*I drafted this article on March 6, when Canada had a mere 27 confirmed cases of the coronavirus. I have added commentary at the end that brings this topic around to the new state of affairs.

Our team was in Silicon Valley recently when, by a stroke of luck and coincidence, we found ourselves enjoying some canapes with a group of Canadian female founders under the nighttime lights of San Francisco’s downtown core.

They were a cohort of women entrepreneurs who had participated in a Canadian program designed to support them with workshops, panels, pitch coaching, forums with peers, and meetings with potential partners and investors.

I was curious about what the experience entailed, so I asked one participant to “tell me more.” She thought for a minute, and then said that she thought the pitch practice was helpful.

“Pitch practice?”

I asked her for more details.

“Yeah,” she said, “We weren’t pitching for the purpose of getting funding, we were pitching so we could get feedback.”

Gotcha.

She also said she enjoyed hearing from successful female entrepreneurs in the San Francisco ecosystem. So there was that.

I asked if, during the course of the bootcamp, they’d had any discussion about the gender-based challenges female entrepreneurs face, or if they’d been given any tips for combating systemic gender bias in VC.

“Well,” she said, “we’ve talked a bit about imposter syndrome.”

That wasn’t the answer I was hoping for.

By way of explanation, I said, “I’d think it would be important for you all to know things like how, for example, only 2.7% of VC funding goes to all-female founding teams.”

She put down her drink. Abruptly.

“Are you serious? Only 2.7%?!”

She’d never heard that before.

What she and other women entrepreneurs were hearing when it comes to their “particular” situation, are factors often cited as the “barriers” to their success.

Some of the usual suspects are “lack of confidence” and “imposter syndrome.”

For example, a 2014 report issued by the Women’s Enterprise Centre states, “Confidence levels impact how women present themselves, set prices, and negotiate on behalf of their business—whether that be with a financial institution, supplier, staff, customer, peer, or even a family member.”

“Lack of confidence” is no doubt reported by women as a problem, and perceived as a root-cause challenge by those interested in women’s entrepreneurship, but the best academic literature on the topic reveals that it is a symptom of systemic gender bias.

Reporting for The Atlantic, Stéphanie Thomson points to research that shows women actually “feel just as confident in their abilities and leadership skills as their male peers. The confidence gap seems to be a classic case of mistaking the symptom...for the cause.” And mistaking the symptom for the cause necessarily leads to the wrong prescriptions for treatment. Think: “use a power pose,” “avoid ‘upspeak’,” “think positively,” “speak with confidence,” etc. Further, nurturing the notion of the “confidence gap” may very well be convincing otherwise self-assured women that lack of confidence is their real problem. Harvard professor Dr. Hannah Riley Bowles muses, “I’m starting to wonder if we could be creating the phenomenon” of the confidence-gap when we should be dispelling it.

But ultimately, the fact that “building confidence” remains on the agenda when it comes to supporting women entrepreneurs is, itself, a symptom of a bigger problem - the individualizing of systemic problems.

Because VC and entrepreneurship has a problem - a big problem - with systemic gender bias.

In this report authored by Siri Chilazi, researcher at Harvard Business School’s Women and Public Policy Program, reveals in great detail how gender inequality is entrenched in VC and entrepreneurship on both sides of the money - affecting female funders and female founders.

(Chilazi’s report is a must-read for anyone who wants to see female funders and founders succeed, and you can get a bite-sized version here, where I’ve distilled the findings and engaged Chilazi in some Q&A.)

A key takeaway for women entrepreneurs is that the root-cause barriers women face are not the usual suspects (lack of confidence, sub-par networking skills, imposter syndrome), but the following systemic challenges:

Gender stereotypes
The myth of meritocracy
A masculine “bro” culture
Harassment (50% of female VCs and female entrepreneurs report experiencing sexual harassment)
Bias in feedback and mentorship (read more on feedback here.)

But what does this mean for the female founder, and what does it have to do with women’s entrepreneurship programs?

Frankly - if programs designed to support women entrepreneurs don’t at very least equip them with the facts about the gender inequality in the VC and entrepreneurship ecosystem, they are failing to give them a chance in hell of combatting them.

Let me explain.

FACT: By and large, funders (who are predominantly male - 90%) say their investment decisions are gender-blind and they simply fund the “best ideas.” In other words, they believe they are meritocratic.

But they are not. And here is (just) one example. (You can find the details of this, and many more in Chilazi’s report.)

In one study, a startup pitch was presented to funders. The pitch was the same. The only difference was one group of funders evaluated the pitch read by a woman and the other group evaluated the same pitch, but read by a man. Not only were VCs more likely to want to invest in the man’s pitch, they evaluated it more positively and described it more favourably than the pitch delivered by the woman.

In this case, gender bias is likely unconscious. In other cases, it’s not. Take the following examples, as described by female founders.

Sarah LaFleur, founder of the immensely successful women’s workwear brand M.M.LaFleur, recalls how a VC told her “It looks like you started a really great niche business for yourself, but we’re not interested in small potatoes.” LaFleur’s response was, “What’s niche about working women?” LaFleur explains that there are 30 million women aged 25-45 working in corporate environments, and those earning $75k+ spend an average of $4k per year on workwear. That’s more than a hundred billion dollar market.

Another VC told LaFleur, “We really like you… really think there’s a lot to like about the business, but we’re four guys sitting around the room and we just can’t get a gut feel on the product.”

One of the female founders I met in San Francisco described coming up against a similar set of challenges. She and her co-founder have built a company that helps hair salons measure and manage product. For anyone who knows even a little about what’s involved in providing colouring services (75% of American women colour their hair), it’s easy to understand why salon owners need a reliable method for dispensing and predicting supply and pricing of colour and colour-related services. But this cofounder explained the looks on VC faces when she and her co-founder say the word “salon.” She expressed how they don’t think it’s serious, they don’t understand the market: “We explain it to them with a bartending analogy and then they usually get it.”

This, and the example of M.M. Lafleur, demonstrates both gender bias in VC, but also reveals how that gender bias is failing to fund economic growth, writ large. Just as working women don’t constitute a “niche market,” neither is the hair salon industry. But when VCs are predominantly men operating inside a “bro culture” who can’t get a “gut feel” on products and services that touch on the female economy which, by the way, is basically... THE economy! (since women control an estimated $28 trillion in annual consumer spending, according to HBR), lucrative funding opportunities go untapped. (Katica Roy, CEO of Pipeline Equity and gender economist, has a lot to say about the economic potential of gender equity.)

So what’s the takeaway for female founders here?

Gender bias exists and it affects your chances of securing funding.

It’s not fair.

The system is skewed.

It’s not your fault.

Ok. But what can female founders do, then, to improve their chances? I’m getting there.

But first, another fact to help illustrate why being armed with the data is a key step toward hacking the gender-biased system.

FACT: During pitches, women founders are more likely to be asked risk-based questions, whereas men founders are more likely to be asked asset-based questions.

So, what? Well, risk-based questions tend to elicit risk-based answers, and risk-based information tends to reduce the likelihood and quality of funding. Asset-based questions elicit asset-based answers, and asset-based information increases the likelihood and quality of funding. Armed with this knowledge, women founders can interrupt the system by answering risk-based questions with asset-based answers.

For example, let’s say a female founder is pitching her tech-based healthcare enterprise. The VC asks a risk-based question:

VC: What are some risks investors might want to consider before investing in your venture?

She can answer that risk-based question with a risk-based answer (and reduce her chances for funding):

FOUNDER: Well, the healthcare industry is highly regulated, it’s slow to adopt change, and when it does, there aren’t necessarily incentivized to make change.

Or, she can answer with an asset-based answer (and increase her chances for funding):

FOUNDER: Well, the healthcare industry is a huge industry that, today, is still using outdated methods when it comes to cost-control measures, a pain point that our product addresses in a unique way. So there is a lot of potential here to capture market share, enough potential - I believe - to overcome the facts that it’s a highly-regulated industry relatively slow to change.

So, let me say again, if your female founder support program (or event or bootcamp or network, or what have you) doesn’t educate women about the gender inequality of the VC ecosystem, you’re setting them up to fail.

WHAT’S THE POINT? WHY ARE WE TELLING YOU THIS, NOW?

If you’re giving them confidence coaching, if you’re perpetuating the myth of meritocracy, then you’re part of the problem, not the solution. And female founders, before you invest in securing yourself the “support” of some such network or group or association or bootcamp, take a minute to ask how they’re going to equip you to thrive in a gender-biased system.

So there’s that.

But what else can we do? (Because many of us are, after all, looking for some tactics here.)

Whether you’re a VC looking to become more equitable or a founder trying to succeed in the system as-is, Chilazi outlines some practical recommendations in her report.

Further to those...

Apply a critical-thinking approach:

The next time you think about dispensing - or internalizing - advice for female founders, ask yourself: is this really research-aligned? Does it describe a symptom or a root cause?

Consider the system before the individual:

By and large, female founders don’t need to be fixed. The system does. So, if you can, work to de-bias the system. Build on existing evidence like that in Chilazi’s report, or trial tactics from other industries and sectors (consider repurposing the tactic used by the USA’s most acclaimed orchestras, which increased the representation of female musicians by 30% by using blind auditions).

Arm yourself with the data:

There is good research exploring the nuances of gender-bias in VC. When you’re familiar with it, when you share it with female founders, you’re investing in the knowledge-base that is fertile ground for new action. Combine that with the lived experiences and best ideas of female founders and you have a powerful recipe for designing novel tactics (like the asset-based answer example above.)

Gender inequality in VC is a systemic problem that prevents women and their enterprises from achieving their full potential. We can’t “self-help” female founders out of it.

We can respect women entrepreneurs enough to stop making them think they are the problem.

We can commit to understanding the nuances and nature of the problem.

We can shine a light - a bazillion lights - on the unequal playing field until we see every divot with such clarity that, one by one, they can be avoided, or, better yet, levelled completely.

WHAT IS THE EQUITY SEQUENCE™, EXACTLY?

The Equity Sequence™ is designed to help your organization truly build equity - and ultimately equality - one question and one decision at a time.

The Equity Sequence™ session brings participants together to learn how to expand equity in organizational decision-making by asking a series of powerful equity-focused & strategic questions - without judgement, and with curiosity and respect.

The innovative Equity Sequence™ focuses on a collaborative, collective effort that invites everyone to participate in the creation of greater equity.

The coronavirus pandemic is laying bias bare and exacerbating existing inequalities, and it’s gearing up to create the kind of tidal wave that will certainly change the landscape.

There is some indication that it is not just changing the landscape for the worse. We are seeing the crowdsourcing of funds, of innovation, of solutions to shared problems. We are seeing what Rebecca Solnit observed through her research on people in the midst of crisis:

We are also seeing a frightening deepening of inequality:

Social supports are flailing as they seek to provide their constituents with the basics (food and housing) that they need, given rapidly changing circumstances and increasing demand.
Racial biases against people of colour are creating measurable trends in regards to who is accessing COVID-19 testing and who is not.
Racial and gender biases (among other means of discrimination) are also affecting who is losing their job in a period of unprecedented layoffs, and who is not.
Women are poised to bear the brunt of the fallout, including women founders who currently only receive 2.7% of VC funding which - at the best of times - is already profoundly gender biased.

On this note, and to the topic of this piece, now more than ever is the right time to be interrupting and uprooting bias where it has been shaping decisions largely unchecked, particularly in the context of VC funding.

The Equity Sequence™️ for COVID-19, for example, trains participants in a series of 5 equity-focused questions that equip them to identify and mitigate for bias, as well as leverage opportunities to increase equity efficiently and effectively, one question and one decision at a time. This version of the Equity Sequence™️ takes less than 2 hours to complete, makes use of real-life case studies and scenarios, and connects you to a community of #changemakers.