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'Young and promising' vs. 'young and inexperienced': 125 VC meetings reveal something disturbing about how financiers describe entrepreneurs

The venture capitalists were seemingly influenced by gender stereotypes, so that they thought men had high entrepreneurial potential, and women didn't.

It seems to affect how much funding they get. Mark Zuckerberg pictured. AP Images

By Shana Lebowitz, BUSINESS INSIDER

The trio of researchers behind a recent paper on gender bias in the venture-capitalist community didn't set out to study gender bias specifically.

[post_ads]As they explain in a Harvard Business Review article, their initial goal was to study financial decision-making among governmental VCs in Sweden, and to help the group improve their processes.

Yet examples of gendered language were "clear and abundant," the researchers write, and they couldn't help but explore that language further.

Between 2009 and 2010, the researchers — Malin Malmstrom, Jeaneth Johnanson, and Joakim Wincent from LuleĆ„ University of Technology — observed discussions about funding decisions for 125 venture applications. Of those applications, 99 were from men and 26 were from women.

Results showed that men were consistently described in ways that sounded more, well, entrepreneur-like. Women were described as having qualities that were pretty much the opposite of entrepreneur-like.

Here's a sampling.

Men entrepreneurs were described as:
  1. "Young and promising"
  2. "Experienced and knowledgeable"
  3. "Cautious, sensible, and level-headed"
  4. "Arrogant, but very impressive competence"
Women entrepreneurs were described as:
  1. "Young, but inexperienced"
  2. "Experienced, but worried"
  3. "Too cautious and does not dare"
  4. "Lacks network contacts and in need of help to develop her business concept"
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Yikes.

As the researchers write in the HBR article, these stereotypes seem to have affected funding decisions:
  • Women entrepreneurs were granted on average 25% of the amount they applied for. Men entrepreneurs were granted on average 52% of the amount they applied for.
  • Nearly 53% of women had their applicants dismissed, compared to just 38% of men.

Even women may be influenced by negative gender stereotypes. Bold Content/flickr

And as the researchers point out in the HBR article, in Sweden, about one-third of businesses are owned and run by women — but they only receive between 13% and 18% of total government funding.

This isn't the first study to document gendered language in a business context. Stanford researchers recently analyzed 125 performance reviews at a tech company, and found that managers used substantially different language to describe their male and female employees.

For example, managers were nearly seven times more likely to tell their male employees that their communication style was too soft. Women, on the other hand, received 2.5 times as much feedback related to their aggressive communication style.
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One of the most interesting parts of the current research is that the venture capitalist group included both men and women, suggesting that even women may be influenced by negative gender stereotypes.

Interestingly, in interviews with the researchers, VCs said they didn't distinguish at all between applications from women and men.

When the VCs learned about the findings, the researchers write in the HBR article, "the VCs reacted with a mixture of emotions: despair for being involved in creating bias, denial of being part of it, becoming upset with the facts, and feeling relief about the fact that gender bias was finally becoming transparent."

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Career Advice: 'Young and promising' vs. 'young and inexperienced': 125 VC meetings reveal something disturbing about how financiers describe entrepreneurs
'Young and promising' vs. 'young and inexperienced': 125 VC meetings reveal something disturbing about how financiers describe entrepreneurs
The venture capitalists were seemingly influenced by gender stereotypes, so that they thought men had high entrepreneurial potential, and women didn't.
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