The same entrepreneur might be described as young, promising, aggressive and sensible – or inexperienced, ill-tempered and not daring enough. A recent Swedish study has shown that female entrepreneurs are judged more harshly than their male colleagues, and that negative perceptions of a women at the helm leads to a negative perception of the business she’s steering. Ultimately, this means less financing for women-run businesses – a disparity that hinders not only the female entrepreneurs themselves, but also innovation and the growth of our society.
Let’s start by getting the background info straight: government venture capital is an important engine to drive innovation and growth, and one of the main financial sources for entrepreneurs. Venture capitalists can take bigger financial risks than banks, and therefore have the possibility to back entrepreneurs working in uncertain fields. Their support is vital for new ideas that could potentially be real game-changers.
A third of Swedish businesses are owned and run by women. However, they receive significantly less funding than male-run businesses – only between 13 and 18 % of the total government funding. A Swedish research group whose initial task was to study financial decision-making in the government venture capitalist (VC) groups, not to look at gender discourse, was surprised by how gender biased their data was.
The research group was listening in on closed-room discussions regarding applications for financial support from 125 entrepreneurs – 99 men and 26 women. They registered phrases used to describe the entrepreneurs, comments on the applicants’ looks, and the way the discussion evolved around each applicant.
What is the difference between inexperienced and promising? Or how about sensible and level-headed? Well, a person can be both at the same time, it’s all a question of how we describe – or perceive – things. A young entrepreneur might be both inexperienced and promising. But, if only one of those words is used, the image of the entrepreneur will become black or white. Positive or negative – promising or inexperienced?
When communicating, it is all a question of how we put things. The same message can be delivered in a thousand different ways. Depending on how we chose our words, we affect not only those we talk to, but also our own mindset. If you never talk about young women in the same terms that are used to describe entrepreneurs, you create a mental gap between the two that becomes hard to bridge.
The Swedish researcher group noticed that the venture capitalists questioned the female entrepreneurs’ credibility, experience and knowledge. When discussing the male applicants, they instead used stereotypical assumptions that fit into the traditional image of an entrepreneur. Some of the men were considered aggressive or arrogant, but in their case, these weren’t seen as negative traits. On the other hand, the more enthusiastic and excited women triggered discussions about eventual emotional weaknesses.
So what happened to the entrepreneurs who were included in the study? Well, 53% of the women had their application dismissed, compared to 38% of the men. Of the women who were actually rewarded financial aid, they received only 25% of what they asked for, compared to an average of 52% received by the male entrepreneurs. In short, this is a story that ends with a very tangible loss not only for female entrepreneurs, but for society at large.
Have a think about how we affect the future of girls and boys around us by the way we communicate, and how you might be participating in preserving old stereotypes about men and women, entrepreneurs or otherwise. How could we all work to broaden the traditional image of an entrepreneur?