Companies founded by women receive a small fraction of venture capital dollars (just over 2% all-women founder teams, 15% if one of the founders is female).
There are many reasons for this low investment rate, including the fact that most venture capitalists are male, and their “pattern matching” perpetuates the imbalance. Investors invest in founders who look like their image of a CEO (typically male and white) and fund businesses they understand—which leads them to underestimate female founders and under-value of businesses that target female consumers. Stitchfix founder and CEO Katrina Lake reported that one male investor told her, “I think you’re amazing, but I have to pick one or two board seats a year and where I feel really passionate about the business, and I don’t think I can be passionate about women’s dresses and retail.” Many VC firms are working to increase the ranks of women, but there remains a dearth of female entrepreneur role models. Founding a company is hard for anyone, and women entrepreneurs face additional challenges when trying to raise the capital needed to launch and grow their businesses.
At a fascinating discussion on this subject last night, When Women Pitch: Fundraising and Dealmaking While Female, panelists weighed in with their experiences pitching and investing. Moderator Diana Kapp, whose new book, Girls Who Run The World: 31 CEOs Who Mean Business, showcases amazing female entrepreneur role models, raised the question of whether differences in the overconfidence level of male and female founders plays a role. I have previously written that the confidence gap is a myth, but women have been socialized not to express confidence in ways that will make them unlikable.
According to Sequoia venture capitalist and former Polyvore CEO Jess Lee, who has experienced both sides of the pitch, the appearance of confidence can be subtle but highly consequential. She identified one moment in the pitch process where she saw women frequently undermining themselves in ways that their male counterparts did not. It comes down to the final slide of the pitch deck, when a founder typically offers their projections. In closing, Lee said, women founders are more likely to be reassuring, saying something like: “Even with our most conservative projections, the 5-year return on investment will be $100 million,” while their male counterparts will be aggressively optimistic, saying, “We project a $500 million return in 5 years.” Thus the final impression that the woman makes on the potential investor is to emphasize a lower return and a modest trend line, while men lay out their best case return and a steeply upward trend line. For VC investors looking for a few big wins in their portfolio, this last impression is crucial. Lee’s advice to women founders: “You’ve got to sell the dream.”
There is a parallel phenomenon that happens every day in the workplace. Co-panelist Mariam Naficy, founder and CEO of Minted, observed that she often hears highly competent women on her operational team say, “I think I can do this,” when considering taking on a challenging new task or role, while men would assert, “I can do this.” She tied it to women’s reluctance to over-promise and then disappoint. Naficy said she consistently needs to “dial up” the confidence of women on her team.
There is a lesson here for the rest of us, the vast majority of women who are not founding companies but who are the founders and CEOs of our own lives and careers. If you seek to advance in your career, you are pitching yourself. You need to persuade others—your boss or company leadership—to believe in and, yes, invest in you. So when you have the opportunity to pitch yourself, be aware of whether you are inclined to hedge or to present a conservative estimate of your capacity instead of aiming high, and don’t let fear of disappointing others eclipse your aspirations and your capacity for stretch. Take Jess and Mariam’s advice: dial it up and sell the dream.
By Hanna Hart
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