Rethinking the “founder’s premium” for women

I recently came across an article from London Business School that offers a refreshing perspective on women’s entrepreneurship, challenging many of the traditional narratives that tend to dominate the discussion. The Founder's Premium: How Women Boost Earnings by Founding Companies moves beyond simple gender-based comparisons to ask a more nuanced question: who actually gains the most from the shift from salaried employment to entrepreneurship?

Discussions around women’s entrepreneurship have often focused on comparing the performance of women founders directly against men. This framing can obscure a more important economic reality. Rather than asking whether women outperform men as founders, the article examines how entrepreneurship changes earnings outcomes relative to remaining in paid employment – and for whom those changes are most significant.

The article’s headline finding is striking. Entrepreneurship appears to significantly reduce the gender pay gap that persists in many traditional workplace structures, with women experiencing the greatest financial gains from founding companies. The authors describe this uplift as the “founder’s premium,” and the evidence suggests that this premium is disproportionately realised by women.

These conclusions are supported by population-level data spanning the period from 1990 to 2020, tracking individuals’ earnings before and after they founded a company. This longitudinal approach allows the researchers to compare like-for-like outcomes, rather than relying on headline averages or cross-sectional comparisons.

The results show that women who left salaried employment to found companies experienced an average earnings increase of 22%, compared with an increase of just 8% for men. Perhaps most notably, the largest gains for women were seen among those who founded businesses in traditionally male-dominated industries. This suggests that entrepreneurship may offer a powerful mechanism for overcoming structural pay disparities, particularly in sectors where such gaps are most entrenched.

By moving beyond binary comparisons between male and female founders and instead examining the broader economic trade-offs between entrepreneurship and salaried work, the article presents a markedly different picture of where the real “premium” of entrepreneurship lies.

For me, the key takeaway is clear: entrepreneurship is not merely a high-risk, high-reward path reserved for a select few. It can – and should – be viewed as a financially viable and potentially transformative model for many, particularly for women navigating entrenched inequalities within traditional employment structures.