Start-ups fail to help women start up

Female entrepreneurship could be the way forward in establishing gender parity, but women remain drastically underrepresented among tech start-ups – the businesses offering the biggest potential

 
The LeadOn: Watermark’s Silicon Valley Conference For Women. While such events are positive, their very existence proves that more needs to be done to promote gender parity
The LeadOn: Watermark’s Silicon Valley Conference For Women. While such events are positive, their very existence proves that more needs to be done to promote gender parity 
Author: Laura French
May 8, 2015

In February, 800 female entrepreneurs gathered at the Female Founders conference hosted by Y Combinator. That’s certainly a promising sign, but the very existence of a separate entity dedicated to women is a stark reminder that men remain the overwhelming majority in the start-up scene.

The numbers speak for themselves; just 1.3 percent of privately held startups had a female founder in 2012, according to the Women at the Wheel: Do Female Executives Drive Start-Up Success? Dow Jones report. And out of 395 early-stage start-ups surveyed, 83 percent had no females on board.

The report found that the more developed the start-ups were, the higher the likelihood they had women on board – suggesting companies tend to add female executives as they go. But adding a plaster to patch up a wound doesn’t deal with the problem itself. To establish real, rooted gender parity, it must be there from the beginning. Quotas and other attempts at creating equality do little more than give the appearance of it.

Stereotypes and brogrammers
Perhaps the most notable factor holding women back from entrepreneurship is the fact the tech sphere – the area offering the most opportunity for start-up creation and growth – is still so glaringly male-dominated; according to a report by the data centre Telecity Group, only nine percent of chief information officers in the US were female in 2012. And according to Venture Lab, female tech start-up CEOs are outnumbered 20 to one.

17%

of computer science graduates in the US are female

That fuels the misguided perception of the tech world as first-and-foremost the province of men, forming a vicious circle that’s tough to break. Patricia Greene, Professor of Entrepreneurship at Babson College, agrees. “The culture and role models [in the tech sphere] are highly male based”, she says.

That’s ironic given that women, at least in the US, use social media sites more than men. According to Pew Internet, they dominate the user-base of big sites like Facebook, Twitter, Zynga and Pinterest – but they don’t found them. All four, like most of the other success stories – Snapchat, Instagram, WhatsApp, Tumblr and Spotify to name but a few – were created by men. Given the importance of social factors in influencing career choices, perceptions of the tech world need to change if more women are to enter it.

Cults like ‘brogramming’ don’t help; the concept, intended to give programming a cooler image by associating it with ‘bros’ and frat boys, is fuelling an already prevalent perception of coding as largely male-oriented. That hasn’t always been the case; according to historian Nathan Ensmenger, up until the 1960s programming was largely seen as ‘women’s work’. Now only 17 percent of computer science graduates in the US are women, according to Fast Company.

Encouraging more women to delve into tech at the education stage is of course central to achieving greater representation in the wider field. According to Greene, fewer females than males study in tech “because young women don’t see themselves spending their days the way they imagine they would if they were to work in tech companies”. A study by Penn Schoen and Berland (PSB) found that two thirds of teenagers had never thought about engineering as a career – and 74 percent of those that did had made the decision after learning about its economic benefits and how they could influence the world.

That suggests the importance of eschewing stereotypes and helping all young people understand the importance of tech skills, as Lydia Thomas, former CEO of Noblis and Co-Chair of the National Academy of Sciences, argues. “We have to capture women at a very young age”, she said in a Forbes report. “Women are not getting the emphasis in school. We need to encourage parents to encourage their daughters.”

Obstacles inside and out
It’s not just an apparent lack of interest in tech that’s holding some women back from launching successful start-ups. A Global Entrepreneurship Monitor (GEM) survey found that women were more likely to doubt their ability to start a business than men (especially in developed Asian economies such as Japan, where just five percent believed themselves capable). Women were also more likely to be held back by fear of failure, according to the report.

Dr Luz Cristal Glangchai, founder and CEO of VentureLab, which teaches entrepreneurship to young people, tells World Finance that confidence can be an issue. “As a college professor, I remember trying to encourage young women to go into technology and entrepreneurship”, she says. “But the girls in my classes felt intimidated. They would look to male classmates for answers even when their own experiences were superior.”

Glangchai believes this is rooted in early childhood experiences, and that role models can help combat the apparent trend. “We have noticed that many successful women CEOs and leaders in technology have all had some sort of ‘spark’ or mentor which gave them the confidence to believe they could accomplish anything”, she says. The GEM study suggests a similar concept; in Sub-Saharan Africa, four out of five women surveyed believed they had the skills to launch an enterprise – and half knew other female entrepreneurs.

But, as the GEM report recognises, even when it’s not a question of will, confidence or other inner hindrances, external barriers can block women entrepreneurs from attaining the same level of success as their male counterparts. Among the more subtle obstacles is the issue of funding; studies have shown female founders have a harder time getting venture capital (VC) backing than men, and it’s little surprise given the stark gender imbalance among VCs; in the US, women accounted for less than 10 percent of high-level VCs in 2012, according to the Kaufman Foundation.

That’s an unfortunate truth given that networks are of the utmost importance in obtaining funding and so achieving growth, at least according to Greene. “For [start-up growth], the factors are generally seen as money and network, with network actually being one of the major blockades for raising capital”, she says, adding that this is even more true for tech companies. “Tech businesses most likely need equity capital as opposed from other sources, and that’s where the network really comes into play.” While men continue to rule over the VC sphere, then, it seems they’ll simultaneously continue to dominate the entrepreneurial one.

As a female entrepreneur, Glangchai has said in the past that she experienced first-hand the prejudices that can greet female entrepreneurs in the science and tech sphere when she pitched the idea for her first company, NanoTaxi. “There were no women to pitch to… I tried not to show my femininity”, she told Women & Tech Project. “So I didn’t feel like I had to be more aggressive, but I did feel like I had to dress more like a man.”

Glangchai added that women in her field often have fewer opportunities to progress than men, not least because their ideas are sometimes shunned in preference for male-voiced ones. “There is some sort of weird, subconscious thing where the guys in the room, they don’t kind of notice you’re there”, she said. According to her, such discrimination can drive women out of tech and leadership positions.

Overhauling the model
It seems that in order to destroy these apparent prejudices, we need to go back to the beginning and challenge male-oriented business models. One way of doing that is by providing female entrepreneurs with greater access to resources – something a number of programmes (such as Astia, which has over 5,000 investors on board) are already helping to do. That marks a useful start in questioning the existing models, but there’s still a long way to go before they’re completely overhauled.

The efforts are clearly having some impact; the number of women in VC-backed companies is on the increase, and the likes of Hopscotch – a female-founded start-up that teaches children how to code – provide positive examples for others to follow. But such examples remain exceptions to the rule.

It’s evident that both men and women would benefit from having more women involved in the tech start-up scene; according to the Dow Jones report, venture-backed tech firms with a higher number of women executives have a higher chance of succeeding. For start-ups with five or more women on board, 61 percent succeeded. Given that some estimates put the average rate for Silicon Valley start-ups at just 10 percent, that’s significant.

It suggests that if the obstacles – whether interior barriers or exterior, cultural factors – can be overcome and the existing models upturned, a far higher number of female-founded start-ups could enjoy the types of colossal growth achieved by the likes of Facebook, Instagram, Spotify and fellow giants.

But those obstacles are ample, and more needs to be done to help knock them down and build new models that see real gender equality established from the start. Only then can men and women be seen as individuals in their own right rather than polarised, binary categories, and the future business world be characterised by true parity, from the roots up.