Published on Huddle Today, Jun 30, 2016
Melani Flanagan and her cofounder Matt Pitchette have been spending a lot of time in San Francisco. Their Moncton-based startup Itavio has been accepted into the prestigious Matter Ventures accelerator.
It’s been a wonderful experience so far, with ample networking and access to potential clients to build their product. They’re totally in their element; they’re where they’re meant to be. However, running a tech startup isn’t a walk in the park, especially if you’re a woman.
“I’ve honestly gone home a couple nights and just asked my co-founder if he wants to switch titles,” says Flanagan, who’s also Itavio’s CEO.
There’s overwhelming evidence that investing in female entrepreneurs pays off big time. For instance, it’s predicted that narrowing the gender gap in entrepreneurship will increase global income per person by as much as 20 per cent by 2030. Women-run private tech companies are more capital-efficient and also earn a 35 per cent higher return on investment. When they receive venture funding, they bring in 12 per cent more revenue than tech companies owned by men.
Stats like these should be very enticing, even to the biggest jerk of a venture capitalist.
Yet, when women like Flanagan and her peers are pitching their companies all over North America, they are consistently asked irrelevant questions.
“I’ve been asked if I’m going to have babies soon,” she says.
“I understand why it might be a concern on the one hand, but on the other hand, if you had two seemingly or potentially gay men – or even not – you wouldn’t ask that question.”
Obviously not all male investors and venture capitalists are sexist pricks. In fact most of the time, Flanagan says, things go great. And though it may seem easy to chalk such comments up to generational differences or “he’s just an asshole”, after you hear them a few times it can chip away at your self esteem.
“When you get ‘Are you your technical co-founder’s assistant?’ things of that nature . . . and more critiques of your appearance, it can be a little debilitating,” Flanagan says.
But such comments also serve as a blessing in disguise. Like a bad relationship, if a possible investor disrespects you, do you really want to work with them anyway?
“What a great way to determine someone you don’t want to be partner, because when you get money, you’re getting married to that person,” Flanagan says. “So that person is going to be connected to you throughout your whole venture and if they’re someone who thinks negatively about women or anything of that nature, I’m just like ‘that’s the litmus test.’”
Though weeding out the jerks is nice, it’s hard when female-run startups are already struggling to secure capital. Recent researchhas shown that digital startups founded by men are 86 per cent more likely to receive venture capital investments than those founded by women. On average, men start their businesses with nearly twice as much capital as women. Besides the lingering sexism, lack of access to capital may be the biggest challenge women tech entrepreneurs face.
Katelyn Bourgoin is the founder & CEO of Halifax-based Vendeve. Vendeve is an online business network for female entrepreneurs with members in over 55 countries. She’s experienced the struggle to secure capital first-hand and says it can be particularly tough for female-run tech startups in the Maritimes.
“Ultimately as an Atlantic Canadian company, we know there is just very little venture capital aside from a couple firms who are primarily government funded and some well-known tech angels that are pretty tapped out. It’s just not a lot of funds,” Bourgoin says.
“We’ve been talking a lot about how do we get companies funded. There’s lots of dormant capital, but the majority of the people that are coming forward showing an interest in investing in tech, tend to be older men who have made their money in agriculture or fisheries or some type of really industrial business and for a lot of women, it’s not the most natural thing to align and build a relationship with a much older man.”
If you’re wondering why, read the first part of this story again.
Bourgoin says that while there are few female tech angels in Atlantic Canada there are more elsewhere. She says female tech angels are very involved in and supportive of the companies they select for investment, however getting access to them is difficult.
“It’s very evident that female angels want to build a relationship with their founder and see a history of success and follow-through before making an investment,” she says. “That’s pretty typical and that’s difficult to do remotely, because there are so many great companies in their local region usually, to build relationships with founders outside your region where you might have never met the person, there’s only so much time you have.”
With limited access to female tech angels, many female founders are left pitching mostly men, many of whom may not see the big picture – no matter how good the pitch.
“It’s not something they get. We can have Forbes calling us the next LinkedIn and see that LinkedIn just got acquired for $26 billion dollars, and at the end of the day every time we talk to a male angel, the thing he firsts asks is ‘How are you going to get women to invest in this?’” Bourgoin says.
“That’s discouraging because I spent a long time honing the pitch to make it very much a gender neutral business proposition…but ultimately they invest in problems they want to be part of solving and there’s a lot of women doing female-focused business. So it makes it difficult for us to get men interested.”
The good news is that these issues can be addressed and there are people working hard to fix them. Flanagan says she’s already seen an improvement since she first stepped into the gaming industry back in the mid 2000’s.
“I think the community is already working towards that. Yeah, there may be some bad stories and perhaps there always will be,” Flanagan says. “Again, I don’t want to complain because overall, 80 per cent of the time, it’s great.”
One organization working to address these issues is Halifax’s Volta Labs who recently launched a new program called Women Taking Over the World with Tech. Open to all women entrepreneurs in the region, the five-pillar program aims to address many of the issues female founders face.
“The goal of the program is for the participants to finish the year with either a new skill, a new mentor, a broader network and more motivation to launch or grow their tech startup,” says Melody Pardoe, Volta Labs’ COO.
The program was designed based on a survey Volta conducted of women interested in tech. The survey found that women’s concerns varied, but included things like the perception of women in the technology industry; the need for young women to enter the technology sector as leaders; the need for senior level mentorship, and the lack of local female angel investors.
“Often when women are building a tech startup, same as men, they’re building something that they’re passionate about,” Pardoe says. “They’re solving a problem that they feel passionate about and often times when most of the angel investors or venture capitalists are men, they don’t really understand the business as well as women do. Because the man can’t relate to the business, they often don’t invest in the business.”
Pardoe says this is a global issue – not one particular to the Maritimes. However, the way to address it might be a little different.
“I think it’s just about doing the right kind of networking in Atlantic Canada, because the way people do business here is very relationship-built,” she says. “In Silicon Valley there are so many angel investors who are actively out looking for startups, but in Atlantic Canada you got to get your butt on the golf course or something and do some networking, or go out to some focused events where there are strong women there.”
Since everybody seems to know everyone in the region, it’s a task that may not be as hard as it appears.
“It’s easier, from my experience and the experiences I’ve heard, for women to get access to some really amazing people in the region because everyone does know everyone and you know somebody who can introduce you to someone,” Pardoe says. “I think it’s easier than in a place like Boston, New York or Toronto.”
For Bourgoin, education is key to improving the lack of capital issue. That means education for both founders and potential investors.
“I think a part of solving the problem is really education for women specifically on how to pitch and network with men in a way that’s going to yield the results that they want, and sharing the message that female founders are kicking ass and getting big returns is important, of course,” she says. “Then educating women on how to invest. That’s the challenge I think is going to take more time as a region.”
Though creating more female angel investors is important, men also play an important role, whether it’s encouraging both men and women in their network to become angel investors, standing up to sexism or supporting female founders.
“I think men need to support what’s going on and they need to support women,” Pardoe says. “If you’re an angel investor, or somebody who’s passionate about mentoring businesses, talk to your network and get them involved.”
As for female founders themselves, they need to seek out a support network. Flanagan says the best thing a female founder can do is to find a support network of mentors, investors, organizations and friends who want to help them succeed.
“I think we’re starting to make strides in the right direction, but I think it’s finding those community pillars that are already there and leveraging the shit out of them,” she says.
And when you do run into the occasional jerk, Flanagan has this advice too.
“Don’t let the man get you down. What I mean by that is, your stereotypical one,” she says. “Because there are great people out there who will listen to your idea, take every opportunity to engage with people and learn more. Look after yourself and listen to your gut.”