Beyond entrepreneurial capital: why some female founders are choosing to be ‘under-represented’
In 2018, Kelly Bewers attended an ‘Entrepreneur of the Year’ event run by a global accounting firm. Just four female entrepreneurs were recognised during two hours of gong-giving. At the end, the (male) CEO host suggested women should “look in the mirror in the morning and tell yourselves you can do it”. Find out what Kelly made of these remarks in her first piece for Trumpet – her new column celebrating the perspectives of female and under-represented entrepreneurs.
The Rose Review of Female Entrepreneurship was published in 2019 as a response to the alarming statistic that female founded companies get less than 1 per cent of total UK venture capital, despite the fact that a third of UK entrepreneurs are female. For women of colour this is even worse. For example, of all global VC funding over the past decade, black women have raised only .0006 per cent.
Much has been written about what can be done to support female entrepreneurs. Most analyses of the problem focus on 'entrepreneurial capital' – defined back in 2013 in The Guardian’s Social Enterprise Blog as a combination of human capital (education, experience), social capital (networks) and financial capital (income, savings, collateral):
- The human capital problem: research (including the Rose Review) highlights women’s confidence, risk appetite and belief in their inherent entrepreneurial skills as barriers. There are ample recommendations for mentoring, coaching, confidence workshops and leadership development.
- The social capital problem: a 2019 Harvard Business Review article consistently found that “networks are a critical factor for small business success”. The more entrepreneurs and venture capitalists you know, the more likely you’ll become one or get backed by one.
- The financial capital problem: arguments here centre around the fact that the VC community is predominantly male, therefore growing the gender smart investing community is part of the answer.
Researchers, commentators and female entrepreneurs themselves have, credibly and justly, explored the under-representation of female-led ventures using this framework and many of the solutions are changing the landscape, but it is not sufficient for understanding the more nuanced picture of female entrepreneurship.
The entrepreneurial capital definition assumes that VC investment is the aim for all female entrepreneurs in the UK, and therefore to increase the proportion of funds flowing to them, we need to make sure it’s women making the investment decision (financial capital), give female founders a mentor (social capital) and send them on a coding course (human capital). I’m being reductive, but this paradigm asserts that our current system for backing ventures is fit for purpose, therefore solutions focus on how we enable women to access it, rather than questioning the system itself. Of course, more women in VC is great – no feminist could argue with that – but that doesn’t address the patriarchal attitudes and structures that create inequality in the first place. If my business gets backed by a woman, that doesn’t mean the ten men who turned me down would make a different decision when the next woman pitches to them.
If my business gets backed by a woman, that doesn’t mean the ten men who turned me down would make a different decision when the next woman pitches to them
Furthermore, the current language explaining the under-investment in female founded ventures is disempowering. It paints women as ‘victims’ – focused on their exclusion from networks and lack of self-belief or skills. Yes, mentoring and coaching are necessary and can be transformative. As is the need for more role models – “you can’t be what you can’t see”. However, to suggest we can tackle the inherent bias and structural oppression in our system through training, female VCs and women-only founder networks is a cop-out. Again, it puts the focus back on women and under-represented founders – that they need to change and that’s what’s holding them back, but it’s the system that is inadequate, not them.
In 2018 I attended an ‘Entrepreneur of the Year’ event hosted by a large global audit and accounting firm. There were only four female entrepreneurs recognised during almost two hours of awards. More than my disappointment at the lack of diversity (in all its forms, not just gender), I was angered by the CEO’s comment at the end – he recognised and acknowledged the male-dominated pool of nominees, but rather than challenge society, the sector and decision makers to change, he said that women should “look in the mirror in the morning and tell yourselves you can do it”. It’s this patronising language that puts the focus back on to women to “back themselves” – I would argue in the social sector, we already are.
To suggest we can tackle the inherent bias and structural oppression in our system through training, female VCs and women-only founder networks is a cop-out
The recommendations outlined in the Rose Review are timely, relevant and important for the female entrepreneur community in the UK, but research about how ‘entrepreneurial capital’ intersects with the female social entrepreneur experience is lacking. Here, the causality between under-representation, lack of funding and scale is more nuanced. To what extent are some female entrepreneurs choosing not to adopt traditional business models? Are female founders deciding not to participate in established routes to funding?
Yes, women are being discriminated against by the system – but some women are discriminating against that system too, leading the design and development of alternative models, from co-ops to community owned businesses (sometimes known as Zebras). They’re building organisations that measure value beyond profit or scale, that don’t align to traditional VC incentivisation and reward rules; choosing not to be represented among those “shocking” figures. These women are forging a new economic system that values more inclusive growth and challenges the inherent concepts of business, and in some cases, social enterprise. A system where decentralised and sustainable is more important than scale, where ownership is more important than ROI [return on investment].
When men reject norms and defy convention (Paul Polman, Mark Zuckerberg, James Dyson, Adam Neuman) they’re celebrated as pioneers and radicals. When women do so, their status is lowered again
Yet, there’s a troubling trend still – when men reject norms and defy convention (Paul Polman, Mark Zuckerberg, James Dyson, Adam Neuman) they’re celebrated as pioneers and radicals. When women do so, their status is lowered again – “rejected by a male-dominated VC industry”, “need leadership development”, “tend to be more compassionate and community oriented than profit driven”. Let’s take back control of the narrative.
I’m not for a minute discounting the very real gap in support, investment and funding of female founded ventures. Women are locked out of a system because of discrimination (explicit or not). But there’s a parallel movement building.
Can we look forward to a new system, designed by women, as well as men? We already know that some of the leading thinkers and academics in post-capitalist systems thinking are women (Miatta Fahnbulleh, Kate Raworth, Mariana Mazzucato). The transition post coronavirus will (as after the 2008 financial crisis), see women become entrepreneurs, in fact in the US women of colour are starting new businesses faster than anyone else. When women do, they bring innovation and activate a more equitable, inclusive economy.
We're working hard to provide the most up-to-date news and resources to help social businesses and impact investors share their experiences and get through the Covid-19 crisis. But we need your support to continue. As a social enterprise ourselves, Pioneers Post relies on paid subscriptions and partnerships to sustain our purpose-led journalism – so if you think it's worth having an independent, mission-driven, specialist media platform for the impact movement, please click here to subscribe.