Guest Post by Adam Quinton, Founder/CEO Lucas Point Ventures (micro VC).
This post was first published in Linked In and went viral!
You recently answered a question posed to you by Dr Sanna Gaspardat a conference for women entrepreneurs in New York. She said that other people had mentioned to her that it might help to bring along a man to investor meetings to be the face of the company … and what did you think about that idea. Although you were not to know it, Sanna has MS and PhD Degrees from Carnegie Mellon in Biomechanical Engineering. She is the founder and CEO of a Rubitection, which is developing a medical device to effectively prevent and manage pressure ulcers (bedsores). Needless to say this is inspired by her research.
As an invited guest in the audience and a micro VC, so a (white male) investor, this is an area I know something about. Not least since I have worked actively with many female startup founders as an investor or advisor. I have written about this topic too, for example when I discussed the challenges female founders faces when pitching.
To Sanna’s question, the challenges for women CEOs raising early equity capital are evident in these statistics: Approaching 80% of angel investors, and per the 2014 Babson Project Diana report 94% of Venture Capital (VC) partners, are guys. Babson also reported that just 3% of VC backed companies have women CEOs. We can debate why this is. From my point of view unconscious bias clearly plays a substantial part, and some conscious bias too I have no doubt. (Check out the Elephant in the Valley research and you will see plenty of evidence of both.)
Many investors will tell you they use “pattern recognition” (less politely known to us all as to as stereotypes) to help identify their best opportunities. That preferred pattern, like the stereotype of a leader – which is of course what startup CEOs are – reflects predominately masculine behaviors. And in addition the patterns that sit in our unconscious or “automatic” brains connect the image of successful entrepreneurship with the likes Jobs, Gates, Bezos, Zuckerberg etc. – so white guys that are the mirror image of most investors themselves.
Sanna asked you to address this issue yes, but also its intersection with another. As you could see, Sanna is Black. Here the statistics become daunting. Kathryn Finney of digitalundivided reports that just 0.2% of venture deals over 2012-14 went to black women founded companies. Again, not a number you would be expected to know, but pitiful in the context of overall venture funding running at $25bn/year for many years rising to roughly double that recently. By the way, once they are on the table these data points should be pretty sobering for anyone who thinks that the angel/venture fundraising business is a “meritocracy.”
Your reply to Sanna, again as I recall it, was essentially that since it is the white guys that get funded (by the white guys) … then why not find yourself a white guy to front the company. So a colleague/spokesperson that could represent Rubitection to investors … and better connect with them, by virtue of being “one of them.” Fitting the expected pattern in other words. What you were saying may have well intentioned and fell into the category of “it is what it is” advice. i.e. if the world “works” a certain way then go with the flow if you want to succeed. In this case if your primary objective as an entrepreneur to grow your business, and you need to get it funded to achieve that, then do what it takes.
In the room I sensed a fair amount of disquiet as this dialog played out. And it came into the open when Content Strategist and founder of Urban Socialista Mary Pryor, took the mic to say that what you were offering was a recipe to sustain a flawed status quo – and that was unacceptable. Mary subsequently wrote forcefully in the Huffington Post about how your advice was “wrong headed” and not the way to empower women entrepreneurs.
As a white guy investor sitting in the room … what do I think about all of this? Frankly I thought long and hard about whether to “say” anything at all. As we know from recent events in the political sphere talking about gender and especially race in America, even in 2016, is sadly still fraught with great tension and difficulty. But, I recently gave a talk with my friend Shari Slate from CISCO at SXSW about unconscious bias. And in that talk we stressed the need to be willing to be comfortable talking about uncomfortable things. This seems a time for that.
So here are some thoughts prompted by the chain of events. These are not intended to be judgmental or “mansplain” (or “whitesplain”) what happened. Not least because this is a situation where I don’t have the standing derived from lived experience to talk “for” the folks involved, you included. Still, as someone who can see when a situation is inherently unfair (meaning the early stage fund raising environment) and maybe has some appreciation of why (given my experience of the investing with an eye on diversity these past four years), hopefully I can say something useful. Hence this more general advice aimed (hopefully!) at making the startup/investing world a better place:
- When we talk in the public domain, or any other context for that matter, we all need to be aware that our comments and views are informed by unconscious biases we do not even know exist.(Unless, that is, we use tools like the Harvard Implicit Association Test to better understand ourselves, as Shari Slate and I explained at SXSW.) Those unconscious biases can get us into trouble, so engaging your conscious or “reflective” brain is important. As Shankar Vedantam (author of The Hidden Brain) has observed, the pilot can take over from the autopilot when it wants to. We especially need to fully engage reflective mode when those biases impinge on how we assess and advise people different from ourselves across some major area of difference (so race, gender, age and so on).
- To have a better chance of catching those biases in the moment we can all do ourselves a huge favor by spending more time outside our (comfortable) “people like us” networks to better understand the lives and challenges of others. So get comfortable with being uncomfortable in that sense too. In this context investors proactively seeking out “non traditional” founders will help break down stereotypes they harbor themselves. But this will also open their eyes to opportunities they might have otherwise summarily have dismissed.
- There is an extra onus on “in group” members to be sensitive and empathetic when they make comments that bear on members of a minority and hence “out group.” Stereotypes in our own heads come in to play in many ways of course. But we also need to be aware that the majority in any situation, which inevitably defines the norms of behavior in any given context), can unintentionally create a dynamic (called “stereotype threat”) where the minority is constantly (and mostly unconsciously) literally stressed out trying to conform to that norm. Read Claude Steele’s fascinating book “Whistling Vivaldi” if you want to learn more.
But what about the specific issue that Sanna raised? What advice would I give to a black female founder seeking to raise money!?Personally I agree with the observation that telling any entrepreneur they need to have a team member to front their company who is a white guy (if they are not) is pretty upsetting. But I also know that the realities of fund raising mean this is an active conversation founders from under represented founder groups in the start up world have, if not openly and in public. Still my primary advice, which I fully credit to Mita Carriman CEO of Adventurely, is this:
– do not give up on your dreams and own your authenticity –
The thoughts of my friend Erika Trautman (co-founder-CEO of Rapt Media) seem relevant here. Erika wrote that yes, there is gender bias in fund raising. But what she learned in her fund raising journey was that she could only be successful if she was authentic. And eventually she did connect with investors who appreciated her for who she is and could look through superficial issues like presentation style. Here I would add the observation that investors are ALWAYS backing the founder and her/his vision, drive, ability to execute etc. So Bethenny, simply having a proxy/spokesperson of the right “look” to front the company, might be an appealing “real world” fix. But, while many investors may not be that smart, they will see through that ruse pretty quickly.
Still, Erika may be from an out-group (women), but is still in a key in-group (she is white.) Going back to the start of all this Sanna’s question was about the intersectionality of her own position. Perhaps one answer is for founders like Sanna to look for the equivalent of a personal “sponsor.” In the corporate world helping under represented groups get recognized and get ahead is acknowledged to be a pervasive challenge. One widely accepted solution, which my colleague Sylvia Hewlett of the Center for Talent Innovation has literally written the book on, is sponsorship. The employee builds a relationship with someone more senior in the organization who does more than mentor them. Rather the sponsor advocates for them when they are “not in the room.” In a way Bethenny you were talking to something like that. Perhaps we need to find a way for more seasoned entrepreneurs and investors with a voice in the community and a commitment to fair play to “sponsor” women and minority entrepreneurs into their networks. With your success that is one way you could help change the ratio.
Ultimately founders can benefit from support but fundamentally need the dollars of course. Getting heard and advocated for more often is part of that. I can tell you that there is no pipeline problem. (At the second day of the conference you attended there was a pitch competition with 10 finalists, all women of course. Three were black and one Latina.) So, as I wrote after the Ellen Pao case “Leaning in is fine, but kicking ass is better.” Perhaps you could fund some of these entrepreneurs, or at least encourage others angel investors and VCs to do the same?
For my part I now know this is a complex issue and I don’t even pretend to have “The” answer. But I know I personally need to spend more time thinking about what it might be … and encourage you (and others) to do the same.
Thank you Adam, for investing in women entrepreneurs and making your voice heard to bust bias.