We need to change the face of our investment community


Female entrepreneurs receive less than 5 percent of all venture capital funding despite owning 38 percent of the businesses in the country.

According to the National Venture Capital Association, 89 percent of venture capital investors are white men who have a bias toward familiar faces. This bias is not always a conscious one, but it’s there. And it is part of the reason why less than 1 percent of venture capital goes to blacks or Latinos, and less than 5 percent goes to women.

Despite the fact that the number of female venture capitalists has increased from 3 percent of all venture capitalists in 2014 to a “whopping” 7 percent today, the equity funding gap for female entrepreneurs has only widened.

In a recent Harvard Business Review article, the authors described a study they conducted where they observed that venture capitalists posed different types of questions to male and female entrepreneurs: they tended to ask men questions about the potential for gains and women about the potential for losses.

They found evidence of this bias with both male and female venture capitalists. This difference in questioning appears to have substantial funding consequences for startups. Despite being comparable in terms of quality and capital needs, the total amounts of funding raised over time differed significantly: male-led startups in their sample raised five times more funding than female-led ones.

Another interesting factoid: 97 percent of all venture-funded businesses have male CEOs, but according to a Dow Jones study that analyzed 15 years of venture-backed companies and how women in leadership roles affected startups, a company’s odds for success increase as the percentage of females holding leadership positions increases.

In the words of Yuvan Atsmon in a recent blog post titled, “Why Confronting Our Unconscious Biases Is Both a Moral and Business Imperative,” Yuvan said, “Diversity and inclusion are a business imperative, and racial, ethnic and gender diversity leads to better financial outcomes, customer experience and employee retention.”

This is exactly why two newly formed groups in Vermont and New England – the Vermont Women’s Investors Network and the Northern New England Women’s Investor’s Network – are looking to diversify the faces and stories of investors who are supporting our entrepreneurial ecosystems.

In October, 38 women and four men from Vermont and New England gathered to participate in a workshop, put on by the Vermont Women’s Investors Network in collaboration with Northern New England Women’s Investor’s Network, that addressed unconscious bias in investing and the workplace.

Guest speakers were Director of Strategy and Partnerships Jessica Nordhaus and Career and Business Coach Lindsay Lathrop-Ryan. They shared their experiences in working with Change the Story’s Business Peer Exchange, a collective of companies working together to ensure women thrive in their workplaces.

They helped participants make the connection to their own unconscious biases as investors. They pointed out how those biases can impact how women entrepreneurs are perceived and how those perceptions can influence their access to capital.

The predominant investor in New England is white and male. If we all – regardless of gender, color or sexual orientation – have an unconscious bias to invest in what we are familiar with or what we look like, then we need to change the face of who is investing.

I’m not here to bash white men – I’m married to one. I’m saying we have some work to do today in our own shop, ladies, to ensure our cultural biases as investors aren’t hindering our female and diverse entrepreneurs’ ability to raise capital.

There is overwhelming evidence that diversity in entrepreneurial teams leads to more successful businesses, and research reveals that companies with gender-diverse boards of directors and management teams produce a superior return on equity.

Think of the great opportunities we all can discover if we acknowledge first that we have unconscious biases, and then seek to consciously overcome those biases in our investing. We also can help change the story in our work with entrepreneurs to help them build diverse teams that have a greater chance of success.

Janice St. Onge, of Stowe, is president of the Flexible Capital Fund, an investment fund providing capital to Vermont food, forestry and clean technology businesses.

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