Welcome to my weekly Q&A feature. (Scroll down to find the Q&A.)
If this is your first time here, welcome. I spend a fair amount of time speaking at events and conferences. At the end of my presentations, I leave space for audience members to ask questions—tough questions, brave questions, you name it. The level of candor and curiosity always inspires me, and I want to share that sentiment with you. Each week I pick one question that I believe others would find most instructive and publish my response to it here.
The purpose of this weekly tradition is transparency and inclusion.
Transparency: a behind-the-scenes look at my day-to-day.
Inclusion: bringing others along on the journey.
Be Brave™
What Challenges Do You Face As A Woman Founder?
Question:
What are the biggest challenges you faced as a woman entrepreneur? What structures should be established to support female founders?
Curious about something? Ask your question here for a chance to have it answered in an upcoming edition of Brave Souls®.
Answer:
One of the perennial questions you are asked as a founder who, yes—happens to be a woman, is: how do you balance being a good mom with being a good entrepreneur?
The question is well-intentioned, kind-hearted, and inherently sexist. It assumes the only way to be a “good mom” is to be the family’s primary caregiver. It also assumes that any endeavor outside of family caregiving comes second to your role on the homefront.
These assumptions reflect some of the inequities nestled deep in the entrepreneurial ecosystem. They are the inequities that make the path of entrepreneurship even more arduous for underrepresented founders.
Women Founders Face A Headwind Of Inequities
People who don’t match the historical precedent of what a founder looks like (i.e. White and male) don’t get four seasons. They get one, and it’s hurricane season. That’s the biggest challenge as a woman entrepreneur.
When you should be channeling your mental energy toward product engineering or go-to-market strategy, you’re walking a tightrope because you can’t come across as arrogant to your investors, but you can’t come across as incompetent either. You’re playing mental gymnastics when you’re told that your idea isn’t viable despite the data proving otherwise.
Prevention Questions vs. Promotion Questions
As a woman founder, you can expect to receive more prevention questions from potential investors. These types of questions focus on safety, responsibility, security, and vigilance, e.g. “What's your plan to mitigate customer churn?”
Meanwhile, as a male founder, you can expect to receive more promotion questions from potential investors. Promotion questions focus on hopes, achievements, advancement, and ideals, e.g. “How big can your TAM get?”
Biases like these lead to smaller and fewer checks for women entrepreneurs and entrepreneurs of color. Despite a banner year that brought in a record $330 billion of venture capital funding in the US, only 2% of funds went to women-founded teams in 2021.
Women founders who are running revenue-generating companies have to fight for cookie crumbs while the deity of fiduciary irresponsibility—Adam Neumann—scores the biggest check in VC firm Andreessen Horowitz’s history…and his company has zero revenue.
How To Make Entrepreneurship More Equitable
Advice is great. Money is better. To improve the integrity of entrepreneurship, we need to equitably distribute resources. (Doing so would also make entrepreneurship more lucrative for investors. Venture capitalists could increase their projected returns to limited partners by $4.4 trillion if they commit to gender equity.)
My first recommendation is for policy makers to create a Female Founders Equity Fund through the SBA. This fund would provide capital specifically for women-led startups.
My second recommendation is to award capital to women founders in the form of grants, not loans. This has the added benefit of closing the gender cap table “equity” gap. As it stands, women founders own 48 cents in equity for every dollar men founders own.
TL;DR
Women founders have proven their competence again and again. Women-founded startups generate 78 cents for every dollar invested in their companies while men-founded startups generate only 31 cents for every dollar invested. Moreover, startup teams with at least one woman founder provide 63% better investment returns than teams of all men.
The two structures I recommended will help distribute resources more equitably. As for the VC decision makers themselves (who are 90% men), the savvy among them will recognize the untapped potential of investing in women-led startups.
Curious about something? Ask your question here for a chance to have it answered in an upcoming edition of this newsletter.
© 2022 Katica Roy™, Inc.