Venture capital shows gender bias at its own expense

Recently when I spoke to angel investor Philip Argy, he told me women make excellent entrepreneurs because they solve real-world problems. He said that while many male start-up founders exude confidence, female start-up founders were almost always too self-effacing about their venture.

"Women tend to make very good entrepreneurs. They don’t have as much self-confidence as the blokes, but they can be as successful," said Argy, who invests mainly in tech and intellectual property start-ups.

Without doubt women are gradually making advances in the world of start-ups and entrepreneurialism more broadly. However, there’s still a bias that tends to colour the assessments venture capitalists, angel investors and other financiers make about female entrepreneurs.

Too many still think of women as purely the people you sell things to, not as people who create and run successful enterprises. Part of the problem of course is that women are just not very well represented, yet, in the ranks of venture capital.

The CrunchBase Women in Venture report from last year found a paltry number of female partners in the top 100 global venture firms.

"Once we carefully reviewed the data for the top 100 venture firms, we discovered that 7% of the partners – 54 of 755 – are women, and 38% of the top 100 firms have at least one female partner," the report concluded.

That’s indicative of the broader, more systemic gender bias evident in not only Silicon Valley (which has its own well publicised issues with sexism) but across entrepreneurialism and business generally.

While investors are now taking women far more seriously than ever, there are still those male investors who show bias and even outright discrimination against female entrepreneurs.

A Swedish study brought to light the disparity in VC attitudes towards male and female entrepreneurs. The researchers observed and recorded face-to-face discussions between founders and VCs for 125 venture funding applications, totalling about 36 hours of recorded decision-making conversations.

Men were characterised as having entrepreneurial potential, while the entrepreneurial potential for women was diminished. Many of the young men and women were described as being young, although for men youth was viewed as being promising, while young women were considered inexperienced. Men were praised for being viewed as aggressive or arrogant, while women’s experience and excitement were tempered by discussions of their emotional shortcomings. Similarly, cautiousness was viewed very differently depending on the gender of the entrepreneur.

These recordings were made in 2009 and 2010, so things have probably changed somewhat in the intervening years, but the basic template of gender bias probably still remains.

The thing is that beyond the obvious desire for fairness between men and women, the venture capital industry has to wake up to the fact women are not only consumers anymore, but increasingly also driving the making and marketing of products and services.

VC firms with outmoded gender notions will only have themselves to blame when they miss out on investing in female-led start-ups that go on to conquer the world. And I have no doubt with the rise of female entrepreneurs globally, we’ll be seeing quite a few of those before too long.