Cyber Monday Sale! 50% Off All Access

VCs Ask Men About the Future and Women About Failure, New Study Finds That affects how much money they ultimately raised. But here's a strategy to fight back.

By Nina Zipkin

Shutterstock

The world of venture capital, from who hands out the money to who receives most of it, skews male. According to research from Crunchbase last year, women make up only 7 percent of partners at top 100 VC firms. And in 2016, women founders received a little more than 2 percent of venture capital funding.

What's behind these dismal numbers? A new study conducted by researchers from Columbia Business School and University of Pennsylvania's Wharton School identified that the types of questions that VCs pose to female and male founders differ greatly and impact how much money the founders receive.

The researchers observed the interactions between 140 venture capitalists -- 60 percent men and 40 percent women -- and 189 entrepreneurs (12 percent of whom were women) during pitch sessions at TechCrunch Disrupt New York. Ultimately, they found that while the companies were similar in the amount of money they sought, the companies with male founders raised five times more than the startups headed by women.

Related: New Data Illuminates VC Bias Against Women

Essentially, while men got questions about their company's potential for success, women fielded queries about how they would avoid crises and failure. Sixty-seven percent of the questions posed to male founders were, as described by the researchers in Harvard Business Review, "promotion-oriented," but 66 percent of the questions directed to women founders were "prevention-oriented."

Where men got questions such as "How do you plan to monetize this?" when it came to sales, women got "How long will it take you to break even?" When looking to the future, men were asked, "What major milestones are you targeting for this year?" while women were asked, "How predictable are you future cash flows?"

Once the entrepreneurs got stuck in that loop, it was hard to get out. Eighty-five percent of the founders responded to the questions in a way that matched the query they received. A prevention question would get a prevention answer.

Related: Only 17 Percent of Venture-Backed Startups Are Led by Women

The founders who got predominantly prevention questions raised an an average of $2.3 million, while the entrepreneurs that got those promotion questions raised an average of $16.8 million.

"By responding in kind to promotion questions, male entrepreneurs reinforce their association with the favorable domain of gains; female entrepreneurs who respond in kind to prevention questions unwittingly penalize their startups by remaining in the realm of losses," the researchers explained in Harvard Business Review.

With that information in hand, the researchers created another experiment aping the conditions they observed during the pitch sessions, recruiting 194 investors and 106 ordinary people. Thirty percent of the VCs were women, as were 47 percent of the ordinary people. Both groups of the experiment's investors ended up giving around $30,000 more to founders that gave promotion answers to prevention questions.
Nina Zipkin

Entrepreneur Staff

Staff Writer. Covers leadership, media, technology and culture.

Nina Zipkin is a staff writer at Entrepreneur.com. She frequently covers leadership, media, tech, startups, culture and workplace trends.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Real Estate

Why Real Estate Should Be a Key Part of Your Wealth-Building Strategy in 2025 and Beyond

Real estate remains a strong choice for building wealth in 2025 and beyond, from its ability to generate passive income to offering long-term appreciation and acting as a hedge against inflation.

Business News

'I Stand By My Decisions': A CEO Is Going Viral For Firing Almost All of the Company's Employees — Here's Why

The Musicians Club CEO Baldvin Oddsson fired 99 workers at once over Slack for missing a morning meeting. But there's a catch.

Business News

'This Company Has Been My Life': Intel CEO Retires, Reportedly Forced Out

Intel CEO Pat Gelsinger has led the company since February 2021 and said his departure is "bittersweet."

Marketing

How to Beat the Post-Holiday Sales Slump and Crush Your Q1 Goals

Overcome the post-holiday sales slump and keep the momentum strong with these key tips.

Franchise

Subway's CEO Steps Down Amid a Major Transition for the Sandwich Giant

John Chidsey will step down at the end of 2024, marking the close of a transformative five-year tenure.

Fundraising

They Turned Down an Early Pay Day to Maintain Control of Their Business. And Then Went on to Raise $190 Million.

Jason Yeh, co-founder and General Partner of Patron, explains the early-stage venture firm's creation and future outlook.