Fast Company

Startups: An "Alpha Male Pissing-Contest?"

We Can Do It

Why aren't enough women seeking angel and VC money? And why aren't more women-led startups getting funded? Consider these little known facts:

  • Women-run tech startups generate more revenue per invested capital and fail less then those led by men, according to New York Entrepreneur Week.
  • "Companies, including information technology, with the highest percentages of women board directors outperformed those with the least by 66%," according to research by Catalyst.
  • "Gender diversity [is] particularly valuable where innovation is key," according to studies by Illuminate Ventures.
  • In 2009 angel investors dished out $17.6 billion to fund startups. Wonder how many funded startups were women-run? 9.4%, according to the 2009 angel investor report Center for Venture Research at University of New Hampshire.
  • Women-owned ventures accounted for 21% of the entrepreneurs that sought angel capital. "Both the number of women seeking angel capital and the percentage that receives angel investments are low compared to the overall market," said the 2009 report.

So why the gender discrepancy?

It's a Multi-part Problem

1. Women fear failure and taking risks more so then men.
2. There are too few women investors. "Among venture capitalists, the population of financiers who control the purse strings for a majority of tech startups, just 14 percent are women," according to the New York Times and National Venture Capital Association.
3. It's a male dominated culture that can be hostile at times. It often can feel exclusive rather then inclusive, though some women interviewed feel it's improving as more open and transparent discussions happen around this issue.
4. There's a lack of mentorships for women and women role models.
5. Networking and promoting occur in silos. Women entrepreneurs are not networking enough with investors and the entrepreneur community as well as promoting their names and companies. But VC's need to do a better job too. They need to make a concerted effort to connect more with women entrepreneurs and become more accessible. How about organizing a series of Reverse-Pitch Parties for women entrepreneurs at SXSW and in different cities?
6. We work in a culture that promotes and rewards 70+ hours work weeks and little work/personal life balance.

"Women entrepreneurs do fear failure and they believe they have to do a...to z and prove themselves before they start their own company. Men don't have that trait, said Amra Tareen, CEO of AllVoices.com and former Partner at the VC firm Seven Rosen Funds. "Men promote themselves even if they cannot do it...they may think they know it all but THEY DON'T. Women on the other hand may have the skills but they will not promote them, and will always feel they need more skills."

"You have to get over the idea that you need to have deep experience in every area," said Mary Hodder, who is developing her second startup Wellness Mobile. And you need a network of people you can ask for answers from when you need perspective on a problem you don't have experience with."

Failure Is a Good Thing

Why are women so concerned about failing, when learning from failure makes for stronger business leaders? The negative messages women give themselves start as young girls, says Rachel Simmons, author of the book The Curse of the Good Girl. "Many young girls define their self-worth according to how liked they are by others. They also equate success with being liked. Failure, or even constructive criticism, leaves many girls feeling as if they've personally let someone down, or that a relationship is damaged. Failure can feel personal and global, raising the stakes for a risk."

"Men are a lot better at letting 'perceived failure' roll off their backs," said Deborah Schultz, a partner at the Altimeter Group. "There's a great quote. If women fail, we blame ourselves, if men fail they blame the situation."

Failure is very common in the startup business. "8 out of 10 start up businesses fail," said Tareen. "Some of the most successful startups in the software and telecom businesses were started by serial entrepreneurs who had one or two failures. Why? Because they learned from there previous companies what to do and what not to do. You cannot learn how to do a startup right until you do one -- this is from a woman (me) who went to Harvard business school and sat on the other side of the table funding startups at Sevin Rosen -- you just have to DO IT!"

Caterina Fake, co-founder of Flickr, Hunch.com and one of the Partners at the Founder Collective, which has funded three women startups, says there's no better way to learn the process than to dive right in. "Do as many pitches as you can, screw up and sink or swim. Almost all entrepreneurs have been through that process, and it's painful, but that's how you learn the ropes."

Tareen recommends making a list of VCs who have funded similar businesses to your plan (remember they are pattern recognizers) and just go and pitch to them. Don't get discouraged when they say no. Keep at it.

Fail Fast! Iteration Trumps Perfections

When embracing failure, it's important that you fail quickly and in a relatively contained/smaller space than let things get big and out of control, said Schultz. "That is why I am such a big believer in iteration trumps perfections -- especially in the tech/business world today. Things are moving too fast to sit around and plan the perfect scenario -- you have to take your ideas and bring them to action -- so you can iterate, improve or adapt quickly."

Self-Promotion Is Key, but Don't Be a Jerk!

While self-promotion is key and something even Clay Shirky recently discussed in his blog post, "A Rant About Women" and on NPR, Hodder warned that "women do not need to match the aggressiveness of men to self-promote into 'arrogant self-aggrandizing jerks' because aggression should not be our filter for quality and substance."

"There is also a style problem," said Hodder. "Much of the tech startup world is an alpha male pissing-contest behavior ... not all and there are plenty of guys who don't do this, but it's a pattern seen too often."

"The cycle is self-perpetuating, so (predominantly male) VCs have a preconceived notion in their heads of what they think constitutes the kind of entrepreneur to back, said Cindy Gallop, who runs the startup IfWeRanTheWorld. "John Doerr apparently said, 'If you're white, under 30, tech geek with no social life and a Harvard/Stanford dropout, line up for VC money.' He didn't say 'male' but he might as well have."

Work/Life Balance?

Gallop brings up a good point about the portrait people paint of startup founders--young geeks with no social life. Has the obsession with finding and funding the next Apple or Twitter driven investors and entrepreneurs to foster a work obsessed culture that may be inadvertently excluding women?

Katie Stanton who was previously a Principal in the New Business Development Team at Google and is now the Director of Citizen Participation at the State Department, says that the work/life balance is a big issue that needs to be tackled. "There are huge barriers for working mom entrepreneurs. There is the tangible cost of having to pay someone else to take care of your kids. When I joined the White House, I realized that almost 80% of my net income went to after-school care and babysitters! But more importantly, there is a tremendous emotional cost of being away from your kids. If your startup fails, you feel like you have let not just your company and your investors down, but your family, too."

While it shouldn't matter if your wearing men's shoes or stilettos, the fact remains that over 90% of investor money goes to men (and only 6% of investor money goes to people of color--another big problem). So if investors really want to find that next Twitter or Facebook, perhaps they need to step up and expand their personal networks too.

Allyson Kapin is the Founder of the Web firm Rad Campaign and Women Who Tech. You can follow her on Twitter at @WomenWhoTech. She will be doing a panel on When Failure and Criticism Are Public during DC Digital Capital Week on June 18th along with Jill Foster of Live Your Talk, Geoff Livingston of Zoetica Media, and Justin Thorp of Clearspring.

Add New Comment

16 Comments

  • Sean Stickle

    I was just informed that the report was only available to paid subscribers to their service, so it's not generally available for inspection. Boo on secret research.

  • Sean Stickle

    After talking with Illuminate, it turns out the source of the study was a company that went bankrupt in 2008. Some of its assets were sold to Dow Jones, but most were not. Still trying to track down the original study...

  • Allyson Kapin

    Sean - email info@illuminate.com and call the Kaufman Foundation (816) 932-1000. They should be able to give you the full studies.

  • Allyson Kapin

    Sean and sited by studies by Illuminate Ventures and organizations like the Kauffman Foundation.

  • Sean Stickle

    This is an interesting claim: "Women-run tech startups generate more revenue per invested capital and fail less then those led by men." Can you reference the study?

  • Tresha Thorsen

    I will brave a comment in this space because solutions to this issue fuel my every waking moment I'm engaged in technology. But I will also offer that I have not yet sought VC.
    At every step of the way, what helps me most to forge ahead are stories from those that have gone before, whether 100 yrs ago or last week. So what I'd value is a compilation of history..evidence..stories...here's what she did/is doing..here's what they did/are doing..what worked didn't/what they'd recommend, etc. That's what motivates me. That's how I learn. That's what gives hope, instills confidence, makes that unknown suddently a bit more plausible. Every woman has had women before her who influenced her, impacted her, inspired her as have men. I'd value a collection of stories of women entrepreneurs who have obtained VC ..what was that journey for them?
    Long term, the more we expand the sense of technology to include all elements of communication, we may well see not only broader scope of startups but greater sensitivity to the necessity for funding. 1 laptop per child is a start...what would it take to campaign for every child to obtain language/literacy across the globe? The receptivity of investors could stand to expand compassion and humanity. How does one instill that value?
    Thanks so much Allyson. Here's to continued discussion.

  • Cathleen Ash

    Great piece with lots to reflect on - silos, failing fast, and most especially resonating: Rachel Simmon's comments. They remind me of work done eons ago (or 15/20 years) by Carol Gilligan "In A Different Voice" which approached moral development disparities between men and woman. Thoughtful and thought-provoking.

  • Allyson Kapin

    Thanks to all of you for your thoughtful responses.

    @simone - Thank you for sharing the info on the Dragons Den that you organize in the UK for women innovators. I would love to see more programs like that happen.

    @Jill - Yes finding a good match is key.

    @Noah - Loved your points about risk.

    @Rose - Thank you for sharing your story on failure.

    @Ed - Thanks for sharing your perspective on how the hacker culture has evolved into what it is today. Regarding the study on people of color only getting 6% of investor money - I will need to check with the Center for Venture Research at University of New Hampshire on how they define it.

  • M. Edward (Ed) Borasky

    There are really two stumbling blocks for women, African-Americans and Hispanic-Americans entering the "tech startup" pipeline:

    1. Yes, the existing networks are dominated by white males who know each other, but there are a number of Asian-Americans who can "import capital" via family and business connections. That's why I questioned "people of color" - I suspect the real distinction is not so much skin color as it is connections to Asian markets, labor, capital and manufacturing.

    2. As I discussed at length on my own blog, the hacker culture, lifestyle, behavior and attitudes seem to have driven out the disciplines of software engineering and project management. It wasn't always like this, and it's better some places than others. See http://borasky-research.net/20... for my take on the subject.

  • Rose Robinson

    I agree with "being afraid of failure" until I too learned so much from what didn't go wrong than from what went well. It has made me more analytical up front and a better manager and communicator throughout. Great article!

  • Noah Kuttler

    Great post. Most people, especially investors, tend to fear risk and try to do everything they can to reduce risk. The funny thing is, by staying with their "traditional" view of who to invest with, they tend to elevate the risk they were trying to reduce! It's important that people such as yourself provide the facts and educate the public on these types of issues that people understand that reducing risk may in fact mean going with something that was different from what they "traditionally" did.

  • Sue Hudson

    Great article, Allyson, but please learn the difference between then and than! Than is a comparison. Then is a time. Just remember that then rhymes with when.

  • Simone Brummelhuis

    Great post.
    @Women entrepreneurs are not networking enough with investors and the entrepreneur community as well as promoting their names and companies.

    We have been organizing female's dragon's den i.e. funding & pitching events with thenextwomen entrepreneurial and investor community since start of 2009. We have each time at least 10 women presenting their ambitious plans to a panel of investors and experts, with the purpose: to practice, to get to know investors, to network with other female entrepreneurs seeking funding, and to be in a trusted environment where one can improve pitch & business plan. It works really well, but actually more investors should be involved. Coming Monday we are doing another funding & pitching event, and we are just evaluating the pitch documents and the women have amazing business plans and ambitions. The winning pitch will win a place at the Astia Investor Readiness programme for women led companies in London. We will profile them soon also on our website, http://www.thenextwomen.com so other investors can see them as well.

  • Jill Foster

    Comprehensive piece - thx Allyson for extending this conversation here. To make systemic change on the VC / startup culture, where is the place to start? It's wise (and well rounded) that different answers were brought out in your post. It's just not only up to VCs to diversify their networks and alter stereotypical perceptions of "tech founder success." It's also up to women startups to be on their self-promotion game and be clear on what VC partner would be a good match.