When our team at Hall & Wilcox put a call out for applicants to our Frank Lab accelerator, 95% of initial applicants were from male-led startups. This didn’t surprise, but it raises an important question: why aren’t more women involved in the startup sector?
I have worked closely with startups for over 15 years and been privileged to assist with inspiring innovations, with people who have created entirely new industries or ways of working using technological nous and imagination. Yet one thing that has not changed is the lack of female involvement in startups, either as founders of startups or as key personnel.
We recently conducted a survey to understand more about why so few women are represented as founders or in key positions among startups.
Aside from more conventional obstacles, such as lacking financial support and difficulties balancing family and work life, women appear to be put off from a startup career for reasons at the core of the female psyche.
For example, an unwillingness to sell ourselves, the imposter syndrome, not feeling worthy and facing limiting preconceptions of ourselves and from others, along with needing to feel ‘ready’ before seeking help or further investment.
Many ‘little and subtle things’ work together to keep women out of startups, from inconvenient networking hours to a business community more responsive to masculine characteristics of leadership.
A common sentiment from women who have left the corporate world for the startup ecosystem is that obstacles in the startup ecosystem are magnified when compared with obstacles faced by women in more conventional and established industries.
Bias, whether conscious or unconscious, is hugely influential. We were told that implicit gender bias when female startups are pitching for investment is common.
This was illustrated by Dr Dana Kanze, assistant professor of organisational behaviour at London Business School. While running and raising funds for her own startup across a five-year period, Kanze noticed she was being asked different questions than her male co-founder.
When pitching to investors, Kanze was often asked about what could go wrong with the venture, while her male co-founder was generally asked about what could go right.
This difference between ‘promotion’ and ‘prevention’ questions is insidious and widespread; research has found males often attract a ‘promotion’ focus, which concentrates on potential gains, hopes and accomplishments, while females attract a ‘prevention’ focus, which is more risk-averse and focused on potential failure.
Kanze’s research showed little difference in the way male and female entrepreneurs present their companies to some of the world’s most prominent venture capitalists, but found 67% of questions posed to male entrepreneurs were promotion-focused, while 66% of questions posed to female entrepreneurs were prevention-focussed.
Interestingly, this gender bias was displayed by both male and female VCs.
Why does this matter? It’s reinforcement. A promotion question begets a promotion response — an opportunity for the entrepreneur to associate themselves with the potential gain. Prevention-based questions hem the entrepreneur into more defensive, prevention responses, associating them with potential losses.
Unconscious bias often sees women remove themselves from the situation. Their confidence is undermined, which has a direct impact on their ability to succeed in their next networking conversation, pitch, or investor event.
Without more early investment in female entrepreneurs, it will be difficult to increase the proportion of female entrepreneurs in the Australian startup sector.
In recent years, there has been a significant increase in female focussed incubators and accelerator programs (such as Springboard Enterprises, SheStarts, and One Roof) and venture capital funds, which are creating greater investment opportunities for women.
More indirect investment can be derived from female entrepreneurs gaining access to sponsorships and partnerships. Examples within the startup sector include sponsorships for placements at co-working spaces that support female founders and women in startups.
Partnerships or joint ventures with larger, recognised brands are also important, however, responses to our survey indicate these opportunities are still an area of development for female entrepreneurs.
Our research suggests prospective investors tend to want female entrepreneurs to have a finished idea and product before they will invest, yet men do not face such high expectations. There is also concern about the amount of investment offered being less than men in the same industry, indicating unconscious bias by investors (both male and female).
Rather than implementing strategies such as blind pitching or tenders (which can be effective in recruitment), developing training programs for investors may be a more practical means for assisting investors to identify and avoid situations of unconscious bias. Investors could use such training as a means of attracting more investment opportunities with target startups.
Our survey results highlighted support networks as an area most valuable to females making their way in the startup world. But support networks can be harder to come by for female entrepreneurs than their male counterparts.
Building a support network requires a more formalised approach to ensure women are able to participate in networking events and groups; have support from the community and industry to form a strong and skilled advisory board; and have access to appropriately qualified mentors. The ability to consult with, and confide in, a mentor could make all the difference between success and failure.
More women-only events, such as networking and pitching events, would be useful. As would dedicated programs connecting prospective mentees with mentors. Addressing those implicit barriers around confidence is also essential. More targeted training for female entrepreneurs to build confidence and develop pitching and presentation skills — providing more opportunities for female entrepreneurs to practice these skills — would be valuable.
More women in the startup sector would create substantial (sector-wide) flow-on benefits including, but not limited to, increased innovation and creativity, diversity of opinion and the identification of new markets.
NOW READ: There is an upside to experiencing imposter syndrome
Jacqui Barrett is a partner at Hall & Wilcox and works with entrepreneurs as part of the firm’s Frank Lab accelerator.
