Don't pitch like a girl

VC gender bias is?not just a social issue, it is?bad business.? Female and diverse founder teams not only?perform better?but they are also more realistic in their pitches and overvalue less.??Yet diverse founder teams get just 25% of the money that goes to male-only founding teams, and female-only teams get just 5%!?????

“Why is it so?”?

Dr Julius Sumner Milner, Cadbury ad, 1981?

So?what’s going on??– are female-founded?startups?poorer bets??No.?In fact,?despite this funding disadvantage,?they?actually?perform?better:?

"US accelerator male-founded startups received 128% more?funding,?but?went on to earn?10% less revenue."

BCG study, 2016

"Female-founded?startups?achieved a 35% higher return on investment and?generated?12% more revenue"??

Kaufman study, 2016 ?

Is it due to there being too few female founders? Well for starters, with this sort of bias, that wouldn't be surprising, but actually no, that doesn't explain the difference. If it did, this wouldn't be happening:

The average funding size for diverse founding teams was $10.5m, higher than either single sex cohort

(M: $7.2m; F: $2.5m).

Techboard Australia, 2021

The only supported evidence is lack of awareness of cognitive biases that naturally stem from 85% of VC decision makers in Australia being men.??But before boring you with the details, the bottom line here doesn't need more detail. The numbers are extremely compelling: clearly most VCs talking about backing female founders actually aren't backing female founders, whether in diverse teams or not.

The great news is, many actually are. And as the data shows female founders doing much better, if you are someone investing in VC and you actually care about this issue, vote with your feet.

And by feet, I mean money.

And by money, I mean Big Money.

That's you guys with the super funds. Particularly the ones with mostly female members: HESTA, Care, HostPlus, Rest. Put your members' money where your mouth is.

If you aren't willing to do this, or if you are a VC but not willing to be transparent about your actual gender balance, that's fine?– it’s a free country and you certainly have better things to do that listen to me preach!?

If you're?still reading and?not sure where your VCs?sit, here's a few avatars based on some of the leading studies into why the VC world has such a massive gender bias. See if you can find yourself on this list?…?spoiler alert?-?women?are not immune to gender bias!?

Meet Jenny: Jenny thinks masculine behaviours are a sign of competence.??Jenny loves investing in women, so long as they act like men.??Read about Jenny here:

"Don't pitch like a girl"?

Entrepreneurial Theory and Practice, 2017?

(No really, that was the title of the research paper!)?

Meet Jack:?Jack invests in voices and looks that give him confidence.??Male voices give him more confidence that female. And an attractive founder gives him even more confidence?-?but only if that founder is male.??

"Come out of the VC closet, Jack"?

Harvard, 2014?

Meet Jock: Jock?went to a private boys’?school.?Jock's network is 90% male, because he has always worked for investment banks, PE and VC.?Jock brings in great deals, but because of his networks, they are 90% male founded.?????

"Boys, Boys, Boys"?

Harvard, 2019?(and?Sabrina, 1987)?

Meet James: James asks growth questions of men, and risk management questions of women.??James is unaware of his due diligence cognitive bias.?But?he invests an average 5x more in men than women, so it’s not that hard to tell?if he cared to check.??

"Biased, James?Biased"?

Harvard, 2017?

And last, and well,?actually least?if you get my drift:??Meet Jeff: Jeff thinks that men and women need the same things in life.??Jeff earns $300,000 a year?salary?from his?VC fund?investors, drives a Tesla and has a private banker. Jeff didn't have to take six years out of the workforce to raise kids. Jeff also earns around 14% more than his female peers.?But Jeff can’t understand why women might need different financial services, health,?or eCommerce solutions to men.???

"Wake up Jeff!!!"?

The Wiggles, circa 2005?

Jack, James,?Jock,?Jenny?and Jeff aren't unique to VC - plenty of individual investors fit these avatars.???

But here’s the difference?(which as a?30 year?veteran of investment management really p*#ses me off), it isn't their money - someone is paying them big time to manage their money professionally. This J-gang don't take the time to investigate why they might, year-after-year, be investing so heavily into male-founded businesses. And they don't take the time to understand that this bias could be costing their investors millions of dollars.???

Luckily there are now VCs in Australia analysing their own processes to see what is driving the biased capital allocations.?They understand the basic tenet of investment markets – irrationally under-allocated?corners of the market will always outperform in the long-run.?