As a female founder myself, it’s been an interesting experience pitching Missing Perspectives to investors, and chatting with other young women going through a similar process about the types of negative questions we have received.
What are the risks? Are you really getting that much traction?
Turns out, it’s a thing.
ICYMI: Research conducted by a team at Harvard in 2017 found that female founders tend to get asked what are called ‘prevention questions’ two thirds of the time, while men get asked ‘promotion’ questions two thirds of the time. Key point: founders that get asked promotion questions tend to receive greater amounts of funding.
“Research my colleagues and I conducted offers new evidence as to why female entrepreneurs continue to receive less funding than their male counterparts. We observed Q&A interactions between 140 prominent venture capitalists (40% of them female) and 189 entrepreneurs (12% female) that took place at TechCrunch Disrupt New York, an annual startup funding competition,” the authors wrote in a summary.
“When we analyzed video transcriptions of the Q&A sessions (with a linguistic software program and manual coding), we learned that venture capitalists posed different types of questions to male and female entrepreneurs: They tended to ask men questions about the potential for gains and women about the potential for losses. We found evidence of this bias with both male and female VCs.”
I spoke with Lisa Fedorenko from investment outfit Alberts about how her firm takes a different approach by introducing ‘calibration’ style questions during initial meetings.
“Research suggests that female founders get more preventative questions (eg. ‘tell me the risks in your business’) than male founders, whereas male founders tend to get more open-ended ones (tell me where you want this business to be in 5 years time),” she says.
“The idea of calibration questions is that regardless of anyones gender or background, all founders get asked questions from each category. As such we chose a particularly good open-ended question (if everything goes right for three years, where will your business be?) and a particularly sad preventative question (your business doesn’t exist in 3 years, why did this happen?). This way every founder gets calibrated with the same type of questions.”
I ask Lisa what trends she has seen with the founders she has met with – and asked these calibration questions. She says that most founders love these kinds of questions. “It often gets them to stop and reflect about their strategy. We often see the founders light up and tell us their three-year dream. Often the founders will check that we really mean ‘everything goes right’ and emphasise that their answer is a best case scenario,” she tells Missing Perspectives.
“The second question gets a range of responses with some having never contemplated their business not working and often addressing how they’d ensure they would avoid it closing, others instantly know the biggest threats to their business.”
Introducing calibration questions are obviously only one small piece of the pie when it comes to removing the barriers faced by female founders during the pitching and investment process. So what other strategies seem to be working? “There’s strong research to suggest having a diverse investment team will lead to more diverse investments. In particular we’re looking for diversity of thinking so that a broader range of ideas are explored and challenged. Having a diverse investment team also means you can explore problem sets for a greater range of people,” Lisa says.
She also emphasises that you can’t fix what you don’t measure – so signing up to initiatives like Equity Clear and measuring diversity in [VC] funnels is a “great way to reduce barriers for female founders.”
“Equity Clear is designed to help you see if you’re seeing a funnel or decision making issue with diversity so that you can focus on solving for backing more diverse teams (should you decide this is important for your strategy and returns)” she says.
Read more reporting on all things VC, gender and bias here.