Silicon Valley has a woman problem. Sexual harassment. Sex discrimination. Lack of funding for women. Men in Silicon Valley just can’t seem to figure out how to work with women, especially with female entrepreneurs. What can Silicon Valley, especially venture capitalists, do to level the playing field for women starting businesses?
I’ve lived in Silicon Valley for nearly 25 years, and I, and most women in the Valley I know, say the treatment of women is worse than it’s ever been. In the last few years, so many billions of dollars have been generated for investors by companies headed by testosterone-driven young males (mostly white, and a few Asian), that there’s been a glorification of the “bro culture.”
Sure, after recent revelations of widespread sexual harassment in the Valley, there may be more care given to reducing overt sexualized behavior in the work place. Sexual harassment claims led to the forced resignation of Uber’s Travis Kalanick and the firing of 20 other employees, the forced resignation of venture capitalist Justin Caldbeck after numerous women entrepreneurs spoke up about being groped while pitching business plans, and the head of one of the Valley’s most influential startup accelerators, Dave McClure, resigned after admitting he’d made numerous sexual advances to women entrepreneurs in work-related situations.
But Silicon Valley’s bigger “woman problem” goes beyond sexual harassment. Women entrepreneurs have a far more difficult time raising funds for their startup businesses than men. And that’s unlikely to change.
Why? Because most male venture capitalists and angel investors (and most of them are, indeed, male–only 7% of investing partners at the top 100 venture capital firms are female) don’t think they have a problem.
Most venture capitalists believe they make investment decisions solely on merit; they’re oblivious to any hidden bias. When prominent venture capitalist Mike Moritz was asked why his firm, Sequoia, didn’t have any women investing partners, he replied “I like to think, and genuinely believe, that we are blind to somebody’s sex, to their religion, to their background… What we’re not prepared to do, is to lower our standards.” Can you imagine Moritz has the same concern about lowering standards when meeting a thirty-year-old white male techie?
Moreover, studies have shown that venture capitalists judge male entrepreneurs more positively than females even when given the same business pitch. A Harvard/Wharton/MIT study showed that venture capitalists given the exact same business pitch by both males and females funded the male 68% of the time and the female only 31% of the time.
Other studies show that when left alone to discuss business proposals from male or female entrepreneurs, venture capitalists concentrated on the positive potential of male-led businesses but focused on the potential pitfalls of female-led businesses.
For an industry that loves data and analytics, venture capitalists turn a blind eye when it comes to looking at their own data:
- Women received only 3% of venture dollars in 2016
- 5,839 male companies received funding in 2016 versus 359 female-founded companies
- Female-founded companies receiving venture funding received only $77 million compared to $100 million for male-founded companies.
What can change and lead to a level playing field for women?
- Recognize there’s a real problem. Venture capitalists need to stop blaming the lack of a “pipeline” of women entrepreneurs or other issues for the fact they’re not funding women. There are lots of capable women techies, and many leadership positions in startups don’t need technical stars. Get out there and look for ‘deal flow’ from women.
- Start asking male-only startup teams, “where are the women?” Improve the future pipeline by insisting that capable women have meaningful leadership roles in the companies you fund.
- Hire or promote more women investing venture capitalists. With more women in decision-making roles, it’s more likely (though certainly not guaranteed) that women entrepreneurs will get a fairer hearing.
- Fund investors need to take action. Big investors in venture funds are pension funds, foundations, and other institutions. These investors need to start demanding transparency and non-discrimination. Moreover, they should actively seek out venture firms headed and/or dominated by women to enable women venture capitalists to have significant funds to invest.
Make a commitment to end the “bro” culture. Demand that the culture of VC’s portfolio companies be inclusive and respectful. No more “frat parties” at work.
Copyright, Rhonda Abrams, 2017
This article originally ran in USA Today on July 12, 2017