Venture capital investors still view women as a riskier bet than men
Women are being urged to pursue careers in technology but female entrepreneurs in the sector face a tougher battle than their male counterparts when it comes to attracting venture capital funding.
More than 90 per cent of tech investment in Europe still goes to all-male teams, according to data published last week by Atomico, a venture capital firm.
The story is similar at a global level. Of the $223bn raised this year to mid-November, only $28.1bn (17.3 per cent of deals) went to companies with at least one female founder, according to PitchBook Data, which analyses private capital markets. Just $3.4bn (4.6 per cent) went to those with exclusively female founders.
Venture investors of both sexes perceive a female-led company to be higher risk, says Cindy Padnos, founder and managing partner of Illuminate Ventures, an investor in early-stage tech businesses based in Oakland, California.
Earlier this year, Illuminate surveyed more than 800 investors and entrepreneurs in the US about their views on the “success attributes” and “potential barriers” with regards to building up a venture-backed business.
Overall, investor respondents saw women as being disadvantaged in most of the top success attributes, particularly in having “networks that provide access to advisers and capital”. Sixty-seven per cent of male investors, and 100 per cent of female investors, believed men were more likely to have such connections.
In fact, almost all of the potential barriers to success posed by the survey were seen by large percentages of both male and female investors as more likely to affect women founders than men. “As an investor, if you perceive that a woman is going to experience 10 times as many barriers as a man — even if you love the deal, the team and the person — which would you choose?” Ms Padnos says. “Or, if you chose both, to whom would you write the biggest cheque?”
Penny Herscher, a serial entrepreneur based in California, agrees that venture investing in Silicon Valley is dominated by men. This is a problem, especially if women want to do something different. “It’s so much easier for them to understand and resonate with a guy who’s got yet another food delivery service than a woman who’s doing a female product they can’t understand,” she says.
Another problem is women’s tendency to focus on their mistakes and underestimate their achievements, says Ms Herscher.
“By contrast, men are more willing to stretch the truth of what they have done and apply for promotions long before they are qualified.” As an investor, if you perceive that a woman is going to experience 10 times as many barriers as a man — even if you love the deal, the team and the person — which would you choose? Cindy Padnos, Iluminate Ventures In the Illuminate survey, women were much more concerned about “having the right qualifications” than men.
Kim Nilsson, chief executive of Pivigo, a London-based data science company, says: “If a woman fails, she’ll go away and think ‘what did I do wrong?’ — whereas a man is more likely to think that the problem was the business climate or unfortunate circumstances that had nothing to do with him.”
Women are poor at claiming credit for their successes, says Monica Eaton-Cardone, co-founder of The Chargeback Company, which facilitates refunds. “Part of having a successful business is not just being able to perform, but making sure that everyone knows how well you are doing,” she says.
“You have to market yourself and men are traditionally better at that than women.” In China and South East Asia, female tech entrepreneurs tend to be more confident, industry insiders say. The biggest deal for a company with all-female founders this year globally was Guangzhou-based Woxing Wosu, an online hospitality booking service, which raised $235.5m, according to PitchBook.
The global leader among fundraising companies that have at least one female founder is Grab, a car-booking company based in Singapore.
The business, co-founded in 2012 by Tan Hooi Ling, has raised $2.7bn this year. Many of the supposed risks around female founders are at odds with the reality, according to the Illuminate survey.
More than half of investors canvassed assumed that men were more likely to have “prior start-up experience” and the “desire to scale a business massively” — yet male and female founders’ responses were fairly even on these points. Also counter to expectations, 17 per cent of women, half the figure for men, felt that balancing family and work was a strong barrier to success. The challenge, says Ms Eaton-Cardone, is getting women to have confidence in what they have achieved, even if they have failed along the way.
“We fail our way to success,” she says. “It means you had the courage to try and there’s no way you can get to success without confronting failures.”