The lack of funding that goes to female founders is well documented. In 2022, 87% of venture capital funding in Southeast Asia went to startups with all-male teams.[i]
Implicit gender bias is hard to catch. But it can lead investors to overemphasize risk when assessing women founders and discount their ability to succeed. Harvard Business Review reported that investors tend to ask male founders about upside whereas they ask female founders about downside during their pitch.[ii]
Accessing capital is not the only issue women founders face. Business networks in the startup and tech ecosystem are traditionally male dominated, which can make it more difficult for women to find both mentors and business partners to grow their business.
Lack of access to capital and business networks can turn into a vicious reinforcing cycle not only for women founders but also VCs. Without investing in women founders, or working with and connecting with them, VCs build biased deal pipelines, unconsciously reinforcing their beliefs that successful founders look a certain way.
Some VCs have chosen to address this issue by creating female founder-only investment programs. Others have set up structured mentorship programs and female founder support networks.
Addressing this ecosystem gap takes many forms. At Qualgro, 1/3 of our portfolio companies have at least 1 female founder. How have we done this?
One way we have found to address gender imbalance is to be rigorous in our emphasis on bias minimization at each stage of the investment process. For us, this looks like developing proprietary methods and tools that we can apply across our founder assessment and due diligence processes.
Each member of the team is trained to assess founders across a set of founder traits to enable objective benchmarking. We have a set of “green flags” that we constantly update. At Qualgro, we often say within the team that we “invest for an abundance of green flags, and not a lack of red flags”. Founder assessments are independently conducted by individual investment team members and subsequently used as a discussion tool to align on a multi-faceted view of the investment opportunity. Over time, a rich proprietary database of founder profiles enables better calibration of potential investments.
[Watch: Qualgro senior advisor Olivier Sibony discusses his book ‘Noise: A Flaw in Human Judgment’, co-authored with Nobel-Prize-winning behavioral economist Daniel Kahneman]
Bias minimization is also an outcome of our intentional efforts to build a diverse team and flat structure. With eight nationalities across fifteen members, the range of perspectives challenges entrenched pattern matching. As investors, we rely on pattern matching, i.e., identifying patterns of success in our track record, to make decisions. When a team is built of only similar backgrounds and networks, they have blind spots and miss out on founders who do not fit these biased patterns. Having a team with diverse backgrounds overcomes this. By focusing on innate abilities, we have curated a portfolio of founders that is more diverse than the average VC portfolio.
Similarly, we have built diversified deal sourcing pipelines to see the majority of deals in the region. Beyond established male-dominated circles, we tap on a wide range of co-investors, founders, accelerators, and executives from all walks of life. Given that 1/3 of our portfolio companies have a female founder, that also increases our likelihood of finding other female founders!
Platform owners can also play their part to support broader representation. On 9 March, Qualgro hosted a Leaders in Tech event to celebrate International Women’s Day with partners Stripe and Google Cloud. Female leaders from our portfolio companies, EngageRocket and Funding Societies, shared their leadership and growth strategies with the Southeast Asian tech community.
Through events like these, budding female entrepreneurs can also meet VC investors and learn from inspiring leaders who were once in their shoes. There is always more that can be done – but every little commitment that we can make will go a long way.
[i] https://www.dealstreetasia.com/stories/female-founders-sea-2022-333418
[ii] https://hbr.org/2017/06/male-and-female-entrepreneurs-get-asked-different-questions-by-vcs-and-it-affects-how-much-funding-they-get
