SEXISM & SILICON VALLEY
Women receive a sliver of the venture capital dollars that go to men. The sex-harassment scandal shaking Silicon Valley offers a new explanation.
When Jen O’Neal was raising money for her travel start-up two years ago, she was invited to pitch to all the partners and associates at a prominent Silicon Valley venture capital firm.
The conference table was huge, and the slides for her presentation were projected onto a massive screen. As she began to address the room, she glanced around. Four women, none of them investing partners, were squeezed into small chairs against the side wall.
“I don’t think I fully appreciated the expression ‘to have a seat at the table’ until that day,” says O’Neal, CEO of Tripping.com, which crawls the Web for vacation property and homesharing listings and has raised $55 million in venture capital.
Yet that’s the reality in Silicon Valley, where men control the power and the purse: Very few women get a seat on either side of the table.
Industry studies for years have documented the sizable gender gap in funding start-ups. The common explanation for women raising a sliver of the financing essential to the growth of Facebook, Google and Uber is that venture capitalists tend to back entrepreneurs who have succeeded before or who fit a certain mold. Think Mark Zuckerberg or Larry Page: young and geeky, white or Asian male, often in jeans and T-shirt, who dreamed up an idea while banging out the code in a dorm room.
In recent weeks, another explanation has emerged: A pattern of suggestive remarks and sexual propositions, casual misogyny, groping and assaults that is too often a part of the capital-raising process for women.
Women have come forward to describe the sexual advances that come with negotiating financing, jobs and partnerships — and retaliation, such as an abrupt end to the business conversation if they rebuff a sexual come-on.
Hanna Aase, founder and CEO of video-profile platform Wonderloop, recalls sessions pitching investors for capital that often resulted in more pick-up lines than term sheets. “The second question I get after ‘What do you do?’ is ‘What do you do for fun?’ ” she says. “The third investor question: ‘Do you like being called Hannah Montana?’ ”
Some women have given up, frustrated by years of pitches that go nowhere or quickly segue into invitations for a late-night drink. A small but growing number of women are forming women-only investment networks or raising starter capital in other ways.
With venture capital’s bigmoney bro-culture behavior coming to light, there’s a new fear, mingled with the relief: That, in reaction, male financiers will avoid women founders altogether. There’s talk of some men following the “Mike Pence rule,” referring to the vice president’s comment years ago that he does not eat alone with any women other than his wife.
Lisa Curtis, founder and CEO of food start-up Kuli Kuli, says she has heard of investors canceling meetings with female founders. “I think that’s the wrong reaction,” Curtis says.
Gaining access to the capital, counsel and contacts they need to turn a big idea into the next big thing is tough enough, women say.
Chrissa McFarlane, founder and CEO of Atlanta-based startup Patientory.com, which uses blockchain to secure digital health records, says when she was trying to raise seed money in Silicon Valley, she was the only African-American woman — and the only African American period — anywhere in sight. She says she’s sure she would have had more luck landing an investment had she been a white or Asian man.
Even as women — and women of color — scale corporate ranks, the number of female investing partners at venture capital firms is shrinking. In 1999, 10% of the partners were women. By 2014, it was 6%. Many top venture capital firms in Silicon Valley don’t have a single female investing partner. And, when they do, many female investors feel so heavily scrutinized for taking risks on other women that they limit how frequently they make those investments.
That’s a significant challenge for women, who are starting their own tech companies in greater numbers even as the funding gap between male- and female-led start-ups keeps widening. Last year, male entrepreneurs received $58.2 billion in venture capital. Women received $1.5 billion, or just 2.5%, according to PitchBook.