Insights for underrepresented founders
It is a disappointment—but not a secret—that the venture-investing world is full of white males. At the time of writing this article, this dynamic is changing, but so extremely slowly that it’s hardly measurable. I myself am a middle-aged white male, so I can only pretend to know what it is like to be an underrepresented fundraiser sitting across the table from one or more white male investors. But an article on optimizing investor interactions doesn’t seem complete without acknowledging some unique issues those founders encounter as the chief fundraiser. For this, I’m only able to draw from what I’ve observed and learned as an advisor to numerous such founders.
Much of the issue has to do with cognitive bias, whether known or unknown, on behalf of the investor. For example, many male investors treat female fundraisers differently than their male counterparts. Part of this is reflected in the way they ask questions. They may ask all—or almost all—questions to a male cofounder who is also in the meeting. Or they may ask certain questions in a fundamentally different manner than they would to a male founder—in a way that tends to put the female founder on the defensive rather than framed around the vision and upside potential of the investment opportunity. In fact, the title of an article published in the Academy of Management Journal in 2018 summarizes this point perfectly: “We ask men to win and women not to lose.”
If you do encounter a biased question, one best practice I’ve observed is to answer certain first with information that conveys your long-term vision, upside potential, and evolution of a great company. Imagine this question posed to a woman founder, and see how she might answer it in a way that rebuts the directness without becoming defensive:
Q: Why won’t you collapse under your own weight as you continue expanding your marketplace to new geographic markets?
A: Expanding to the top 10 markets in the US alone will bring our serviceable market up to $650 million. We are already profitable in our home market and are posting 30 percent month-over-month growth. Our new market activation playbook has been in use for two months in our second market, and all of our assumptions have been validated so far. In fact, let me show you our KPI dashboard to give you some additional insights.
This response starts by framing the company’s mid-range potential ($650 million SAM), then discusses some current success (already profitable in the home market and with 30 percent monthly growth), and finishes with something more directly related to the question but framed in a positive context (new market activation playbook already in use and working well). Offering to dive into some metrics is just icing on the cake. Eventually, investors will have reduced bias, but underrepresented founders need funding now and can’t afford to wait for that to happen.
Similar issues of cognitive bias surely exist when the chief fundraiser is a founder of color, an immigrant founder, an LGBTQ founder, disabled, or an elderly founder with wrinkles and gray hair. Until the cross-section of venture investors looks much more like a cross-section of our society, this issue will continue to persist at some level. If you are an underrepresented founder, find others like you who have been successful in their fundraising endeavors. They can advise you much better than I can on this issue that, unfortunately and undoubtedly, you will face at some level and frequency—hopefully, diminishing over time.