We Recorded VCs’ Conversations and Analyzed How Differently They Talk About Female Entrepreneurs

When venture capitalists (VCs) evaluate investment proposals, the language they use to describe the entrepreneurs who write them plays an important but often hidden role in shaping who is awarded funding and why. But it’s difficult to obtain VCs’ unvarnished comments, given that they are uttered behind closed doors. We were given access to government venture capital decision-making meetings in Sweden and were able to observe the types of language that VCs used over a two-year period. One major thing stuck out: The language used to describe male and female entrepreneurs was radically different. And these differences have very real consequences for those seeking funding — and for society in general.

Before discussing our research, it’s worth proving a bit of context about government venture capitalists, which rank among the most significant financial sources for entrepreneurship. In the European Union, government VCs allocated €3,621,000,000 to finance innovation and growth in small and medium-size businesses from 2007 to 2013. Worldwide, government venture capital is important for bridging significant financial gaps and supporting innovation and growth, as VCs can take risks where banks are not allowed to. When uncertainty is high regarding assessment of product and market potential, for example, the assessment of the entrepreneur’s potential becomes highly central in government VCs’ decision making.

In Sweden, about one-third of businesses are owned and run by women, although they are not granted a corresponding proportion of government funding. In fact, women-owned businesses receive much less — only 13%–18%, the rest going to male-owned companies.

This brings us back to our research. From 2009 to 2010 we were invited to silently observe governmental VC decision-making meetings and, more important, the conversations they had about entrepreneurs applying for funding. The initial aim of our work was to study financial decision making and help the group to develop their processes, not to look for gendered discourse. But as we put together our data, the presence of gendered discourse was clear and abundant, leading us to take a closer look.

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