Despite successes like Gilt Groupe and Kiva, female entrepreneurs are still typically at a disadvantage when it comes to scaling their business. Less than 5% of venture capital funding goes to female CEOs, according to Dow Jones VentureSource.
That number is especially startling given that women now make up half of college graduates, PhDs and MBAs, says Sharon Vosmek, chief executive of Astia, a San Francisco-based nonprofit that runs programs for female entrepreneurs to launch high-growth companies. Understanding and dealing with the disparity between male and female entrepreneurs depends on several factors, and Vosmek says she uses Astia as a “social experiment” to help fuel growth.
Vosmek recently spoke with Fast Company about the needs of female entrepreneurs and how they can scale up to start high-growth companies similar to their male counterparts. The interview has been condensed and edited for length and clarity.
FAST COMPANY: What are the biggest barriers for women trying to turn their ideas into high-growth companies?
SHARON VOSMEK: There are really two fundamental issues for female entrepreneurs. The first is in the U.S., men and women are still by-and-large in separate business networks, while 95% of VC partners and 85% of angels are men. This societal structure becomes extremely important in the entrepreneurial space, because they rely heavily on business relationships. Within the high-growth space, groups who are not naturally in each others' networks, will suffer as a result. Women have to actively pursue building business relationships across genders, since women entrepreneurs are going to be uniquely disadvantaged because of the societal structure where men make up more VCs. [Studies show that] if women had the same access to capital we would see six million more jobs within five years--there is a really strong case for why to care about this.
How did this separation of the sexes start?
I think it goes back to when women weren’t in the workplace and our primary relationship with men was via marriage. We don’t have a legacy of doing business together; women did business with other women in a home setting. Nowadays, the capital is primarily held by men and it requires close business relationships. It becomes a bottleneck because of that screening mechanism that investors use. One of the core factors is, ‘Do I trust this person?’
So what do you do about this?
The Astia model purposefully combines men and women so they can build trusted business relationships early on. This doesn’t yet exist in society. In Astia we thoughtfully socially engineer advisory boards, speaker panels, and boards of of trustees. We socially orchestrate this structure and we seek out that expertise in a gender inclusive way. You have to plan it and to build relationships. If don’t know any VCs to ask for that money then you don’t have the kind of trusted business relationship that’s require to gain funding.
What’s the second issue that affects female entrepreneurs?
The second point is that still today women self-assess differently than men. The most basic example is if I’m a woman and have 15 years of experience and seated next to a man with the same 15 years of experience he will articulate a higher level of confidence and aspire to a higher level of things than a woman. Generally speaking a man does not need to have been a CEO before to be able to envision it, but a woman does. Women also use networks to validate their ideas through investments or to get endorsement of the idea, but men don’t seem to need that kind of validation. It’s very much a generalization but we end up aspiring for less because we assess that we can only deliver so much
Are there differences in the type of support women need when compared to men?
The research shows that they need all of the same things. If you think about these challenges they have little to do with the women, they have to do with the structures. Both men and women need to be surrounded by a highly engaged and supportive ecosystem and need access to capital and expertise--they need all the same fundamental things.
Do you suggest women find mentors to lead them through the company growth process?
I use the word advisor rather than mentor. Advising is not about a mentee receiving skills from a mentor--women are at the ready and need advisors. We don’t need to the develop skills which are achieved through a mentor-mentee relationship. Rather the advisor is responsible for the success in a startup, it’s huge help. The advisor then brings in other investors and helps the company strategically grow bigger. It’s harder to find your male advisors [for women]. If you are a male and invest in a company and are constantly taking phone calls from a woman, that can be uncomfortable in some families. I’m sure there’s a tension there and that’s the tension that I think is the hurdle in achieving high growth and one that most people won’t talk about.