Originally found at Inc. by Rebekah Iliff
These days, it’s nearly impossible to peruse your favorite business outlet or watch the nightly news without seeing a headline about sexual harassment or the shocking inequities that female entrepreneurs face. As discouraging as it may seem, the truth is we all need to be “woke” in terms of systemic social injustices, particularly regarding race and gender. Our collective awareness of these disparities is precisely what is needed in order to move the conversation forward.
With that in mind, as we enter the holiday season–a time for reflection, spreading cheer, and inciting general goodness–I think it’s also a perfect opportunity to understand just how far we’ve come so we have a better sense of what lay ahead of us. Not as women business owners, startup founders, or solopreneurs, but as a unified group. We have a tremendous amount of progress to make; yet, we have much to celebrate....
Analyzing the investment gap
Another reason for the massive gap between the number of businesses owned by women and the revenue they generate is the fact that a smaller percentage of women raise capital to fund their companies. The current statistic often cited is that “women only received 2 percent of all venture capital investment in 2017”–a proportion that was even lower in previous years. However, to give this more context: According to All Raise, a nonprofit dedicated to increasing this percentage, female founders raised only 15% of venture capital. The 15% differs from the often cited 2% because the latter refers only to all-female founder teams. While 15% isn’t phenomenal, it does signal progress.
One explanation for this disparity is that only 9% of VCs are women–a number that is increased in the last few years has more women started launching their own venture funds. The still blaring investment gap may also be caused by bias, which can creep into the attitudes of both male and female investors.
A 2018 study published in the Academy of Management Journal found that investors (both men and women) are more likely to ask female entrepreneurs “prevention” questions, whereas male entrepreneurs receive “promotion” questions. This means investors are more concerned about potential losses with women, but they want men to tell them all about their ambitions and the growth potential of their businesses. Unsurprisingly, entrepreneurs who are asked “promotion” questions typically receive more funding.
Continue reading original article at Inc.
Learn more about the AOM Scholars and explore their work: