E ight out of ten young people cannot name a single female entrepreneur. When they hear the word ‘entrepreneur’, they are four times more likely to think of a man than a woman. These figures are drawn from a report by the UK Government’s Women-Led High-Growth Enterprise Taskforce, published in 2024. However, they are unlikely to have changed. What impact does this ‘think entrepreneur, think male’ perception have on entrepreneurs looking for funding? A well-known gender gap exists in funding for high-growth start-ups. Just two pence of every £1 invested in venture capital funding goes to female-founded businesses, according to the British Business Bank. This is the result of an equally well-recognised gender bias among investors. Our previous research identified several factors that contribute towards this bias. Investors favour ambitious, high- growth strategies when investing in start-ups. These are inevitably high-risk and require aggression,
confidence and hype – qualities typically associated with men. Meanwhile, women are often seen as more collaborative and consensual, qualities that are more suited to moderate growth, which appeals less to investors. Bias can also be influenced by familiarity; investors are used to working with male founders, and so men are subconsciously viewed as the ‘default’ entrepreneur type. When there is uncertainty, investors tend to go with what feels familiar. These types of subconscious bias affect the way investment decisions are made. Our latest research focuses on how women can counter this bias by optimising their pitches. To be clear, female founders should not be responsible for tackling this issue. Investors need to be aware of biases, especially as they may lead to sub-optimal investment decisions. However, that change is likely to take time as we have all been socialised in the same world where the most salient examples of high-powered entrepreneurs are men. Until then, this advice may act as a band aid, helping women to overcome some of the immediate challenges they face. 1 Avoid hype. It is important not to conflate ambition with ‘hype’. The former simply means targeting high growth, which is generally more appealing to investors because, while the risks are higher, so is the potential payoff. Hyping is a way of talking about that ambition, not the level of ambition itself. Hyping is when a founder makes unsubstantiated claims about a venture (e.g. “this is going to be a home run!”) without providing economic or technical backing. In our research, we assigned male
TO THE CORE.
1. Just two pence in every £1 in venture capital goes to female- founded businesses. 2. Women investors are particularly likely to penalise female founders who ‘hype’ their plans with unsubstantiated claims, but reward men who do the same. 3. To mitigate that bias, women entrepreneurs should adapt the way they speak about their ambitions. They should avoid hype and focus on de-risking their plans by providing proof that they are feasible and that they have considered the potential challenges. 4. Provide this reassurance early during the pitch to head off critical questions later.
Warwick Business School | wbs.ac.uk
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