by Tumi Frazier, founder of Tumi Frazier International
Over the years various studies have found that female entrepreneurs receive smaller loans than their male counterparts but no evidence of gender bias was ever brought to light.
Recently, I came across two studies that prove that some of the obstacles women face in gaining access to funding have to do with the different standards used by investors to evaluate potential and performance between men and female entrepreneurs. These two studies show how the types of questions posed by financiers and the language they use develops into gender stereotypes that ultimately influence their decision making regarding who gets funding and who doesn’t.
A field study conducted by Dana Kanze, Laura Huang, Mark A. Conley, and E. Tory Higgins on question and answer interactions at TechCrunch Disrupt New York City during 2010 through 2016 reveals that investors tended to ask male entrepreneurs promotion-focused questions and female entrepreneurs prevention-focused questions. One of the examples given in this study is the question about customers; a promotion question relates to customer acquisition, while a prevention question would query customer retention. Essentially this study highlights that venture capitalists posed different types of questions to male and female entrepreneurs; they asked men questions about the potential for gains whereas women were asked about the potential for losses.
In another study, Malin Malmstrom, Jeaneth Johansson and Joakim Wincent recorded venture capitalists conversations and analysed how differently they talked about female entrepreneurs. These researchers were given access to government venture capital decision making meeting in Sweden and were able to observe the types of language that VC’s used over a two year period. Over this period, they identified words and sentences used to describe entrepreneurs, comments on their appearance and the dynamics around the general decision making on who got funded. Women were considered to have qualities opposite to those considered essential for entrepreneurs; their credibility, knowledge, experience and trustworthiness were questioned. On the other hand male entrepreneurs were described as innovative, assertive, competent, knowledgeable and having established networks; essentially reinforcing men’s entrepreneurial potential.
The findings of this study suggest that the entrepreneurs’ attributes discussed when assessing entrepreneurial potential varied based on gender stereotypes, with women's potential diminished while men's potential amplified.
I must also point out that the investors in these two studies had women representation, so it is interesting to see that even though some of the investor teams constitute women, the gender bias still continues.
In a full potential scenario in which women were given a fair chance, not just in Africa but all over the world, women entrepreneurs would raise their revenue goals to match the revenues of companies owned by men and the global growth would be significant.
Tumi Frazier is a South African entrepreneur, professional speaker, author, TV personality, consultant, and founder of Tumi Frazier International, Tumi Leadership Academy, and Tumi Foundation. Tumi is an internationally acclaimed Leadership and Change Management expert who has worked with high profile clients and organizations across Africa, United States and Europe. Tumi has authored 4 books: Courageous Stories of Inspiration; In the Midst of the Storm; Stepping Stones to Success; and Your Moment. Follow Tumi Twitter | LinkedIn
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