From San Francisco
Gender Bias In Startup Funding: How To Fight It And Win
by Ron Flavin
Gender bias in startup funding is pervasive and persistent. For a lot of budding female entrepreneurs looking to establish their own businesses or launch a startup, securing capital or funding is a challenging and sometimes very unfair activity as there is still a lot of gender bias from investors. Many investors view women as new to business and entrepreneurship as women were only able to get access to business credit beginning in the early 1970’s. After nearly 50 years, you might think that things have changed but, sadly, they’ve changed much. Today, as we move well into the 21st century, gender bias in startup funding is alive and well.
One of the reasons gender bias in startup funding exists is that many male investors believe that women are primarily maternal, which means they are instinctively going to prioritize taking care of their families over running a business. As women entrepreneurs have been launching and growly highly success startups and businesses for decades, one might think this false bias would fade, but sadly, it has not.
In looking at the numbers, you can see that gender bias in startup funding truly is pervasive. According to a 2017 article in Fortune, “Venture capitalists invested $58.2 billion in companies with all-male founders in 2016. Meanwhile, women received just $1.46 billion in VC money last year, according to data from M&A, private equity, and venture capital database PitchBook. That massive disparity is due both to the differences in the number of deals and the average deal size by gender.” Gender bias in startup funding didn’t improve much in 2017, with female founders securing just $1.9 billion of the $85 billion total invested by venture capitalists.
That being said, here are few tips for female founders to help in the fight against gender bias in startup funding. To be clear though, the responsibility for change clearly should not rest upon the shoulders of women. Men need to wake up and embrace the fact that when it comes to launching highly successful startups, women are on equal footing with men.
Do not be Afraid to Rub Shoulders with Men
The gender bias in startup funding that still occurs today is not likely going away anytime soon. For this reason, women should take matters into their own hands when seeking startup funding. Investors are supposed to know a good idea when they are pitched with one regardless of who pitches the idea. If your startup venture has the potential to earn serious profit, then don’t back down or be intimidated.
Pitch to as Many Investors as Possible
Regardless of gender, securing startup funding is definitely no easy task. People with brilliant startup ideas are rejected all the time by investors because they all have different expectations and preferences. On average, statistics show that it can take anywhere from 140 to 180 meetings with investors before hitting success. With the different expectations and preferences that all investors have, it takes perseverance to be successful. Female founders should not be intimidated by a no.
Diversify your Team
It is a well-known fact that women have different perspectives from men in almost everything. When developing your team of partners, you may want to consider diversifying your team across skill sets and experience. I would never recommend that a female founder bring on a male team member simply because it might improve their chances for funding. Any team member you bring on—man or women—has to have the right mix of skills and experience to help ensure the success of your startup.
Be Financially and Emotionally Invested in Your Startup Idea
One of the trade secrets in the startup funding world is investors prefer not to fund business ventures entirely with their money. They need to see that you as an entrepreneur are also invested emotionally and more importantly; financially. This is why if you are seeking to receive startup funding, you must be financially responsible for a substantial percentage of the cost your startup venture will need to operate. In other words, it’s easier to secure startup funding, when you’ve demonstrated that you’ve got a strong financial interest in the venture.
Emphasize Why You are the Right Person (or Team) to Make the Startup Successful
Some people disagree with me, but as an angel investor, I invest first in people and secondly in ideas and business models. I believe that a lousy team can turn the most brilliant startup idea into a flaming disaster. But on the other hand, a stellar founder or team can make even a mediocre idea a raging success. In any case, when pitching their startups, female founders should strongly emphasize their skills and experience, clearly showing why they are the right person or team to make the venture a success.
Fighting gender bias in startup funding is a battle that will most likely continue for decades. The tips above are just a beginning. But the good news is that women are not fighting the battle alone. There are men like me who strongly believe in it’s high time for gender bias in startup funding (and all the other places) needs to disappear once and for all. I was raised by a tough, hard-working single mom so I know first-hand that women truly are our equals.
There are also a lot of great organizations fighting the battle too. One of the reasons that I am so proud to be Co-Director of the San Francisco Founder Institute is the FI is so strongly committed to helping female founders launch successful startups around the globe. The Founder Institute operates in about 200 cities around the globe and each chapter is committed to helping female founders succeed. For example, FI Afghanistan, recently graduated an all-female cohort of startup founders. As organizations like Founder Institute continue to grow and expand their reach, hopefully in the next few years, we’ll see more progress in fighting gender bias in startup funding.
Ronald Flavin’s occupation as an organizational strategist encompasses his expertise in business growth, business grants, grant writing, ghost writing, product/revenue development, and also as an author and a professional speaker.