It’s tough out there if you’re a female founder, and the numbers prove it. Many of us are familiar with the dismal stats, including how women receive only 2.9% of VC funding, even though women make up over half the population and are starting more businesses than ever before
There’s a growing awareness of the daunting challenges female founders face as they seek funding to grow their companies. Awareness is a good first step, but the companies that actively take steps to address bias and foster diversity are seeing better business results, according to recent studies. Consider the stats:
- Companies with the most ethnically diverse executive teams are 33% more profitable.
- Companies with more women in executive positions have a 34% higher return to shareholders than those that do not.
- Companies with the most women directors have a 26% higher return on invested capital than those with the least.
Companies are realizing they can’t ignore inherent bias and a lack of diversity because it impacts their bottom line. Diversity is good for business.
Unfortunately, it’s not only female founders who struggle with being seen, heard, and treated as equals in the business world. Unconscious, inherent bias against women is a pervasive issue in the workplace. Here are some examples of how that bias plays out:
- The gender wage gap hasn’t budged in recent years, with women in the United States still making $0.80 on the dollar compared to their male counterparts, according to the Institute for Women’s Policy and Research. At this rate, pay parity won’t be achieved until 2059. For women of color, the rate of change is even slower: Hispanic women will have to wait until 2233 and Black women will wait until 2124 for equal pay.
- There are more directors of S&P 1500 companies named John, Robert, William or James than all the women directors for those companies, taken together.
- Women receive fewer call backs for interviews for the exact same resume when it has a female name on it.
- In Sweden, VCs were recorded discussing male and female entrepreneurs to analyze the difference. Funders relied on stereotypical images of women as having qualities opposite to those considered important to being an entrepreneur, with VCs questioning their credibility, trustworthiness, experience, and knowledge. Conversely, when assessing male entrepreneurs, funders leaned on stereotypical beliefs about men that reinforced their entrepreneurial potential. These stereotypes impacted funding: women entrepreneurs were only awarded, on average, 25% of the applied-for amount, whereas men received, on average, 52% of what they asked for.
So how do we address bias and work toward gender balance in the business world? One simple thing we can all do: listen.
Men need to “Listen Louder,” says Jonathan Sposato in his 2017 book Better Together: 8 Ways Working with Women Leads to Extraordinary Products and Profits. Sposato is chairman and co-founder of Geekwire, PicMonkey, and WeCount.org, and he recently promised all his future investments to female-founded companies. Here are some of the other key themes and concepts that resonated with us:
- Let’s stop trying to change the way women speak and instead change the way men listen.
- Male and female leadership qualities can be different, and we don’t need to favor one over the other.
- Tentative words and speech patterns exist to “keep the tribe together” – it’s important not to confuse certain words with a lack of intelligence, ambition, or drive.
- Men get jobs based on potential and women get jobs based on track record – a broken system of hiring.
This piece on Forbes by Laura Berger has good advice on how to diminish bias in the workplace, which applies not only to companies but to VCs and funders as well.
We’re all moving so fast, it can be difficult to “listen louder” – to actively listen with intention, but that’s what we need to do to change the way we support and work with women. Our future depends on it.
We’re proud to support the Female Founders Alliance and their Ready, Set, Raise program, an accelerator consciously designed for women. Join us in celebrating the inaugural class on September 27th for the Demo Night and Closing Party.
