New businesses are fraught with challenges, and raising capital can be one of the most tricky aspects of all. But, for 50% of the population, that journey can be even more treacherous.

Earlier this month, research from the Boston Consulting Group (BCG), in partnership with US accelerator group MassChallenge, found that female business founders pitching for investment capital receive significantly less than their male counterparts.

Of 350 startups, those founded by males received an average of US$2.2 million (AUD$2.95 million) in investment, compared to an average of US$935,000 (AUD$1.25 million) for those founded by females.

However, startups with female founders generated better cumulative revenue over a five-year period – US$730,000 (AUD$977,250) on average, compared to US$662,000 (AUD$886,200) for male-led businesses.

Through interviews with founders, mentors and investors, BCG deduced that one of the reasons for these numbers is that women are more likely to be challenged in their pitches, particularly regarding their technical knowledge.

Equally, the report said: “If a potential funder makes negative comments about aspects of a woman’s pitch, rather than disagree with the investor and argue her case, she is more likely than a man to accept it as legitimate feedback.”

Nicola Hazell, director of SheStarts, the female-focused arm of Australian accelerator Blue Chilli, says this research shows nothing new.

“It’s consistent with trends we’ve seen over many years,” she tells SmartCompany.

Hazell suggests that the reason for the disparity is a bias against women – unconscious or conscious – that remains in business.

Of course, she says: “Women are not a homogenous group … there are entirely broad scales of privilege that affect how hard people have to work.”

But, in general, women face “more hurdles, more questions and indeed, for many, more injustices”.

We asked some female founders about their experiences in fundraising, and for their tips on overcoming adversity.

Can I meet your boss next time?

According to Hazell, in conversations between startups and investors, men are more likely to be asked questions are what they are going to do, what the possibilities are, and what they can bring to the table. Women, on the other hand, are more likely to be quizzed on what issues they need to address, and what they will do to make sure they don’t fail.

The questions “lead to a negative, not a positive,” Hazell says, meaning females have to “jump over a higher bar to access funding”.

Catriona Wallace, founder and chief executive of Australian machine learning technology company Flamingo AI, says the statistics in the BCG report reflect her own experiences, adding that she learnt to assert herself as credible from the get-go.

“I have a PhD in human technology interaction,” she says. “I learnt from a very early stage that I needed to be very bold and establish mastery upfront around the tech components, so those challenges would be removed.”

Lucy Liu, co-founder and chief operations officer at payments startup Airwallex, who scooped up the 2018 Finnie Award for female fintech leader of the year this week, says she hasn’t actually felt particularly challenged when pitching.

In fact, she says most investors don’t know enough about the technology to ask in-depth technical questions.

She does say, however, that when trying to build up relationships with regulators or corporate partners, she has felt her age has been an obstacle.

“Age-plus-female might come as a disadvantage,” Liu says. “People would say things like: ‘That was a really good conversation, but can I meet your boss next time?’”

These questions can become even more inappropriate depending on the industry women are in.

Leah Callon-Butler co-founded Intimate, a blockchain startup focused on the sex industry, which recently closed its ICO.

She says: “The one question that I always get is: ‘Are you, or were you, a sex worker?’ The answer is no, but I just think it’s interesting that they never ask my male co-founders the same question.”

Power imbalance

According to Hazell, part of the reason for the investment imbalance is that the majority of investors are male. Getting money into a startup is about “much more than just the dollar sign”, she says.

Startups are typically looking for investors who can bring value to the business in terms of advice, mentorship and networks. And investors want to back individuals they can relate to.

“Often, it’s very difficult for a male investor to understand the potential of the startup if they can’t relate to the people,” Hazell says.

This barrier, paired with conscious or unconscious bias, “feeds into the fact that people find more reasons to say no”.

That said, Callon-Butler says being a female co-founder in the adult industry has “absolutely been an advantage”

She says: “Many investors perceive a certain level of reputational risk about injecting money into an industry that is generally thought of as sleazy and exploitative of women.”

Having a woman involved helped the Intimate team “present a more accurate projection of the business opportunity that exists”, she says.

Callon-Butler adds that, in its token sale, the startup saw a “significant number” of female participants. The decentralised nature of raising funding through an ICO, rather than through the traditional VC route, could potentially affect the power balance of investment, she says.

“If more women were empowered to make more investment decisions, would we see a shift in the statistics around where the funds are directed?”

Interestingly, Wallace also says Flamingo has also seen more success from capital markets than from traditional VC funding. Flamingo listed on the ASX In 2016, following a merger with Cre8Tek, and found that provided a better platform.

“Despite the majority of investors still being male, there’s more diversity in the investor pool. That provides a better platform for us.”

For female-run businesses to win more success with VCs, Wallace says, they should receive training in how to present themselves, establishing their own mastery upfront, while also focusing on the figures.

However, she says it would also help to have women in the room at a pitch – or even men who are already behind the idea; “people who can amplify the woman’s messaging if it’s not presented in a way a male VC might immediately respond to”.

Don’t worry about it

For women at the start of their capital-raising journey, Liu says one of the most important things is to consider how you present yourself – having the confidence in yourself and your product, and being passionate about it. Those founders that come across as confident won’t experience some of the challenges associated with being a woman in business.

She adds: “It’s up to people who are more confident about what they do to inspire the ones who are not.”

Also, Liu urges entrepreneurs: “Don’t worry about the VC side of things.”

“There’s enough capital in the market,” she says. “If you find the right VC who is genuinely interested, the money will be there.”

She adds: “You’re actually making money for the VC. They’re making returns for what you’re doing.”

Hazell urges entrepreneurs to take advantage of the “amazing community” in Australia and to reach out to other female founders for advice.

“The community wants to share stories, to empower each other and to connect,” she says. “If you’re thinking you don’t belong in there – you do.”

And, according to Callon-Butler, in the crypto-community that support is global. Intimate recently attended Blockchain Week in New York, where support from women, for women emerged as a theme.

“I’ve never felt more supported by a community like I do with the women in blockchain network,” Callon-Butler says.

“There’s a lot of ‘talk’ out there about women supporting women, but in my experience, women in blockchain really commit to lifting each other up.”

Wallace’s advice is simply to go for it – thinking “bigger and more boldly that even your first idea”.

She says: “I thought I was developing a website for customer service, now it’s a global machine-learning company.”

“If I can do it, other women can – absolutely.”

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