Slashdot Mirror
Having a Woman On Your Team Ruins Your Chances For VC Funding (theoutline.com)
Laura June, writing for The Outline: It's a well-known, well-documented fact that women entrepreneurs face an uphill battle in the fight to get funding for their businesses. But a new study suggests that it can actually be almost impossible. According to the study, published Tuesday in the journal Venture Capital, having even one woman on a company's team makes them far less likely to get funding than an entirely male one. In fact, an all male team is about four times more likely to get funding than teams with any women on them. The study was done by researchers at Babson College and Wellesley, and looked at data on 6,793 companies funded between 2011 and 2013. This is the first large-scale study in a decade to focus on women's efforts to get funding, and it's not encouraging. The authors write, "We did not determine any significant performance differences between companies with women CEOs from companies with men CEOs, so it is quite surprising that women are still, practically speaking, shut out of the market for venture capital funding, both as CEOs and participants of executive teams."
It's the VCs money, and they can do what they want with it.
Misleading summary and conclusion from a website that with a subtitle of, "Did we ban men yet."
Direct quote from the study:
The average dollar investment in businesses with a woman on the management team was slightly higher for all three years during 2011â"2013, $12 million for those with women, $8 million for those with no women.
This isn't an unheard of problem. The 1980's TV series, Remington Steele, explained the situation in the intro for each episode: Laura Holt (Stephanie Zimbalist) opens a private investigation agency, gets no business as a woman, and renames the agency with a fictional male owner who is always unavailable. Until a jewel thief steps into the role (Pierce Bronsan), but that's a different problem.
People are already talking about correlation etc, but the study tells a different story than the slashdot summary. The study shows that companies with woman on the executive team were 15% of all companies in the sample (Table 1 and 2). It also shows that companies with woman on the executive team made 25% of total funding dollars across all industries (Table 5). It also shows that companies with woman on the executive team received an average valuation of $73 million those without woman received only $49 million (Table 8). In fact the only fact supporting the summary was that companies with woman as CEOs received a valuation of $40 million investment versus male CEOs who had $54 million on average. It is important to note there were only 119 companies with woman as CEOs while there were 3554 with males CEOs, a much larger sample. Obviously each individual company with a woman CEO effects the average valuation greater for their sex and you can decide for yourself if that makes the number less relevant or a good measure.
Based on that you might as well say this study shows that companies with a women in lead position comes up worse ideas then a team of all men.
Well, occam's razor would suggest no, especially given that numerous other studies have demonstrated that people are often biased against women. And the study notes that the success rate varies between states. So your alternative hypothesis is that magically, VCs are immune from biases that are well documented, and it's just women from some states have worse ideas that men in their groups accept.
Also, startups aren't all about ideas. Often they have very little to do with ideas and more to do with credentials of the founding team.
Is there an available data-set of companies that attempted to gain funding and didn't, let alone their gender breakdown? I tried to start a company briefly and received no funding. It's not a formalized process, there wasn't a department of startups we had to get a license from. The only way you'd know it ever happened is if you talked to one of the four or five people involved in our pitch.
The fact that you say "SJW" suggests to me you're already biased against the conclusions from the start. There are probably VCs who care less about "mens rights" and that nonsense and more about making money, they might be interested in being aware they and their competitors might have a bias even if the study is not the word of god.
If you bothered to read the study, they vite evidence that proves causation:
"The effects of sex were investigated in a study of men and women pitching in three experiments, where the results showed that investors prefer pitches presented by men, even when the content of the pitch is the same (Brooks et al. 2014)"
"More specifically, another study of venture pitches finds different results, where sex of the entrepreneur does not influence investor preference for the venture but gender does, whereby there were systematic biases against femininity, and entrepreneurial competence was associated with masculinity (Balachandra et al.)"
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
According to the study, it's the exact opposite:
"Are there differences in performance outcomes between male and female entrepreneurs funded by venture capital?
When looking at outcome measures, we see that company valuations are significantly and consistently higher for companies with a woman on the team than those with no women."
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Cause it is.
Biased, post hoc ergo propter hoc nonsense.
They didn't do a comparison of probability for a company to get VC funding based on the presence of women.
They didn't compare companies which received VC funding vs. those that didn't.
They just took all the VC funded companies and counted ones with women listed on the company profile.
It's a literal post hoc condition for determination of likelihood of receiving VC funding.
As for bias... From the study:
The Global Entrepreneurship Monitor (GEM) reports that in 2013 approximately 13% of the working population of the United States was in the process of starting or running a new business - the rate for women was 11% compared with 16% for men (Kelley, Brush, Greene, and Y. Litovsky 2013 Kelley, D., C. Brush, P. Greene, and Y. Litovsky. 2013.
The Global Entrepreneurship Monitor Women's Report. Wellesley, MA: Babson College. [Google Scholar]). This means that one out of every 10 women in the United States was becoming an entrepreneur, which is a higher rate of female entrepreneurship than for any of the other 24 developed economies.
Disregarding the fact that they are confusing "one out of every 10 women in the United States" with 11% OF the 13% OF the working population... in the process of starting or running a NEW business.
People who write biased crap can't do math. Big surprise there.
But their criteria for VC funding female teams is "a single female on the team".
In other words, their sample will look a LOT like that 11% mentioned in the cited study, as it doesn't discriminate between the teams with a single woman, teams with more women or teams with one or more women starting or running a business which is not new, but only seeking VC funding for the first time.
Cause they are going out of their way to find a proof of "women being bad luck on the ship".
Number of VC funded companies, according to the study, with at least one women on the company profile in that same year (2013)? 18%.
2012 - 13%.
2011 - 9%
I.e. Percentage of companies with women on the team receiving VC funding is actually higher than the percentage of women in the process of starting or running a new business.
It's even higher than the percentage of ALL population starting or running a new business.
Only thing they got right is that there are MORE COMPANIES WITH WOMEN.
But that's not the idea they want to get behind.
See... there's this patriarchy thing...
Mit der Dummheit kämpfen Götter selbst vergebens