Working Towards Even Representation Of Both Genders
A woman entrepreneur could be an oxymoron if data had its way. As per a recent report[1], only 1.4 per cent of all asset managers are women and people of colour. The number is so small that they had to combine these two groups! Women-led startups receive anywhere between one per cent to 2.4 per cent of overall PEVC (private equity and venture capital) funding, which is a natural follow through to the low number of women investors – research has found a positive relationship between having women as investors and women as funded entrepreneurs. And the final nail in the coffin – 31 per cent of women-led companies that had raised a funding round witnessed that the women were replaced by men by the time the next funding round happened. Compare this with the fact that a change in the leader’s gender happened in only two per cent of the companies with male leaders.
I see why they had to keep language and data as separate subjects, and I am kind of glad they did so else I would have made it to the list of oxymorons.
On a serious note, why blame data? It is merely a quantification of the state of PEVC funding. The PEVC industry, with its roots dating back to old money has been heavily male dominated for decades. Much has been said in recent years, but on an overall basis the needle has barely moved. For example, there is much conversation around the increase in the number of women fund managers (which is supposed to help women entrepreneurs). Yet, women-led funds raised only two per cent of the $166 billion raised by venture firms globally, with a median fund size of $17 million1. The percentage of women in the alternate asset management industry has hovered around 20 per cent (give or take) for years, with majority being at entry levels or in supporting functions[3].
Investors prefer to hire and invest via networks. Research has found that similarity bias (also known as affinity bias) is the overriding factor in 78 per cent of recruitment decisions[4]. Further, multiple studies have found it to be the strongest bias at play when VCs are making investing decisions – does the entrepreneur think in ways similar to their own? And so, the boys club keeps growing. This is true globally. But there is good news too.
There is a section of men and women who are keenly aware of the low gender parity in the PEVC industry and are working their way through changes that will level the playing field. My venture Winpe works with such PEVC firms and leaders in India, identifying areas for change and implementing those changes. The focus is on debiasing the firm and its operations, which will lead to even representation of both genders in investing as well as in the recipients of investor funding. That said, the number of such enlightened souls is far lesser than one would like. The majority continues to believe that hiring 1-2 women at the entry-level is enough to pacify the gender monster, and of course there are those who are not scared of any monsters as long as they are able to raise money.
So what do we do? Women entrepreneurs, who have to field questions on their married life and parental choices, and why a man has not joined them as a founder (this one is a big negative you know). And there are the lucky ones like a friend of mine who was told that they might be able to raise funding if they sounded needy rather than confident. Well, we rally together, and we work harder than everyone else. We find our community, build strong connections with other women in investing and entrepreneurship. We mentor and guide each other. Winpe has built one such incredible community of women investors, entrepreneurs and aspirants that meets regularly across Delhi, Mumbai and Bangalore.
Most importantly, we stay focused on solving the problem. This is my advice to all young entrepreneurs, especially women. Remember that if you are solving a real problem, people will pay for the solution. The race to unicorn status has slowed down, realism is setting in. One of the lessons learnt is that a business that creates value is more valuable than a business with high valuation. If you can build one such valuable business, then investors and funding will find their way to you. And that is how the data will start to change.
Nupur Garg is Founder, Winpe
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