05/17/18

Women Still Can’t Catch a Break When Seeking Venture Capital

When a segment of the population contributes more than $3 trillion to the national economy, you’d expect them to be taken very seriously. And when that same group owns more than 36% of all businesses in America, it would seem that they’d have impressive leverage when it comes to finances.

But this group we’re talking about is women. And according to reports, they still face hurdles when it comes to accessing venture capital. How bad is it? Well, despite the fact that businesses with female founders consistently outperform those with all-male leadership, when you look at all the venture capital provided last year, startups led by women only got 2% of the pie.

To get more insights into this gender-based disparity, the Harvard Business Review analyzed 125 applications and hours upon hours of venture capital decision-making. The researchers discovered that male entrepreneurs were typically asked questions that focused on success components like “potential of growth” and “future possibilities.”

On the other hand, the women seeking venture capital were often asked questions focused on financial caution and the risks of business. Given the uninspiring and somber direction the questions leaned, it’s unsurprising that the women experienced a much lower venture capital success rate.

Many observers believe that discriminatory behavior like the examples uncovered by the Harvard Business Review can be traced to the fact that the traditional profile for a successful entrepreneur is a man. While this profile is rooted in outdated perceptions, it nonetheless leads to an unconscious bias when women approach venture capitalists.

In one Harvard study, men and women delivered the exact same entrepreneurial pitch. And, wouldn’t you know it, those who received the pitch from the men reported a more favorable opinion than those who received it from a woman.

So how can women get a fair chance in the male-dominated world of venture capital, where nearly three-quarters of firms don’t have a single female investor? According to Forbes, it starts by challenging that traditional male dominance.

One example of this is All Raise, a nonprofit that’s focused on building success for female funders and founders. There are 34 members of the All Raise team, each dedicated to working together to bring a healthy splash of diversity to the boy’s club.

Of course, the challenges and opportunities within the industry aren’t limited solely to gender categories. All Raise understands this fact and provides mentoring and support to minorities and other groups who have been left behind by the status quo.

At the same time, All Raise also partners with their male counterparts to form a unified front. Because when the boy’s club and the girl’s club join forces to become one club, the sky’s the limit. Research shows again and again that more diversity in business leads to better bottom line results and stronger workplace cultures. And those are things we all can get behind.

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About the author

Grant Olsen
Grant Olsen
Grant Olsen is a marketing and technology writer with a B.A. in English from Brigham Young University. He has written for healthcare companies, outdoor gear manufacturers, international airports, and dozens of small businesses. Grant is a contributing writer for KSL 5 TV and Lendio News. He is also the author of the book “Rhino Trouble.”

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