There are plenty of studies that have illustrated the differences in the way VCs treat women and men. In an HBR article one group of researchers, who hadn’t even set out to test gender differences, found the evidence so overwhelming that they felt compelled to explore it further. They found that stereotyping through language upheld men as true entrepreneurs while undermining the image of a woman as one. That study was in Sweden for governmental VC decision making, one of the countries often cited as doing a significantly better job toward gender equity. The article is especially insightful, because it highlights just how much language shapes who gets funded and not.
Recently the British Business Bank published its UK VC & Female Founders Report, originally commissioned by Chancellor Philip Hammond, and undertaken in partnership with DiversityVC and the BVCA. The image below illustrates some of the most important — and shockingnotshocking — findings.
And while it’s cute that the image above uses faceless humans of different shades, most reports are not designed with intersectionality in mind. However, there is the ProjectDiane2018 report that focuses specifically on US-based Black women. It collated numbers on the shockingnotshocking state of affairs for Black women founders. There were 6,791 funded startups led by at least one woman founder, yet only 4% of those startups were led by Black women. In 2015 a mere 0.2% of VC funding went to firms founded by women of color in the US.
So, with that in mind, I am clear that I am not alone in the patronizing experiences I have with VCs and other funding organizations. I’m writing answers to the most common comments, because it is tedious to receive this type of feedback, and perhaps someone else needs to read this today. The similar feedback between reviewers serves as a reminder that no matter how different their websites and vision and mission statements might read, most VCs are really following the same unspoken formula.
- “What a great cause!”
Merriam Webster and Oxford dictionaries include a definition for the word ‘cause’ as a charitable undertaking alongside a few other definitions. However, a ‘good’ or ‘great’ cause distills down to one definition: a charity. As someone who studied development economics, I could write a whole thesis on how detrimental the notion of charity has been to what is often referred to as the Global South. Charity and investment are not to be conflated.
Colour Balance Images (CBI) is a two-sided marketplace for royalty-free and rights-managed images and footage featuring culturally, ethnically and racially diverse people, communities and their environments. The platform focuses on images stemming from the regions of Africa, Asia, the Middle East, Central and South America. It is a for-profit business. But these two positions cannot co-exist in the minds of some.
It is possible that I may be missing the potential in how to effectively use gender-based bias. One study showed that female-led ventures that put more emphasis on the social impact of their work reduce the discriminatory effects, i.e. gender penalty, that other female-led ventures encounter. The social + commercial combo is evaluated more positively than simply the commercial. Is that good news for me, or for women in general? Prolly not. Bias is bias.
2. “There’s already ONE company focused on this.”
Unsurprisingly, some reviewers write as feedback that there is already one random company, that they probably came across in a quick search, doing the same thing, so why should they bother investing in mine. Two issues with that: 1) most startup literature asserts that direct competitors signal that there’s a market; and 2) to what extent is one [insert random company] doing the same thing a deterrent for another company in other markets, or even in this one for that matter?
The (indirect) competitors that the reviewers tend to mention aren’t actually doing the same thing. And they would know that had they taken a few moments longer to read the deck or even spend some time on the website of the supposed competitor. This is actually at the core of one of the challenges that CBI seeks to address.
3. “This type of company doesn’t warrant VC backing, because returns will be so low.”
- iStock, founded in 2000 by a sole white male founder, was acquired in 2006 by Getty Images for US $50 million
- Shutterstock, founded in 2003 by a sole white male founder, had a successful IPO in 2012 raising US $76.5 million with a market capitalization, at the time, of US $760 million.
- Fotolia, founded in 2005 by three white men, was bought in 2014 by Adobe for US $800 million in cash.
Are those not the types of exits that one is taught to aspire to at just about every accelerator?
My ask: Who are the angels with whom I should speak? What are the angel investor networks — preferably based in London/UK/Europe — that I should contact? I’m looking for angels with an interest in removing barriers, providing access to capital, networks and know-how for underestimated founders, and positively impacting the future.