Misogyny is a thorn in the side of female entrepreneurship
The next time a woman in your life tells you she wants to start a business, don’t look at her as if to say “aww, that’s cute.” Take her seriously. Look her dead in the face. Ask her how bad she wants it. Ask her if she’s willing to fail.
Because she might. Businesses fail for a variety of reasons. But, her being a woman shouldn't be one of them. Watered-down misogyny continues to keep women from acquiring necessary funding, either from venture capitalists (VCs) or small business loans.
Female-owned businesses seeking small business loans have 15–20% lower approval rates than male-owned companies, while woman-led startups are even less represented in front of VCs.
Reality check
The 2014 U.S. census described the median income between men and women of different age groups. Still, the gender-pay gap is staggering. Men still hold more managerial positions than women. Women hold just 4% of CEO positions.
What’s a girl to do, but become an entrepreneur?
When bosses don’t pay enough, the only option for women is to consider financial autonomy: start a business. A surely daunting task, however, especially for those women without business education and experience.
Founding a startup or small business is a process. Greenhorn business owners need not only a good idea, but the energy and drive to execute it. Founders will also often need outside investment to start up, hence the name, and money doesn’t grow on trees. These women must look to either venture capitalists (VCs) or a bank to secure funding. But, what investors will give women a chance?
Misogyny in venture capitalism
For the moment, female entrepreneurs still lean on the charity of men. The business world has been dominated by white males since its inception.
Male VCs — and obviously most are — are very comfortable now giving female entrepreneurs capital for “girl stuff.” Want to rent dresses or sell baby wipes as a subscription? No problem. The VCs ask their wives or girlfriends if the idea is cool, and they’re good to go.
—Katherine Hays, the co-founder and CEO of venture-backed Vivoom, an ad tech startup.
The Wharton School of the University of Pennsylvania chronicled Hays’ experience trying to secure VC funding as a woman in its 2016 piece “Why VCs Aren’t Funding Women-led Startups.” Read the full story here.
Although 38% of new businesses in the U.S. are female-owned, only 2–6% of them receive VC funding, according to Ethan Mollick, a professor of management at Wharton. An innocent explanation is that women don’t start businesses that look like typical VC-backed businesses. They tend to be smaller and in lower growth industries such as retail or food, rather than technology. But, for dark horse women-led tech start ups like Vivoom, bias continues to influence funding opportunities.
There are a few reasons for this, misogynist or otherwise:
- During series A funding, VCs can only judge a book by its cover, passing judgment based on personal attributes or gender. Mostly because early stage startups have little objective data to support results. VCs like numbers. But, startup founders without any must rely on their idea and charisma to sway potential investors.
- Birds of a feather flock together a.k.a. the homophily principle. Much of business is networking. When an individual shares a gender, ethnicity or social background with another person, it becomes easier to create a connection. Male VCs find it easier to connect with other men. Women are put at a disadvantage when they are unable to access personal or professional networks.
- A lack of social and intellectual capital available to women. “Women entrepreneurs face challenges in getting access to thought-leaders — people who can help them think through problems they may be facing: social capital, intellectual capital, and things that are important in addition to financial capital,” said Laura Huang, a management professor at Wharton.
- VCs want someone who lives and breathes for their startup, 24 hours a day, 365 days a year. They may second-guess a woman’s commitment. The fact is that VCs want a return on their investment. Makes sense, but why should being a woman make their investment more of a gamble?
- Women may lack the confidence to put themselves out there. Or, they fear failure to the point it prevents them from starting. While the percentage of men starting new businesses has increased, the percent of women starting new businesses has stagnated. Underrepresentation will make a woman stick out in front of VCs and can add extra pressure to her pitch.
Sometimes I believe if I were a 21-year-old male in a hoodie, Vivoom would be even more appealing to VCs.
–Katherine Hays
An entrepreneur used to be a tongue-in-cheek way to describe a door-to-door-hack-of-a salesman. But, entrepreneurship is now edgy and stylish. A great part of entrepreneurship is that it doesn’t require previous business experience. In fact, VCs are more interested in the grit and determination necessary to create and maintain a quality product. VC investment usually covers the back end of a business, such as organization, while the abilities of the entrepreneur are the front end, or what the customer sees.
Hays is an example of a woman who sold her first startup, Massive Incorporated, a video game advertising company, to Microsoft for $200–400 million. Yet, she faces the same stigma other female entrepreneurs face with her second venture, Vivoom. Is her idea less than adequate? Doubtful. VCs have put little faith in the abilities of female entrepreneurs. Prejudice has kept them and other minority groups from being marketable in the business world.
The fact is that because women are undervalued in the work world, it’s up to women to translate their value to investors and clients.
No one will pay you what you think you’re worth, only what they think you’re worth. — Casey Brown
Another part of it has to do with legacy.
Women want opportunity, not charity
Female entrepreneurship needs pioneers and success stories. Young girls still don’t grow up viewing entrepreneurship as an option. Sheryl Sandberg, author of Lean in: Women, Work, and the Will to Lead, sought to shed some light on the state of women in the working world using anecdotes from a variety of entrepreneurial sources. It starts with education, but action spurs change.
Despite all the rhetoric about investing in women, just two cents of every [current] development dollar actually goes toward programs for girls.
A new philanthropic model
That’s why Kate Roberts, CEO of the philanthropic initiative, the Maverick Collective, and Crown Princess Mette-Marit of Norway, teamed up to create something new for international women. The Maverick Collective was co-chaired and granted a $5 million investment over five years by Melinda Gates’ and the Gates Foundation. It applies a VC model to philanthropy, recruiting women who are able to invest $1 million of their own capital into personal pilot programs. These women become Mavericks, identifying a few impact areas they have interest in and then choosing a geographical location to focus on.
Much of the focus is currently on health care because “If you’re not healthy, you can’t go to school or work. It’s the core of everything,” said Roberts.
For example, Pam Scott, founder of research and branding firm the Curious Company, addressed unintended pregnancies in Tanzania. She funded three research groups who all came back with the same conclusion: girls were paying for taxi rides with sexual favors. Scott helped to create a free taxi service for girls, run by girls. Within a week, there was a woman-driven taxi in a Tanzanian village working as her own boss.
The Maverick Collective isn’t a philanthropic sinkhole rich women can poor money into to feel better about themselves. The movement’s founders are very hands on, providing Mavericks with social and intellectual capital to help them find solutions. Mavericks are educated in navigating the grant process, communicating with donors and public speaking. The support is passed down to women being benefited by the Maverick Collective. The ventures aren’t just charities, for if they were they may as well be run by men. They are investments in social justice ventures capable of providing vital infrastructure and developmental skills to women in developing nations.
The Street Business School in Uganda
This mobile classroom is another example of collective action fostering intrenational entrepreneurship. The Street Business School emerged from of an older program of CEO Devin Hibbard’s, BeadsForLife, which is a fair trade organization that pays Ugandan women to make earrings, necklaces and bracelets out of recycled paper.
The Street Business School took on the role of educating women in business practices. Ugandan women had little formal education, so curriculum included basic bookkeeping skills, customer service and even the simple differences between profit and loss. Hibbard and the Street Business School understand that
Entrepreneurship is the path out of poverty.
The organization began with a bead making businesses, but grew to incorporate 45,000 women who started 3,250 businesses, everything from vegetable stalls to hair salons and restaurants. What is even more remarkable? 81% of the businesses the Street Business School helped create stayed remained open after the first two years, compared to the 80% failure rate of businesses in Uganda.
Women want opportunity, not charity
Here’s proof that women don’t need to be versed in business language, with an expensive degree, to become entrepreneurs. They simply need an opportunity. But, not to be confused with charity. Women don’t need anyone to say they did it for them. VC philanthropy and the Street Business School were successful because they gave women in the countries they served the means to exist after the organizations left, whether it was infrastructure or an education.
Women in the U.S. hoping to become entrepreneurs face a similar struggle. Yet, only because they have not been taught there is another way. There may not be as many philanthropic entrepreneurial programs looking to make an impact in the developed world, but women in the U.S can still be armed with tools for success. A formal education is the most comprehensive way. But, for those women already well into their professional career or denied access to college, forced into the working world at a young age, this kind of social and intellectual capital isn’t always available. There are, however, free digital tools that can help supplement formal business education, such as MIT Open Courseware and Khan Academy.
Cycling back to a previous question: what investors will give women a chance? A few, actually. While small business loan approval rates are still lower for women than they are for men, Nerdwallet put together its “Best Small-Business Loans for Women 2017.” The Small Business Administration (SBA) also has a page dedicated to informing women on loans and how to apply for one specific to women.
What she’ll need to get started:
- A good business credit report
- A solid business plan
Microloans are a secondary option for female entrepreneurs who need $50,000 or less in funds. Once again, the SBA has provided a resource to help business owners through the process. Nerdwallet is also on-board to bring its “Microloans: 13 top U.S. Nonprofit Lenders.”
In many ways, women have been inhibited by men, controlled by a patriarchy that kept them unruffled and wholly domestic. Men used to “protect” women from the emptiness of failure by hiding them away in the home or pigeonholing them into delicate, ladylike careers. When women joined the workforce in the late 1800s, they found the most work under male subcontractors in the textile and garment industries, but nothing about the work was delicate. They were paid less than men to work longer hours. Women laborers were meant to provide a second wage, not be breadwinners.
Well, times have changed. But, what women make still isn’t enough to provide for a family. Single mothers continue to suffer through monthly bills. Men can’t pretend any longer that they care for women by holding them back in their careers. That is why women are still paid less and fight misogyny nearly every day in the workplace. Men are only protecting themselves from a little friendly female competition. What are you scared of boys?
