How to wow your audience with your investment pitch when you are a female presenter (1 of 2)

Female presenters are subjected to both conscious and unconscious biases, which male presenters or males on the receiving side of the presentation usually have little idea about. Nonetheless, it is commonly accepted that often the odds are stacked against female entrepreneurs. But how big is that problem, how does the problem get created in the first place, and what can female presenters do about it? I will discuss the first two questions in this article, and then attempt to answer the last question in a second article next week.

Nearly a year ago a groundbreaking study was published in the Harvard Business Review by Dana Kanze and others that showed how these biases operate and what effect they have on fundraising outcomes in the context of venture capital funding in the United States. The results were so stunning that, even though it has been in the public domain for almost a year, it is worth still calling your attention to it. I don't think it registered enough.

In a nutshell, the researchers studied Q&A interactions between 140 prominent venture capitalists (40% of them female) and 189 entrepreneurs (12% female) and tracked all funding rounds launched at a particular annual start-up funding competition in New York. The start-ups were broadly comparable in terms of quality and funding needs, but the male-led start-ups in this sample raised five times more funding than female-led ones.

The analysis showed that male and female entrepreneurs got asked different questions by venture capital firms - male presenters received mostly promotion-oriented questions, while female presenters got prevention-oriented questions. Promotion questions focus on hopes, achievements, advancement and ideals; in short, the potential for gains (e.g. "how do you intend to monetize this?"). Prevention questions focus on safety, responsibility, security and vigilance; in other words, the potential for losses (e.g. "how long will it take you to break even?"). The researchers found that 67% of the questions posed to the male entrepreneurs were of the more aspirational "promotion" bent, while 66% of those directed to the female entrepreneurs were of the more conservative "prevention" kind. The study found evidence of this bias with both male and female VCs.

Because we are taught to answer the question asked (!), the majority (85%) of entrepreneurs responded to a promotion question with a promotion answer, and conversely, a prevention question received a prevention answer, which reinforced perceptions to the positive and the negative respectively. In other words, if a female presenter answers a prevention question with a like answer, she unwittingly penalized her start-up by keeping the conversation stuck in the realm of potential for losses.

Stunningly, the study found that for every prevention question asked of an entrepreneur, the start-up raised $3.8 million less, on average, in this sample. Controlling for all sorts of factors, the prevalence of prevention questions completely explained the relationship between entrepreneur gender and start-up funding. The gender gap in venture capital funding in the Unites States - female entrepreneurs receive only 2% of all venture funding, even though they own 38% of businesses in the country - will not go away soon, just because we hope it will, or because it "should". Yes, more women are becoming venture capitalists (an estimated 7% in 2017 vs. 3% in 2014), but that is unlikely to close the gender gap in funding - this study showed that both men and women who diligence start-ups appear to have the same bias in their line of questions, and tend to favor male entrepreneurs over female ones. There is a lot more rich detail in the HBR article linked above, and it is worth a read.

When I speak to my female friends in the private equity and venture capital industry, I hear of too many uphill fundraising struggles. I am not going out too far out on a limb when I assert that these same biases unfold in many different settings, in many different parts of the investment industry, and in many other industry sectors, the world over. This study just provides the evidence for the tip of the iceberg. When you are a minority female entrepreneur, the biases only become stronger. So, now that we know a bit more about how exactly these biases operate, what can you do about it?

Please stay tuned for next week's contribution.

Robert van Zwieten is the CEO of The Serendra Group LLC, a boutique emerging markets advisory firm. He also serves as the CEO of Private Capital Development LLC, a new-generation full-service economic development firm which mobilizes private capital to fuel sustainable economic development, entrepreneurship and innovation in support of the Sustainable Development Goals. He is the former President & CEO of EMPEA, the global industry association for emerging markets private capital.