“I've just received seed funding, the business is going well, and we’d like to raise series A. But I’m pregnant. Should I tell my prospective investors that I am pregnant?”
Cue large gasp from the panel, shocked faces in the audience and one panelist asking “is this really an issue in 2017?”
This was just one of the questions relating to sexism raised at our AllBright FoundHER Festival for female founders in London last week.
You’d be forgiven if you were one of the crowd thinking that, in the fast-paced, progressive world we live in, this type of challenge shouldn’t – and doesn’t – exist.
But, unfortunately, this question is justified. Sexism is alive and well in the global investment community, and we must have a frank conversation about it here in the UK.
I have raised capital for both of my businesses, and in both circumstances have been fortunate enough to partner with investors with integrity, who never questioned whether my role as a mother would affect my performance as a chief executive. However, I also know that others have not been so fortunate. There are horror stories out there about male investors asking a woman’s male co-founder whether or not the former will get pregnant, and what will happen in that situation.
Other instances of sexism are, some might say, less intentional and direct. Sometimes it comes from a lack of education among male VCs about etiquette or experience with female founders, and the types of businesses they have founded.
While I haven’t been on the end of overt sexism, I have experienced a male VC saying: “I’m not sure there is a market need for this service. I’ll go home and check with my wife and will get back to you.” Men simply would not have to deal with this sort of feedback.
This is echoed by recent research by HBR.org that notes the deep rooted gender bias from both male and female investors.
The research showed that “both men and women who evaluate startups appear to display the same bias in their questioning, inadvertently favouring male entrepreneurs over female ones.”
It shows that VCs frame questions in two different ways; either they ask “promotion” or “prevention” questions. Promotion questions focus on potential gains, while prevention questions focus on potential losses. VCs tend to ask the former of men, and latter of women.
The HBR report states that the difference in questioning appears to affect the amount of capital raised. It says: “entrepreneurs who fielded mostly prevention questions went on to raise an average of $2.3m in aggregate funds for their startups through 2017 – about seven times less than the $16.8m raised on average by entrepreneurs who were asked mostly promotion questions.”
Whatever the reason for sexism, it is a large problem in the industry and likely the cause of the funding gap between male-led and female-led businesses. Only 2.17 per cent of global VC money goes to women.
Working out how to bridge this gap and overcome these challenges is not only a moral duty as we strive for equality in business and society; it’s also in the interest of the economy.
The statistics on this point speak for themselves. Female founders deliver better returns on investment than their male counterparts. Further research adds that if just a fifth of women who wanted to start a business in the UK did so, it would add £10bn to the economy by 2020.
With the stats stacked in our favour, right now feels like the perfect time for female founders, VCs and anyone else involved in the investment world to be having a frank conversation about sexism in this sector.
Together, we can right the wrongs, and make the UK the place in the world where outstanding female founders can thrive, and significantly contribute to the economy.