A look into what it’s like raising venture capital as a female.
I need to start by telling you that in writing this piece about the female funding gap, I feel very much like these ladies:
It’s a tough and tricky land mine of a story. And I’m terrified to write it. Because while I am a female, I’ve never tried to raise funds. And I’ve certainly never been tasked with deciding who should receive funds nor tried to navigate the complications that entails. Pretty much the only qualifications I have to write this story is owning a computer and having access to the Silicon Slopes Medium account.
So, instead of opining, I’m going to stick with the facts and the experiences others have graciously shared with me to address this problem.
So. The Facts. With Linked Citations.
- The number of women investors has not increased at an equal rate to the number of women founding companies.
- Venture capital firms with female partners are two-and-one-half times more likely to invest in companies with women on the management team.
What Those Facts Mean
Even though few female-founded companies are backed by venture, those that are backed generally perform better than venture-backed companies founded by men. So why doesn’t more investor money go to females? Because all investors are sexist pigs. I’M JUST KIDDING, CALM DOWN. If only it were that simple.
But it’s not. It’s a multi-pronged problem with a number of issues contributing to both a lack of females founding companies — even relative to the small number of female founders — and a lack of female-founded companies receiving capital dollars.
The Issues
To learn what’s contributing to the funding gap, I talked to a lot of people. A LOT of people. Founders, investors, and observers of the scene. These people helped me identify some of the major issues that make fundraising feel like a nearly impossible task for any female founder. Those issues are:
Unconscious bias. I heard this term in nearly every conversation I had, and investors’ unconscious bias was offered as one of the top explanations for why women aren’t funded more often. Please. Don’t misunderstand. And don’t send me any angry emails. No one is saying all investors are intentionally biased. Only that they may have unconscious biases, like we all do, and those unconscious biases may affect their investment decisions. We like people who are like us, and in the world of venture, often investors invest in founders who are like them. Most venture partners are male with SAAS backgrounds, therefore, most founders that receive investment dollars are males building SAAS startups.
“People tend to resonate with people like themselves,” says Kickstart Seed Fund founder and managing partner Gavin Christensen. Kristy Sevy, founder of Fuzeplay, has felt the effects of unconscious bias in a number of meetings. “It seems that if you’re not a certain type of person (white male) with a certain type of business (SAAS) and background (BYU), investors [in Utah] have already made up their minds. There have been a lot of meetings where I have taken lead, but the investor will look to my brother for validation after every comment or answer to a question,” she says. “It’s hard to change a bias that people don’t think is there.”
It’s a bias that hurts not only women, but the investors who miss out on potentially lucrative investment opportunities. Sara Jones, cofounder of Women Tech Council, explains that while there aren’t a lot of women founding enterprise startups, “there are a lot of women building scalable businesses in other verticals with high growth rates, or who just need the right mentorship nudge to grow in that direction and it doesn’t seem that Utah VCs are playing much in those spaces.” As Sunny Washington, founder of Ardusat explains, “Unless you recognize your unconscious bias, you might be missing out on some opportunities.”
Cultural Norms. These contribute to unconscious bias. And heck, just straight up bias too. Not all cultural norms are bad, obviously. I’m pretty okay with the expectation that every member of society wear clothing in public. But some cultural norms are destructive. Like the cultural belief that women cannot give their all to both being a mom, or future mom, and running a company. “There may be perceptions, fair or unfair, toward a female relative to their whole-hearted risk,” says Sid Krommenhoek, managing partner at Peak Ventures. He explains, “Traditional roles could lead people to ask, ‘Are there other obligations competing for this person’s time?’” In other words, can a woman be a mom and the head of a company? “It’s not right that a woman or any human step onto the stage and be given a higher bar,” Krommenhoek says. Not right as it may be, some women are feeling that higher bar. “I don’t feel like I’m being compared the same way. I have to prove myself in order to get capital,” says Washington.
“Social norms change frustratingly slowly,” Christensen says. “When your society has been male dominated for…