Disparity Between Men, Women Entrepreneurs Great
Sandy—When it comes to entrepreneurs, women are still in the distinct minority—they get less than 2 percent of venture capital funds—and yet female-owned businesses represent the fastest-growing segment of the workforce.
There’s a discrepancy there that needs to be addressed, said presenters and panelists at the WeROC Conference at Salt Lake Community College Thursday.
In a live analysis of language used by a group of investors to male and female entrepreneurs, the investors were more likely to ask questions to men about the best-case scenarios of their businesses but about the likelihood of failure to women, Beresini said. The twist? Forty percent of those investors were women, and the pattern still held.
“This is a mindset we must change, and it is a mindset,” said Debra Beresini, CEO of invencor, inc. “Even as a woman, we have bias in our own gender, and all of us need to be aware of that if we want to support women.”
There are many reasons why women find more barriers to getting funding as an entrepreneur than her male counterpart. Sometimes, there’s a perception that investors can’t shake no matter how good the pitch is, said Nancy Phillipart, general partner with The Belle Michigan Fund, which deals exclusively in early investments in female-founded or -led startups.
One business they enthusiastically backed had software that helped make industrial vehicle recalls more efficient and streamlined, Phillipart said, which before was a massive gap in the industry in dire need of filling. The proprietor, a California woman in her 60s, initially had difficulty finding investors who understood the need. But in Michigan, where investors tend to be much more familiar with the automotive industry as a whole, she found some investors who understood and appreciated her message but could not get past her image—they found her too much of a “hippie” for their tastes.
“I think if there had been a man pitching this they definitely would have invested, because they understood this problem and many of them lived it,” she said.
That entrepreneur eventually found other investors who understood her vision and ended up exceeding her goal for her initial round of funding by about half a million dollars, Phillipart said. By round two, investors were clamoring for a piece of the pie.
“It takes a long time to make that flywheel turn, but once it does, you can use that,” she said.
Because of different perceptions that frequently dog women—too old, too young; one presenter told of a time when she was asked by a potential investor who was caring for her children while she was giving her pitch—it can be tempting to have a male co-founder or partner do the talking. But that, too, can backfire, said Meg Carlson, CEO of Boise-based Prosperity Foods.
“Your passion helps tip your pitch over the edge. It’s hard for another person to have that same passion come through,” Carlson said. “Practice, practice, practice, and make sure you’re confident, and make sure your passion for your company and how you’re going to change the world is what they take away from it.”
In addition to someone else delivering a pitch lacking in passion, Phillipart said doing so can also set a bad precedent for the way a company will be lead in the long run.
“Yes, you want to be funded, but you want to be visible,” she said. “What you don’t want to do is set the example for your cofounder and employees that you’re going to take a back seat.”
Every entrepreneur, regardless of gender, will hear more no’s than yeses, but feedback like the woman in her 60s heard—criticizing her appearance, rather than her idea—can be particularly difficult. However, Carlson said, it’s important to brush off the failure and try again.
“Sometimes women tend to personalize rejection, and it can be hard, especially if the feedback is harsh,” she said. “I just encourage you to rise above and not take it personally.”
Overcoming bias is important, but it can also be a means of weeding out investors who would likely make poor partners going forward, said Rose Maizner, associate with Salt Lake City-based Renewable Tech Ventures.
“As a woman, there may be more steps you have to take and other things you have to do,” she said. “Part of that research is understanding not just the right kind of investor, not just for your product, technology or service, but for you as a person.”
Carolyn Rodz, CEO of Houston-based Alice, said many entrepreneurs don’t realize that investors can quickly become as much a part of the company—and have as much say-so—as the founders, and it’s important to find ones who are just as excited about a company as the entrepreneur.
“You’re looking for someone who will come into your company,” she said. “Those same investors who wrote you a check might be the ones to kick you out the door.”
Because investors can play such a crucial role in a business, it’s also important to find and establish a good sense of respect and balance of power early on, she said, and don’t be afraid to give respectful pushback to make sure the terms being agreed to are fair.
Another mistake entrepreneurs frequently make is in obsessing about perfecting their product before concerning themselves with building the consumer base to buy it. Maizner suggested entrepreneurs initially launch their products or services to a small sector of their overall desired audience, take feedback and retool where needed, and then look to expand and gain more funding with the prior success as proof of the idea’s potential. Rodz said the error is one she herself made when starting her first company.
“Every time I’ve built a company subsequent to that it’s been about building a following and then perfecting the product,” Rodz said. “It’s been such an easier path in every way.
“That’s how you gain the confidence, as well, to go before those investors,” she added.
The disparity between men and women entrepreneurs and funding is great, and the tactics currently being employed to change that aren’t working, Maizner said.
“The biggest thing we really need to create change is just bringing more women to the table. … We’ve been trying to make the venture capital world as it is involve women for decades and we’re not making any gains,” she said. “It’ll create an entire culture that I think will be more conducive to having women in more leadership positions. We have to create our own space.”