What Can The Barbie Movie Teach Us About Start-Up Investment?
- A wealth or research reveals the additional lengths women must go to in order to secure support, and investment in, their ideas
- Men benefit from the status of their gender, whereas women are often unfairly judged or stereotyped on theirs
- Women are advised to be bolder and more demanding to get ahead, but does such action solve the core issue?
She’s everything. He’s just Ken.
In Barbieland, women rule the world. In reality, however – as Greta Gerwig’s box office hit Barbie demonstrates – it’s far from a Barbie Dreamworld.
To convince Warner Bros and Mattel to give the script the go-ahead, Margot Robbie, who both stars in and was one of the producers on the film, told them that the film would make a billion dollars. “Maybe I was overselling, but we had a movie to make, okay?” she said.
If anything, Robbie was underselling. The film has already made more than $1bn since its release on 21st July, and pink-cladded crowds are still rushing en masse to see the film of the summer.
But was it harder for Robbie and Gerwig to pitch this film to producers, than it would have been if they were men?
Male entrepreneurs more likely to secure funding
There is a significant amount of research that shows the unfavourable gender bias against women when pitching to venture capital investors.
Research by Jorge Guzman at Columbia Business School and Aleksandra Kacperczyk at London Business School has shown that female entrepreneurs are 63 percent less likely than men to obtain venture capital funding. However female investors are twice as likely to fund female-led start-ups compared to male investors.
This suggests that female entrepreneurs might be better to pitch to female venture capitalists then, right? Again, unfortunately, it may not be that straightforward.
Recent research Kaisa Snellman at INSEAD and Isabelle Solal at ESSEC Business School revealed that female-founded firms backed by female investors in their first funding round were two times less likely to raise further investment compared with those backed by male investors.
The study found that not only were pitches made by female entrepreneurs and backed by female investors perceived as less favourable, but that the female entrepreneur was also perceived as less competent.
This may be due to an unfair perception of female-led companies, the researchers suggested.
Kaisa Snellman one of the researchers from the INSEAD study said: “Rightly or wrongly, individuals considering investing in individual start-ups tend to assume that a female-led start up receives funding due to the founder’s gender, rather than on her own merits.
“The fact that a woman and her backer share the same gender is used as an excuse to ‘explain away’ a woman’s achievements. As a result, future investment becomes more difficult to obtain.”
Asking women questions that are more likely to lead to failure
To get to the root of the problem, we might ask why it is that men are more likely to gain funding than women in the first place.
A doctoral fellow at Columbia Business School, Dana Kanze, found that investors ask men different types of questions than they ask women.
Her study discovered that investors, regardless of their own gender, were more likely to ask male entrepreneurs promotion-focused questions, while female entrepreneurs were asked prevention-orientated questions.
Aside of the discrepancy between the questioning styles, the key issue lies with how investors ultimately decided to award their funds.
As the entrepreneurs were likely to match their responses to the focus of the questions, prevention-focused questions are likely to receive prevention-focused answers. However, most of the funding money went to the individuals with promotion-focused questions.
This therefore meant that the male entrepreneurs were generally awarded more money than their female counterparts. “Every additional prevention-focused question significantly hinders the entrepreneur’s ability to raise capital,” said Dr Kanze, putting women, yet again, at a significant disadvantage.
Should women fix things for themselves?
Whilst there are often measures in place to attempt to rid decision makers of the influence of gender bias, studies show that these are not always fit for purpose, so where does the solution lie?
Dr Kanze’s research suggested that entrepreneurs could significantly close the funding gap by framing their responses in promotion-focused terms, therefore reducing the gender disadvantage in funding outcomes.
Look at Margot Robbie’s Barbie pitch as an example. She kept the pitch positive and promotional, instead of being defensive. As a result, it paid off.
But the burden to change this should not be placed on female entrepreneurs. Arguably this is a much wider issue that can be reduced through education.
“We actually see both male and female investors behave in the same way towards entrepreneurs,” said Dr Kanze. “It’s evidence of a venture stereotype at play that seems to be universally shared.”
It’s for this reason that Dr Kanze and her business partner, Mark Conley, are currently working with venture capital funds and MBA programs to design training workshops for investors and entrepreneurs to help shift this perspective.
But until the venture capital process is reformed, maybe women need be a bit more like the Barbies in the Mojo Dojo Casa House, and push for change.
To direct her first film – Little Women (2019), which took $219m at the box office – Greta Gerwig is said to have forced her way into a meeting with executives at Sony and persuaded them to let her direct the film, though she had not directed before.
Perhaps female entrepreneurs can take some important lessons from Gerwig.
But, should they have to?
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