An alarming precedent has been set. At venture capitalist firms, sexism now runs so deep that even the female partners believe the damaging messages concerning investment in women. This is a huge problem for women and for business.
Not enough money is invested in businesses led and run by women. This isn’t a secret, and it’s a constant source of frustration for everyone who cares about gender equality and business. In February this year, Bloomberg found only 7 percent of the companies that had received $20 million or more in funding between 2009 and 2015 are owned by women. Even more depressing, they received $77 million while male-led start-ups received $100 million.
Not long ago, I went to an event about this subject as an interested observer. The company that hosted and ran the event is trailblazing women-led businesses aiming to make a difference in the funding world. However, some members of the panel, which comprised several experienced female venture capitalists, made comments about investing in women that left me shocked and disappointed. Female VCs, it seems, are now propagating some of the damaging messages that have historically limited investment in female founders.
At the event, two messages stood out. First, an obstacle to there being more female VCs is that women have children! Secondly, that women need to change the way they pitch for funding to be considered a good prospect by VCs.
In the case of the first point the rest of the panel were quick to debate the premise, but the fact is, it was still said. If a male panelist had said the same thing, there would have been a huge outcry. But it was a woman partner at a VC firm who was expressing what in her eyes is a real issue with managing her business. Having someone on maternity leave in a small team can be a pain, and she wanted to voice this out loud.
This is still considered as “a problem” for women and an obstacle to getting more women to partner level. In my view, the only way to change this outlook is for us to think about families in a different way, and for it to become standard for fathers to have paternity leave allowing their partners to come back to work earlier.
The second message is perhaps the more damaging of the two: the view that “women need to change to get VC funding.” This implies women need to be more aggressive or bullish, to say that market opportunity is more than X (even if it’s too early to say); or that VCs work in a certain way and women need to change the way they work to accommodate that. We shouldn't be telling a room full of relatively young women that you can only get funded if you act in “male.”
What is bizarre is that these types of messages were followed by statistics which, for example, showed that businesses with women on the leadership team got 35 percent better returns. Then, the panel made comments such as “I like speaking to women investors as they will give me a genuine view on their business and won’t overstate things.” Then they expressed frustration that they didn’t find enough women to invest in!
Moreover, many female founders have described how even if they do act like men they are asked different questions and still get less funding. Surely the self-contradictory nature of what the panel said is obvious.
An ever-growing body of data shows that female-founded companies grow faster than their male-founded counterparts. Female management is almost invariably more transparent, and diverse teams make more money and better decisions.
Women are also more successful than men at winning seed-level crowdfunding, which is the most democratic way of raising capital. According to recent research, female-led crowdfunding campaigns were 32 percent more successful at reaching their funding target than male-led ones. The public, in other words, backs female founders financially, which given the evidence is a smart investment, but VCs who are the presumed experts in investing are still operating as if there is something inherently toxic about female-founded companies.
Why is sexism taking so long to disappear in this sector, and how long will it take these VCs to catch up with the wider public? People who care about equality and business need to call attention to this issue, or risk letting many businesses launched by talented and imaginative women to fail before they’ve even got off the ground.
Why should women change to suit VCs? Why should they be more aggressive and exaggerate their perspective when they can generate high returns anyway? It is venture capitalists and other investors who need to change what they are looking for and how they look for it.