The venture capital industry’s corrosive gender bias, on full display in the past few months, has already cost one of its most valuable new companies billions of dollars; brought about the dissolution of one partnership; and forced the resignation of one of its most public spokesmen.
It’s also been on display at our own TechCrunch Disrupt New York conference (more on that later).
These recent events are the latest in a string of high profile conflicts between venture capital’s idealized version of itself as a meritocratic haven for free-thinkers of all stripes, and the more unfortunate reality of a business beset by the same problems of systemic privilege as any other that involves massive monied interests and a highly selective group of (mostly) hyper-educated, white, male elites as its gatekeepers.
Indeed, venture capital’s problems with women (and with people of color, and with sexual orientation) extend far beyond the obviously terrible behavior exposed in the excellent reporting done by The New York Times (which would have been impossible without the brave entrepreneurs who came forward to speak on the record about the sexual misconduct they had to confront).
It extends beyond Susan Fowler’s exposure of sexual harassment at Uber and the company’s unwillingness to address the issue.
Sexual abuse, harassment and misconduct are the most egregious and violently awful signs of a pervasive problem that the industry is in the midst of struggling to address. But that struggle plays out in a number of ways. Even in the conversations that investors and entrepreneurs have during the startup founders’ sales pitch for investment.
That’s why the study published earlier this week in the Harvard Business Review is so important. In it, the authors examined the ways that investors pose different questions to the men and women they’re vetting for potential investment dollars… and the ways that those questions and their responses impact financing.
The study’s authors found that investors tended to ask men questions about the potential for gains and women about the potential for losses. Both men and women expressed the bias against women founders.
According to the psychological theory of regulatory focus, investors adopted what’s called a promotion orientation when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals. Conversely, when questioning female entrepreneurs they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance. We found that 67% of the questions posed to male entrepreneurs were promotion-oriented, while 66% of those posed to female entrepreneurs were prevention-oriented.
Importantly, this matters for funding companies. Every prevention question…