A Swedish study has found VCs talk about male and female entrepreneurs hugely differently

Rebecca Smith
Evan Spiegel co-founded Snapchat at the age of 22
Evan Spiegel co-founded Snapchat at the age of 22 (Source: Getty)

Male and female entrepreneurs are discussed in very different terms, with women often referred to as "inexperienced" and "too cautious", while men are seen as "promising" and "sensible".

That's according to a group of researchers in Sweden, after conducting a two-year study into VC investment decisions. They had access to government venture capital decision-making meetings in Sweden and observed the types of language used by VCs.

Writing in the Harvard Business Review, they said:

One major thing stuck out: The language used to describe male and female entrepreneurs was radically different. And these differences have very real consequences for those seeking funding - and for society in general.

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The authors, Malin Malmstrom, Jeaneth Johansson and Joakim Wincent from the Lulea University of Technology, considered how entrepreneurial potential was expressed, and for the most part, found that stereotypical images of women were produced, with them having qualities opposite to those considered important to being an entrepreneur.

VCs questioned their credibility, experience, knowledge and trustworthiness. And when it came to men, the financiers often came back to stereotypical beliefs about men that reinforced their entrepreneurial potential.

They were described as being assertive, competent and experienced, with established networks.

Comparing quotes used by VCs to discuss applicants

The average male entrepreneur is
described with language such as:
The average female entrepreneur is
described with language such as:
"Young and promising" "Young, but inexperienced"
"Arrogant, but very impressive competence" "Lacks network contacts and in need of help to develop her business concept"
"Aggressive, but a really good entrepreneur" "Enthusiastic, but weak"
"Experienced and knowledgeable" "Experienced, but worried"
"Very competent innovator and already has money to play with" "Good-looking and careless with money"
"Cautious, sensible and level-headed" "Too cautious and does not dare"
"Extremely capable and very driven" "Lacks ability for venturing and growth"
"Educated engineer at a prestigious university and has run businesses before" "Visionary, but with no knowledge of the market"

These differing quotes reflected a few key differences in how the entrepreneurs were perceived depending on their gender: youth for men was viewed as promising, while for women it was considered evidence of inexperience. And cautiousness was viewed very differently depending on the gender of the person.

Of the applications, women entrepreneurs were rewarded on average 25 per cent of the applied for amount and men received on average 52 per cent of what they were after.

Women were also denied financing to a greater extent than men - nearly 52 per cent had their applications dismissed, compared to 38 per cent of men.

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Across the world, government venture capital helps bridge major financial gaps and supports both innovation and growth, taking risks where banks aren’t able to. The professors noted: “When uncertainty is high regarding assessment of product and market potential, for example, the assessment of the entrepreneur’s potential becomes highly central in government VC’s decision making.”

They observed face-to-face discussions leading final funding decisions for 125 venture applications between 2009 and 2010, and of these 99 (79 per cent) were from male entrepreneurs and 26 (21 per cent) were from female ones.

The group of VCs observed included five men and two women.

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