Breaking into the boys club- Intersectionality
By Yamini Mathur | 21st September
When it comes to getting money to start a company, it is different for men and women. Female Founders received only 2.2% of the biggest Venture Capital deals in 2017. The low investment number directly stems from the fact that, venture capital is predominantly a boys’ club with 9% of US VC’s being women. VC’s and firms are preventing themselves from achieving a consistently performing diverse portfolio, which is considered enviable strong in the Venture world by not funding women. An intersectional lens in investing, especially in women-led companies is the cornerstone to stay competitive and relevant.
Intersectionality is described as the interconnectedness of different aspects of one’s identity like gender, religion, race and social class. These identities create overlapping and interdependent systems of discrimination and disadvantage for a person, group of people or a social problem. This concept forces venture capitalists and venture firms to use multiple identity lenses in order to develop a deeper understanding of the current problems in funding and the startup ecosystem.
Despite the oppressions in this ecosystem, in the US women start companies at a rate 5 times more than men do, generating twice as much revenue per dollar invested, than businesses founded by men according to a BCG study. If women do not receive funding for their businesses, then the economy will suffer tremendously. The situation is worst for working pregnant women. There exists a well-known bias against pregnant founders as evidenced by an investor, who recently claimed that a, “pregnant founder/C.E.O is going to fail her company”. Women founders like Jennifer Fleiss, founder of Rent the Runway, an online clothing rental website with 2.5 million members and Divya Gugani, founder of Send the Trend, an ecommerce website for beauty and accessory items, gave birth to their children while growing and managing companies with high money involved. We need smart women starting and running companies to stay in the workforce even during motherhood. Women will be leading web and technology or, we can say leading the future. Successful female founders emphasize that they made it work as they had an entire community behind them composed of supportive spouses, friends, nannies and in-laws.
However, approximately 87.6% investors are currently white males who simply refuse funding to working mothers. Actually, these investors should consider themselves lucky to have an opportunity to invest in female run companies. Only women can come up with the best ideas for women. Executive decisions need to be made by female founders who have an insight into the woman’s brain in order to reflect the market that is driving the economy. Instead of seeing motherhood as a disadvantage, investors need to see mothers as a strength and roll up their sleeves to find solutions to make it work with high-potential companies led by mothers.
After repeatedly seeing women-led companies not receiving funding, former Wall Street CEO Sallie Krawcheck started Ellevest, which is a tech-enabled investing platform for women whose goal is to get more money to women to equalize the investment gap. This lack of support also fuelled a powerhouse of 34 women investors in Silicon Valley to start a movement in the form of a non-profit called, All Raise dedicated to support women in entrepreneurship and venture.
By keeping an intersectional lens in mind, increased funding to women of underrepresented groups needs to be a priority. As of 2017, there are 20 million Asian Americans in the US from which Indians are the second highest in number. The U.S. Asian population is the fastest growing racial/ethnic group in the US. They have high pedigrees since, 51% Asians of ages 25 and older have a bachelor’s degree or more compared with 30% Americans this age. Unfortunately, 44% Asians in STEM field have experienced some sort of discrimination at work. Therefore, Asians, particularly, Asian women need to be propelled in the workplace to create more inclusive work environments. The benefits are not limited here, recently several companies announced costly product changes to counter racism on their platforms. Working with a racially diverse team could have easily anticipated and avoided these product abuses in the first place saving the company millions. As all of us around the globe are becoming more connected and moving online, a global perspective is compulsory not only for global multinational companies, but also local businesses. A racially diverse team is an indication of profitability because, according to a report by Mckinsey, racial and ethnic diversity has a linear relationship with better financial performance.
Asian women have taken notice of the investment gap and stepped up to obliterate these obstacles for women, particularly Asian women in the startup world. Jaida Yang and Preeti Sampat have taken the problem into their own hands and started a venture capital firm called Infinite Road, “to bridge the geographical and diversity gaps in the current early-stage investing ecosystem”. Yang and Sampat plan to utilize their background and connections to the Asian, specifically Chinese and Indian markets along with their international and cultural sensitivity as their strengths to invest and grow companies domestically or/and internationally depending on the company’s needs. Women like Tracy Gray want to change the number of, only 0.2% venture capital deals going to black female founders by starting her own venture firm which focuses on manufacturing companies preferably owned by women and people of color, to export their products so that companies can grow globally, create jobs and boost local economies of developing countries. She also aims to make them tech-enabled by creating jobs in big innovations like 3D Printing to destroy the structural barriers that thwart women and people of color from the technology industry.
An estimated $12 trillion additional GDP will be generated in the world economy if women are equal work. Financially powerful women need to put their money on promising allies of their own gender and more women need to join the investing world. Together we need to break the boys’ club from a bros’ funding bros’ to an inclusive community where the best ideas and execution are the winners.