How To Prepare For Bias When Pitching For Funding

By August 24, 2020Uncategorized

This year, Fortune 500 CEOs who are women are at an all-time high! There’s a record-breaking number of 37 female CEOs leading America’s largest companies. That’s great news, right? That’s just 7.4% of 500 businesses on this list. Within that breakdown, only 3 of the 37 CEOs are women of colour. There seems to be an unending list of barriers and systems that prevent women from being in leadership positions, with both explicit and implicit bias being a source of these disparities. We all have biases; what’s important is how we confront them and the actions we take to learn, improve and change.

Struggling companies tend to promote women to positions of power when things are going poorly, therefore these women face a greater likelihood of failure. When female CEOs are promoted to fix problems, not only do they have little opportunity to succeed, their failures reinforce existing gender bias.

“When the going gets rough, organizations look for a change of pace and often believe they find it in someone who isn’t their typical executive” – Vox

We KNOW this is depressing news! But we’re here to provide a hopeful solution. The upside in all this? This gender bias is less likely to occur at organizations with a history of female leaders. What if we fixed this disparity at the seed stage? What if within our community of investors, co-founders and accelerators, we are able to determine the success of female startups simply through the questions we ask?

In a TED Talk by Dana Kanze, called “The Real Reason Why Female Entrepreneurs Get Less Funding”, she discusses two motivational orientations of promotion and prevention questions in the context of startup funding. A promotion focus is concerned with gains and emphasizes hopes, while a prevention focus is concerned with losses and emphasizes safety, responsibility and security needs. 

 

At best, the answer to a prevention question results in maintaining the status quo, whereas promotion questions lead to discussions of growth potential and returns.

Kanze’s study showed no difference in the way female and male entrepreneurs presented their companies. However, 67% of the questions posed to male founders were promotion-focused, whereas 66% of the questions posed to female founders were prevention-focused. All VCs, whether male or female, displayed the same implicit gender bias in their motivational goals through the questions they asked.

The entrepreneurs who managed to switch focus by responding to prevention questions with promotion answers went on to raise 14 times more funding than those who responded negatively to prevention questions. 

“For example, if you’re asked a question about defending your start-up’s market share, you’re better off framing your response around the size and growth potential of the overall pie as opposed to how you merely plan to protect your sliver of that pie.” – Dana Kanze

By being aware of our own bias, we can then take action to redirect our responses. For our investors reading this, we hope in future Q&A sessions you illuminate gains and losses equally for every startup, to support all deserving startups and maximize returns in the process. For our female entrepreneurs reading this, take this awareness of prevention-oriented questions to frame your responses in a way that best showcases your startup’s potential.

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