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Women Founders: How To Get Men to Relate

There’s a clear and well-documented gender gap when it comes to scoring startup capital from investors. Women entrepreneurs receive less cash (less often) than men.

The reasons are varied: sexism, old boys’ clubs, unconscious biases. While all likely play a part in the low number of venture dollars for female founders (women reportedly received just 2.2 percent of all venture capital funding in 2016), a recent panel discussion in San Diego brought another possible contributor to light:

Women are starting businesses around products that men don’t understand or identify with.

“These women are innovating in areas they’re passionate about, but they may not be areas that are well understood by the other half of the population,” said Cheryl Goodman, executive director of Athena San Diego, a local professional development group for women.

That can be a problem when women founders are pitching a room full of male investors. And most investors are indeed male. Only 7 percent of partners at top VC firms are women, according to a recent analysis by TechCrunch. And women hold just under 12 percent of the partner roles at both startup accelerators and corporate venture firms.

“The problem is systemic,” Goodman said. “It should be a priority to have someone on your team that understands 50 percent of the population.” But that’s often not the case.

There has been a call for more diversity on VC teams for years. But until that request becomes a reality, women founders are pitching to rooms full of men. And that’s a serious problem for companies whose products are targeted toward women.

A Startup Vision

Take Jennifer Cosco, for example, who founded local startup Envy in 2016.

The company is developing an app that helps users find local services by flipping through photos rather than reviews. While reviews are helpful in the decision-making process, photos give users a better idea of what to expect from aesthetic services such as hair salons, nail parlors, or cosmetic surgery. And because aesthetics are subjective, photos may be a better reflection of quality than star-based reviews.

The product is especially appealing to women, who have spent hours flipping through Pinterest photos of haircuts and other aesthetic services before attending a salon.

“When talking to male investors, it’s hard for them to grasp the value because this is not an issue they have experience with,” Cosco said. Middle-aged, male investors are not searching for the perfect balayage blonde, nor are they scouring plastic surgeon’s sites for breast augmentation results.

“Every woman wants this product, and they don’t understand why it doesn’t already exist,” Cosco said. “Men have a harder time grasping that.”

Cosco is raising money to build up Envy, and has managed to raise $250,000 so far. She said she has more female investors than male, but “probably 95 percent of the investors I pitch are male.” Cosco said she can tell the second the investor has written her off.

“It’s the worst feeling,” she said. “Their eyes glaze over, they’re not connecting, they’re not engaging, and their questions are not good. If you’re really trying to see if this is a worthy investment, you should have some difficult questions for me, but that rarely happens.”

Starting at Zero Perpective

Cosco may have the cards stacked against her, but pitching male investors is arguably more difficult for Sabrina Johnson, a highly regarded biotech executive in San Diego and the founder of Daré Bioscience.

Daré is developing a non-hormonal birth control product for women, and she spent the first two years of the company’s inception looking for funding.

Pitching male investors on a women’s health product is hard enough, as there are few institutional investors who invest in this space. It becomes even more difficult to pitch male investors on a topic that’s not discussed openly between men and women, such as female contraception.

“Even if men are in a relationship, they probably haven’t thought about female contraception at all,” Johnson said. “They probably have no idea what their partner is using, and they weren’t involved in that decision-making process. They don’t understand the pros and cons of different contraception methods.”

Despite Daré’s compelling product candidate (which has promising clinical data to support it), and Johnson’s impeccable resume (she’s a longtime chief financial officer in local biotech, and the former CFO at the California Institute for Biomedical Research), it took her two years to secure the financing she needed to grow Daré. And the money did not come from VCs; it came from a reverse merger with a clean shell biotech company that was already listed on the Nasdaq.

Market Opportunity

Both Cosco and Johnson do not blame their difficulty landing capital exclusively on gender bias and male disconnect with female products. Both women listed several other reasons why fundraising was hard.

For Envy, investors were concerned with competition and the cost of user generation for the app.

For Daré, life science investors have far more experience in fields like oncology or cardiovascular health, and are therefore hesitant to learn the regulatory rules for a contraceptive product.

“Investors in general like to invest in things they can add value to and understand,” said local investor Susie Harborth, a general partner and the chief financial officer for BioInnovation Capital.

At the end of the day, however, Harborth said the most important thing to investors is market opportunity. If a female entrepreneur, with a female-targeted product, can convey a sizable market opportunity to investors, then they’ll have a better shot at scoring capital.

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