DEI is Left to DIE
(Especially in Funding)
Gender bias in funding startups
March is International Women’s Month and it is unconscionable for us to celebrate women and their achievements, and not discuss how far women have yet to go, especially in terms of just getting a business start-up funded, not to mention operating it while suppliers and staff are sometimes blatantly dismissive of your instructions, because of gender in many cases.
Whether it is SBA lending, commercial lending, or venture capital funding, women have a much harder time getting financing for their business ventures. Even when one considers education, entrepreneurial experience, geographical location, and income, the abundance of evidence yields the same conclusion: Men with the same factors have a different (and better) outcome.
In her doctoral dissertation, Dr. Dana Kanze, (Columbia Business School PhD. and current professor at the London School of Business) provided proof that venture capitalists STILL have a gender bias with respect not only to whom they fund but also the industry that they fund.
The researched explored and examined variables such as entrepreneurs have with investors contribute to the disparity in their funding outcomes. It revealed the following:
- Female entrepreneurs are far worse off/disadvantaged (compared to their male counterparts of very similar background) with respect to the amount of money raised from investors, business valuations applied, and the industries that they are funded in.
- Women had far more fundraising-related disparities than men. Male funding was not restricted to industry served.
- Female-led firms get hit in areas of funding allocations, valuation amounts, and equity retention if the women goes into a male vs. female-dominated industry… but the reverse is not true.
- The female for owners experience even worse funding-related outcomes when she’s at the helm of a fintech venture than, say, a fashion tech venture.
- The usual explanation given by investors is: lack of fit i.e. the female entrepreneur didn’t quite “fit” the opportunity. Such nebulousness has been used to justify racism in employment, housing, and business opportunities to minorities.
- This “lack of fit” means that there is a perceived (or mis-perceived) mismatch between attributes deemed necessary for success in a given field and those attributes that women/minorities are expected to possess.
- Investors perceive female entrepreneurs to be significantly less of a fit with respect to the project, especially when they are in a male-dominated (vs. a female-dominated) industry.
Now imagine the degree of difficulty in getting funded if you are a two-fer (i.e. a minority and female) entrepreneur seeking funding!
Without intention change in awareness of gender bias in entrepreneurial funding, there will continue to no diversity, no equity, and no inclusion in the sine qua non of what makes, and keeps America great: Successful entrepreneurs that dare to dream.
In 2024, going forward, in International Women’s Month, let us remember our sisters, wives, daughters… and the dreams of our mothers. Let us stop the gender bias… as well as the racial bias that denigrates and destroys opportunities to fund the “next big thing”
For help breaking through that ubiquitous glass ceiling in your business, call Empire Capital & Consulting Corp. at:
