There’s good and bad news for women in the venture capital space. On the one hand, women-led businesses have increased by 21%. But on the other hand, less than 3% of venture capital investment is funding women-led businesses. Moving into 2020, it’s time for women to turn the tides and take advantage of everything the venture capital world has to offer.
Antiquated venture capital dynamics leave women out of the club
Rarely does funding just fall into the lap of any entrepreneur, male or female. However, age-old biases that run the male-dominated venture capital club make securing funds significantly more challenging for women than for their male counterparts. In order to beat the challenge and come out on top (fully funded), women must make an effort to understand the specific dynamics of the space and how they can find success among them.
Disparate gender dynamics can show their colors most vividly during business presentations. When women present, they tend to be more conservative, projecting realistic business goals. Men are more likely to skew big-picture and present exciting, hopeful estimates. Women: Stop underestimating the possibilities of your business and steer clear of presenting overly safe projections.
Another major dynamic is trust. Venture capitalists are human beings and as such tend to trust people that are similar to them — based on ethnicity, gender or even where they grew up. As more than 90% of venture capitalists are men, this puts women at a disadvantage. Women may have to work harder than their male counterparts to build trust in their vision until representation in the space is more equally spread across all genders.
Shifting the space to favor business ideas regardless of gender
Dynamics are already shifting and the number of female investors is climbing. With more representation in the field and more women-led investment groups created to specifically support female entrepreneurs, there is more than just a glimmer of hope.
However, with such a strong focus on providing women representation and support, it would be dangerous to lean into a homogenous, women-only space. It’s proven that more diverse executive teams make better decisions and that gender-diverse organizations are 21% more likely to surpass the financial performance of a competitor with only male executives.
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