Women are taken less seriously when it comes to investment.
A Venture capitalist is someone that invests in companies that have potential scale but bear significant risk, such as a startup or an expanding business. In the financial world female led companies are seen as not as equally deserving, and too high risk. This is due to the fact that those who work in the financial district have a subconscious bias against female entrepreneurs and how they handle large sums of money. However an article published by London Business School thinks that this may change due to the rising number of new female VC investors.
An article published by the Harvard Business Review points out that there is no substantial data to prove that women don’t perform as well as men when it comes to making financial decisions. In the workplace there are phrases that women get used to hearing on a daily basis that subtly belittle the competencies that women offer everyday. If an employer doesn’t see potential they wouldn’t hire that individual, right? So why is it that women face adversity when it comes to their skills in the workplace?
It is pointed out that there are 4 assumptions made about why women are not capable of being a successful VC.
“Women are cautious and risk-averse, whereas men are ambitious and risk taking”.
Working VC’s were interviewed about their fellow women co-workers, and a common notion was, “‘She is very cautious, as women often are, and she is careful in what she does, and she does not dare to invest’”. This statement generalises that a woman being cautious and careful when investing money is a bad thing. However, evidence has clearly shown, that this is when the best decisions are made because the overall end goal is fully evaluated. Not necessarily the fact that the next few months look promising but what the next years whole trajectory will look like.
“Women are reluctant to grow their businesses, whereas men are willing to do so”.
Let’s look at two statements. One evaluating a woman’s performance, and the other a mans.
“‘We should finance where we can contribute to high leverage and prioritise such businesses instead of financing hand-to-mouth enterprises, which women typically run.”
““His major problem is to find enough financial capital for the investments to grow”’.
Let’s evaluate the differences. The statement made about women puts them in a bubble. It doesn’t give them the opportunity to grow or develop. The male VC can easily move upwards once he acquires the investments he needs. If a woman and a man were to try and grow the same business who do you think would acquire the investment they needed first?
“Women do not have resources to engage in high growth, whereas men do”.
This statement assumes that a woman wouldn’t have as lucrative assets to use as a man would. The lack of a mans financial statues can be overlooked but for a woman this is a large downfall.
“Women’s ventures under perform, whereas men’s ventures perform well”.
If a man and woman were to have the same experience of under performing on a venture his would be more easily forgiven based on the notion that “with some help” he could get back on track. A woman is not seen as being able to do the same.
A study published in The Telegraph showed that a large majority of women felt that they weren’t taken seriously when first starting up their own business. 64.8% said yes they felt they were not taken completely seriously compared to 35.2% who said no.
Another surprising fact is that female business owners who were also mothers were taken even less seriously. “These barriers mean that nearly three quarters of female founders are forced to fund their ventures out of their own pockets… 72% of the women surveyed had used their own credit cards, cash and savings to fund their businesses”. An even more shocking note is that just under half of the women interviewed had been told that they would need a mans help to get their business started.
All of these preconceived notions about women investors and business owners overall, results in less funding, but that will only make us work harder to make it known!