This morning I woke up to a horrifying graph that Wall Street Journal put out about how women lag behind in fund raising. Reproduced below this graph shows that “all-male founders in 2017 have outnumbered those led only by women by a ratio of more than 18 to 1.” This is for the United States. India isn’t any better.
Why and how women founders face bias while raising money – see the graph? Those tiny red bars – yes those! https://t.co/ESLn9IOOQ3 pic.twitter.com/mVQ3quR1cv
— SheThePeople (@SheThePeople) November 30, 2017
To our tweet this morning, Kiran Mazumdar Shaw was quick to respond how tough its been for her. Clearly, lack of funding for women is not a new problem.
I certainly faced it in my early days The truth is that women are fiscally very prudent @BDUTT https://t.co/Dd6oDEAtqu
— Kiran Mazumdar-Shaw (@kiranshaw) November 30, 2017
On an average only 10-15% of total funding goes to women in any startup year in India. Quantum of funding aside, not enough of them make it to higher rounds of funding. Of late angel funding has been more democratic but not anywhere near to make it worth it for growing and transforming businesses for women entrepreneurs.
I am a female founder. A journalist who turned to entrepreneurship. I don’t look at myself as a female or think of my gender as something that comes in the way. I have never been conditioned to. But I have been vociferous in seeking female specific incubators and funds for women. And there is good reason for that. Investors obsessed with GMV and the ‘scale up’ piece just don’t have the interest or the patience to go through other aspects of the idea. The numbers are completely off. Not more than 3 odd per cent women received funding from the total people who got funding in 2017. The figures, like mentioned here, were only slightly better in 2016 given the fund raising scenario.
Male Startup Prototype
WSJ notes that women find it is common for VCs to compare them to the investor’s vision of the prototypical male entrepreneur. A set pattern of working, of fund raising, of the next round, of exit, of no ‘work-life balance’ (as if that’s something real any way). The testosterone startup style has tailored investor thinking. They know what to expect. It’s familiar territory.
Investors in India have looked to Silicon Valley for inspiration and continue to be focussed on neat copies of businesses there, most tech oriented. No surprise then technology centred startups pick most of the funding. Even as women rise in STEM, such obsession with a cookie cutter model of investing can mean new and impact driven businesses by women get little or no attention.
I remember when I started SheThePeople.TV and told people it was going to be India’s biggest media platform for women, some asked me if it were a hobby. That’s the thinking of most investors. It was only after Anand Mahindra chose to invest in this, that I could smile back at the investors who just didn’t get it.
Can’t Look Into The Eye
Shopclues founder Radhika Aggarwal, now the only female to co-lead a billion dollar startup in India, faced the problem of investors not looking at her. With two male co-founders, she noted that at most investor tables, she wouldn’t be spoken to. A former Goldman Sachs, Nordstorm employee, it didn’t matter to investors that she knew her retail. This is true for many investors. One founder of a beauty salon company said that her husband was asked if he would join the business.
That Same Old
Sometimes I believe if I were a 21-year-old male in a hoodie, Vivoom would be even more appealing to VCs.”–Founder Katherine Hays to Harvard Business Review
Small Is Big
We run the very prestigious Digital Women Awards, which recognises women breaking new ground in digital. Each year we get over 5000 applications and these are women who look at small and scaled up businesses both. Some are filling a market gap. Others are focussing on social impact. Do all need to grow into billion dollar businesses? No. But do they all deserve attention and investment? Yes! Alas, investors don’t get this.
A look at America: While 30 percent of small businesses in the United States are female-founded, women received only 4.4 percent of total small business loans
Women Are Prudent
I won’t make it generalisation but mostly women entrepreneurs are far more prudent with money. They spend more carefully. Headlines are testimony to how many more startups run by men go bust. In India, in the last four years we have had a crazy boom in food startups and an even crazier fall. Investors have been okay to burn their fingers. A few of them continue to get more money, even if the end result is more cash burn.
WSJ points to an important issue. Of how much is a lot when it comes to seeking funds. One of the entrepreneurs the paper spoke to says “after looking at pitch decks from her male peers, she realized her projections were much more conservative than the men’s were.” And this becomes a double edged sword. Some investors call it under-confidence and reject it for not being ‘scale’ oriented. If and when women pitch a lot more, it becomes an issue of ‘is it worth it? or over-confidence.” Somehow these questions aren’t that commonplace for men.
Those questions. How do you find investors who understand female founders? Does that breed exist? Do investors take you seriously?
Fund raising not only remains one of the biggest challenges for women entrepreneurs, it’s also one of the key reasons why women face harassment. The last 18 months several cases emerged in India that suggested investors were harassing women who had reached out to them for investments. On other occasions many women face discrimination for being who they are – the leaders of their startups – and those who seek to grow their business and their families (no I am not calling this a work life balance for that’s really not what women are all about.)
I repeat. Female founders deserve your money not your bias.