business, the business activity and
its growth prospects:
 Women are engaged in business activity in a smaller proportion.
One third of entrepreneurs are women (Vajda, 2014:111).
 Women's businesses run 90% of micro-enterprises, single-person
enterprises, do not hire or only employ a small number (vertical
segregation).
 Women's entrepreneurship is often a complementary activity.
 Women's businesses are mostly women's activities (horizontal
segregation): they carry out activities related to women's roles in a
female clientele.
 Hence, their income from the enterprise is also lower than the
income of the businesses owned by men.
The capital adequacy of women's businesses is much lower from the start
it has been compared to businesses headed by men:
 The starting capital is more limited by the lower savings due to
their lower earnings.
 They decide less independently than men on the use of family
savings for entrepreneurial activity and men are less supportive of
female entrepreneurship than vice versa.
 They involve less investors.
 Their willingness to take risks is lower and therefore take less
credit for starting a business.

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Women's business growth is also lower than for men-led businesses for
similar reasons:
 their accrued income is more likely used for family life-related
purposes.
 They are less oriented towards growth, as women's primary goal -
necessarily in the longer term - is to create a work-family balance.
Demographic characteristics. The existence of personal qualities that are
compensating for gender-based socialization and restrictive female image
(self-confidence, risk taking, determination, etc.) are especially important
for women entrepreneurs. It is no coincidence that 85% of female
entrepreneurs participating in our survey have a higher education degree
and have previous success path in their employment history, and that the
launching an entreprise is rarely included in the young women's girls and
women's career prospects. Women tend to be orientated towards
„feminine” professions that are compatible with family roles. No coincidence
that there are very few women among in technology-based businesses,
among start-up owners, their proportion is about 10%.
In our online survey, the young age group (20-29 year olds) represented
only 3.3% of respondents. The two largest age groups consists of those
women who probably have the biggest difficulties to restart their career and
attune work and family, women between 30-39 years (42.1%) and those
between 40-49 year olds (35.5%), but those above the age of 60 were
responding in a larger number than the youngest ones (5.3%).
Nearly 80% of woman entrepreneurs live in a town, but only 16.6% of
them are living in the capital (the share of he population is more than 20%),
which indicates that the job market is a determining factor for women to
start an enterprise. Budapest, however, plays an outstanding role in
business development infrastructure (training, financing, etc.) and business
opportunities.
Women enterpreneur’s lifestyle. Only one third of the respondents work
with their business 8 hours a day or more. This may mean that the business
is profitable, well-organized, it does not require more work, but it may also
be an indicator that women enterpreneurs has other type of activities too.
As for the mobility, 1/3 of them spend less than one hour per week on travel
linked to their business which means that they are working mainly from
home. For female entrepreneurs, the support or lack of support of the
husband/partner, the contribution to the business activity, the division of
home-work, etc. is a very important circumstance.
According to our survey, the participation of husbands/partners in
decision-making and counseling is the most striking, the assumption of
concrete tasks, the direct involvement is much less typical. At the same
time, nearly 40% of husbands/partners do not participate at all in
parenting, and more than 1/3 in housework. The traditional roles dominate
in the private life which is a core obstacle of growth of female enterprises.
Starting a business: capital and planning. One third of the respondents
claimed that her husband/partner financially supported the start of her
business, but at the same rate they stated that their venture did not need

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any starting capital. Nearly 40% said that raising the money was not a
problem for them, and 22% could handle it. Hardly 4% relied on external
sources.
It is not surprising at all: the start-up capital of the companies filled the
survey is extremely low: only in 30% of the cases it exceeded 1 million
forint (cca 3200 Euros) and only 0.73% enterprises had an initial capital
more than 3 million forint (in the range of 10 000 Euros). In 56% the
starting capital did not reach 300 thousand forint (less than 1000 Euros),
the proportion of the companies with the sum of between 1-3 million forint
(3000-10000 Euros) was 44%. Thus, those whose family status suggests
greater economic independence – the singles - are somewhat bolder in
making investment decisions. At the start of the business, they were most
likely to have parental assistance, but the majority of them typically did not
have any kind of relatives and friends to help. The ones, who filled the
questionnaires received tender sources and bank loans is very few cases.
Proper planning is an important part of a successful business. Although
earning an independent income was the most important issue among the
direct motivations of their reasons why they started the, 45% of
respondents have not made any initial calculation about the return. The
business plan was just over 1/10 of the start.
Horizontal and vertical segregation of female entreprises. For the analysis
of the activities of women's businesses, the evaluation of their results and
the understanding of female entrepreneurs' attitudes, it is essential to raise
awareness that women's businesses are fundamentally gender segregated.
While in manufacturing, the share of female entrepreneurs is only 17%, it
is 68% in services, and 66% in social and health services.
6
Segregation is also reflected in the nature of their clients: 76% of
entrepreneurial women are mostly women, hardly 7.6% of them are men
and the proportion of those whose customers are men and women equally
is only 1.4%. Basically, they meet everyday needs, a large number of their
clients are private individuals or private companies, only a smaller
proportion have clients from the public sector or work for diverse sectors.
More than half of the enterprises are one-person organizations. Almost 80%
of entrepreneurs do not have any employees at all, 1/10 of them work with
1 employee, 2% is the share of enterprises with more than 10 employees.
98% of women led businesses are micro-enterprises. More than 60% of
women enterpreneurs do not have any other contributors to their business
activities than an accountant.
Growth prospects. Financial success and profitability are an essential
component of entrepreneurship, but in case of women, the priorities about
success criteria are different. Their strategies are mostly build around male
breadwinner concept: only 1/5 of the respondents considered that to ensure
the family's livelihood is the utmost importance and only 20% of them think
that the expansion and investment is the most important for their
6
http://visegradrevue.eu/their-own-bosses-female-small-business-entrepreneurs-in-the-
v4/

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enterprise. The objective of growth itself is not particularly motivating for
Hungarian female entrepreneurs.
Language and ICT skills. A possible direction for business growth may be
the move to international markets, which requires language and IT skills.
The knowledge of languages and IT skills of Hungarian female
entrepreneurs typically needs improvement, but they are much more
satisfied with their IT skills.
Use of loans: needs and opportunities. The use of external resources for
the expansion of the company is not figuring among the plans of the
entrepreneurs involved in the survey. Less then 5% have or had bank loans,
they do not think to contact private investors and only slightly more than
13% think that they will borrow some money from a bank. More than 80%,
completely reject the idea of borrowing a bank loan. Those who have
already borrowed have a negative experience in a relatively large share.
Nearly 8% said they did not have access to the necessary external funding,
and less than 54% confirmed that their experience was benefiting.
Women's entrepreneurs are considered not only to be the target markets
of their financial services, but the banks are working to strengthen women's
businesses: beyond the product they are also organizing programs for skills
development and knowledge transfer training, mentoring services and their
relationship building. However, the strategic, non-sensitive financing
approach is very limited in financial markets.
Apart from the different preferences and motivations of women, which
define their ideas and decisions about funding, they are less risk-taking than
men by gender-based socialization. The different characteristics of their
business, as regards the size of the business and the sector's affiliation, also
affect the way in which banks think of their business potential and
creditworthiness.
The increase in female entrepreneurship through external financing is
limited not only due to the lower capital requirements of female
entrepreneurs but also because of investors' attitude, ie both on the
demand and on the supply side.
Gender-based stereotypes also affect financial decision-makers
(Malmstrom et al., ****:3) according to Swedish research conducted by
venture capitalists, ther is a strong stereotype for female entrepreneurship:
whether their experience or reliability can be questioned (Malmstrom et al.,
****).
Female enterpreneurs as investors
64.4% of female entrepreneurs reached by our survey owns one firm, but
more than 25% of them have more than one, and 7.4% have a share in
more than two companies.
Given that the business angel activity is a peculiar entrepreneurial
activity, the general limitation of women's participation in businesses,
relatively low growth prospects, their potential, generally low capital

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adequacy, the prudent company building practice of entrepreneurial
women, their limited leadership experience limits their becoming an angel
investor.
In contrast to the layer of women entrepreneurs reached by the
questionnaire, there is a limited circle of female entrepreneurs who possess
more sufficient assets and professional experience to become an angel
investor. Even if ass business owners their actually focus on the growth and
expansion of their own business if they think about investment or they
provide financial assistance to their family businesses - they invest their
private property in a business.
The reasons for the low prevalence and volume of private investment in
the developed capitalist countries are due to the shortcomings of the
business environment surrounding businesses and the characteristics of
Central Eastern European history.
The historical, social and ideological context of
entrepreneurial activity in Hungary
Similarly to most of the post-socialist countries in Hungary, the business
has been left out for several generations, as an opportunity for survival, a
form of livelihood. In Hungary before the World War II, the outstandingly
successful representatives of the company were primarily Jewish traders
and craftsmen. Despite the Holocaust and the communist nationalization,
there was a small craft industry, but the socialist system did not allow the
accumulation of significant assets. Hence, the number of family businesses
that have contributed significantly to the creation of entrepreneurial culture,
traditions, values or the involvement of women in business, typically family
heritage, in the developed capitalist countries is very low.
As a consequence of the fast changing elite and their clique-building
activity of the, which is a frequent occurrence in history, there is also a very
low level of cooperation, a culture of social trust.
The authoritarian social structure did not favor the development of a
cooperative, success-oriented business-friendly culture, and the Prussian
education system crossing the systems, punitive and obedient education
encouraged less self-confidence, avoiding failure, melting into the average,
and Hungarian society lacking the atmosphere of aid and assistance: we do
not tolerate failure, we suspect success, we cut ourselves off from
opportunities because of envy.
According to Eurobarometer's 2016 survey
7
, the concept of business
involves only a more negative judgment in Romania. This is due to the fact
that the origin of much of the wealth created after the change of the regime
can not be separated from the privatization and politics soiled by corruption.
The fast fortune of some notorious entrepreneurs can be directly questioned
7
http://ec.europa.eu/growth/tools-
databases/newsroom/cf/itemdetail.cfm?item_id=8833&lang=en

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by transactions that are related to the underworld, oil spurs, in the 90’s a
few big killings occurred ehich got great publicity, when entrepreneurs had
showdowns with each other in a Wild West manner.
The questioninig of the origin of wealth has only partially changed since
the 90’s, there is great suspicion around suddenly wealthy entrepreneurs.
For prostitution trafficking and the porn industry one of the capital is still
today Budapest, and even the Liberal Press celebrated the third richest man
in Hungary as Entrepreneur of the Year in 2014, who has been enriched by
the online porn industry.
The consequence of the post-socialist past is that it builds a wealth of
assets or private or invests in private goals, relatively few people are
thinking of participating in another business.
On the other hand, the concept of business was linked to unemployment:
with the transformation of the structure of the economy and the
disappearance of the socialist industry and agriculture masses lost their
jobs. Elsewhere, they have resolved to retain jobs, cheaper employment
due to high contributions, to employ employees as entrepreneurs. For both
reasons, a large crowd was created, these are the so-called forced
businesses. There are still constraints behind the creation of micro-
enterprises, which in the case with female entrepreneurship are presented
as so-called push factors, which are related to career obstructions or private
life constraints.
In the past few years there was a generation-shift in the business world,
world-wide, global start-ups appeared in the IT sector, with 85-90% of men
in the range of 28 to 30, but the majority of young people between 20 and
35 are still thinking about being an employee with predictable income.
8
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