Entrepreneurs looking for advice on pitching their business ideas will find abundant resources on what to include in their presentations but less about how to respond to questions. Is it wise to showcase strategies to deal with a project’s risks? Is it smart to show competitive aggressiveness? Are there downsides to being too intense?
Evidence suggests that the answers to those questions depend in part on whether you’re male or female.
Recent studies in the U.S. and Europe have explored ways that the fundraising process may be gender biased. Understanding the dynamics at play could help explain why, for instance, venture capitalists (VCs) overwhelmingly provide more venture capital to male entrepreneurs than to female entrepreneurs. In the U.S., women-led companies received only 2.2% of venture capital dollars in 2018.
Research published last year in the Academy of Management Journal observed gender bias in the Q&A interplay between investors and entrepreneurs. Coauthors Dana Kanze, Laura Huang, Mark A. Conley, and E. Tory Higgins found that male entrepreneurs tend to receive “promotion-focused” questions (in the domain of gains) and female entrepreneurs tend to receive “prevention-focused” questions (in the domain of losses). This difference in questions helped to account for the gender disparity in their funding amounts.
Our research takes this investigation an important step further. We examined not only verbal interactions, but also how other signals in pitches trigger thoughts that cause VCs to approve or deny funding for female and male entrepreneurs.
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Our results suggest that there are specific ways for women to be more successful in venture capital pitch situations: Their presentations can sidestep gender stereotyping traps by avoiding discussions about their willingness to take on risk. Women should also find out about the gender composition of the panel they’re pitching to so they can prepare their language accordingly. These strategies may be useful for women making pitches for initiatives within established organizations, too.
Gender Stereotypes in Venture Funding
In Europe, the primary research context for this study, venture capital has been a major source of funding for years. In the second quarter of 2019, European startups had a record level of venture capital investment, with 9.3 billion euros, or $12.7 billion at the time, invested. Women-run companies make up about 22% of Sweden’s businesses (some sources say 29%) and about 25% of U.K. businesses. But Swedish and U.K.