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It will have escaped few people’s attention that today is International Women’s Day. Earlier today, I was at the launch of The Rose Review of Female Entrepreneurship, where my colleague Annabel Denham spoke about the challenges highlighted by the report. It inspired me to return to a draft of an article I’ve been meaning to publish on the issue of female empowerment.
Women have always worked. On top of the often-arduous labours of looking after home and family, most women in Victorian England worked for wages. However, the most talented women weren’t even close to being able to fulfil their potential. The first step towards even a semblance of that sort of equality didn’t come until the Sex Disqualification (Removal) Act 1919, which lifted many of the common-law restrictions on women, including their ability to enter the professions.
“It’s really only the last 100 years that women have been educated through university,” says Sara Murray OBE, founder of Buddi. “We are still defining, and claiming, our position.” The long-term trend in developed economies is towards a convergence in gender roles and pay, but this isn’t happening fast enough for many, particularly with concerns that this process is stalling. “We have a level of protection and opportunity that our grandmothers and our mothers didn’t have but I do worry that the pace of progress isn’t fast enough for my daughter’s generation,” says Debbie Wosskow OBE, who exited her business Love Home Swap for $53m.
For nascent female entrepreneurs, the hurdles are often higher – particularly when it comes to getting investment. In fact, female business founders only received 1p in every £1 of all start-up funding last year.
The fact that the vast majority of VC investor teams are male or male dominated makes it difficult in itself to gauge whether the often cited unconscious bias towards male entrepreneurs really is the defining factor as to why women are attracting less investment,” says Allison Keyse, Legal Director within Mishcon de Reya’s Private Equity group. Keyse believes that as more women rise through the investment ranks themselves, we will see a shift towards more investment in female led businesses, driven by a better understanding of different management and presentation styles: “Flipping the unconscious bias argument on its head, women contemplating investment may well be more inclined to seek funding from investors whose profile and interests they perceive as more aligned to their own.”
But we aren’t there yet. A host of academic studies have shown that venture capitalists too often discount the competence of female entrepreneurs. Researchers at Sweden’s Luleå University of Technology recorded and analysed the deliberations of seven Swedish government venture capitalists (five men, two women). The male entrepreneurs, who raised funds 62 per cent of the time and received over half of the money requested, were treated markedly differently to the women, who raised funds 48 per cent of the time and received a quarter of the money requested. In the recorded deliberations, male founders were more likely to be described in terms like “young and promising” and “cautious, sensible and level-headed”, while the female founders more often described in terms like “young, but inexperienced” and “too cautious and does not dare”.
Sadly, some of the biases in the Swedish study weren’t as unconscious, with two of the applicants referred to as “sweeties”. Richard Reed CBE, Co-Founder of Innocent Drinks, which was sold to Coca-Cola for over $500m, has since founded JamJar Investments, where the majority of its Partners are female. He says: “We hear from some of our female founders that the pitching for money stage can be rife with men suggesting they come over to their house in the evening or meet over dinner to discuss their business. That sort of practice has no place in the investor world.”
The academic literature shows that female founders and leadership teams perform at least as well as male-only teams. As such, those VC firms that are better at implementing checks and balances to overcome their biases will prove more successful in the long run, but many female leaders are understandably impatient. Wosskow has a fund specifically for female founders and a monthly pitching event for female founders in The Allbright, the female private members’ club she co-founded in 2016.
“Founding a business enables a woman to create her own workplace culture”, says Murray. And Wosskow thinks “setting up and running a business allows women to be the change they want to see when it comes to creating a workplace culture that helps other women to thrive. Being a leader doesn’t mean you have to act like one of the boys or be a ‘super bitch’ – that style of management is so outdated.”
But not every woman wants to be an entrepreneur or works for an enlightened employer. What about the challenges for women in the workplace?
In the excellent paper A Grand Gender Convergence, Professor Claudia Goldin, Henry Lee Professor of Economics at Harvard University, sets out what is needed for greater gender equality of outcome: “The solution does not (necessarily) have to involve government intervention. It does not have to improve women’s bargaining skills and desire to compete. And it does not necessarily have to make men more responsible in the home (although that wouldn’t hurt). But it must involve alterations in the labor market, in particular changing how jobs are structured and remunerated to enhance temporal flexibility.” In other words, companies getting better at managing flexible working hours and career trajectories.
Goldin demonstrates that the difference between male and female pay is largely based on job continuity and hours worked. In some occupations, working 70 hours a week earns you double working 35 hours, in others it earns you a lot more. Working longer hours commands a premium of earnings per hour because employees have more time to accumulate knowledge and more flexibility to communicate and respond to work. The solution is for greater independence and autonomy for workers and the ability of workers to substitute seamlessly for each other.
The gig economy shows how technological platforms such as Uber and Lyft can reduce transaction costs and increase flexibility for its drivers, but technology should have a greater role in supporting those working in the professions too. More easily sharing clients, data and insights would reduce transaction costs, so women – and indeed men – are freer to build their work around their lives without suffering financially for it.
Susannah Kintish, Employment Partner at Mishcon de Reya, cautions though that “the flexibility offered by the gig economy has clear advantages for those that want to work around other commitments, it does however come at a price; with no guarantee of work it can be difficult to plan financially and to raise finance from traditional sources such as banks and building societies.”
Progress – won’t be simple, but whether by building their own company, funding female founders or creating the technology that allows women in the workplace to flourish, entrepreneurs are at the forefront of making the changes most of us want to see in the world.
March 8, 2019 at 03:15PM
Forbes – Entrepreneurs