Female entrepreneurs, like other professionals, often have to make more effort to prove their credibility than their male counterparts, especially when they communicate with VCs, a famously male-dominated group. Even so, only a disproportionally low number of them receive an investment. Gry Alsos and Elisabet Ljunggren studied the decision making process of a Norwegian venture capital fund to better understand the communication barrier between female entrepreneurs and male investors.
Female and male entrepreneurs sent similar messages when they tried to prove their credibility: they both highlighted their own and other board members’ entrepreneurial and industry experience and the interest of other investors in their business. However, there were minor gender based differences. For example, women put more emphasis on the relevance of their previous experiences because these are often overlooked by investors and they also relied more on the professional legitimacy of their male board members.
Gender also influenced the way the venture capital fund managers interpreted the messages of entrepreneurs.
As a general rule, women were evaluated less aggressively which is a double-edged advantage: they had to meet lower demands but, essentially, they were told that they cannot be taken as seriously as entrepreneurs, while in some cases, female entrepreneurs were actually judged harsher. For example, the lack of entrepreneurial experience was often noted in their cases while it was overlooked in the case of male entrepreneurs due to their experience in the industry.
The authors argue that women can work their way around this communication barrier to an extent. The credibility of female entrepreneurs increases if their messages emphasize “masculine” values, for example growth ambitions. It also helps if they include men in their team because it positively changes the interpretation of their messages on the side of the investor. These advices might be particularly important for female entrepreneurs who are involved in “feminine” industries. These industries are often difficult to understand for investors which reinforces the gender based doubts women have to deal with.
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Contributed by Bence Juhasz