Funding discrimination may begin with the questions entrepreneurs are asked

July 13, 20171 minute read

In a study reported by Harvard Business Review, researchers found that interactions between venture capital firms and entrepreneurs asking for funding may explain why start-ups by females receive less funding. The new study found that questions for males most often focused on potential for gains and for females, on potential for losses.

According to the study, investors tended to have a “promotion” orientation for men and a “prevention” orientation for women. The study was conducted to try to understand why female entrepreneurs receive only about 2% of all venture funding, despite owning 38% of the businesses in the country.

Researchers also examined comparable companies and observed that “entrepreneurs who fielded mostly prevention questions went on to raise an average of $2.3 million in aggregate funds for their startups through 2017 — about seven times less than the $16.8 million raised on average by entrepreneurs who were asked mostly promotion questions.”

This revelation comes close on the heels of recent reports that women running start-ups have actually been propositioned and otherwise harassed by men who lead or work for venture capital firms. An article in the New York Times included interviews with several of the women who are now speaking out about what they say is a frequent occurrence.