Solving implicit bias in the startup industry
While working on my neuromarketing startup, NeuroFocus, I learned a massive amount about the brain. Perhaps the most impactful finding was this: Much of what drives our behavior is not accessible to the conscious mind. Specifically, we sometimes act in a biased manner toward a specific group of people due to attitudes that are buried deep in our brains that are not consciously accessible, even after introspection. Neuroscientists call this phenomenon “implicit bias.”
A recent study by Dana Kanze, Laura Huang, Mark A. Conley, and E. Tory Higgins published in the Harvard Business Review reveals actionable insights into what can be done about implicit bias in venture capital. Finally.
About 2 percent of all venture funding goes to female entrepreneurs, the study reports, despite women owning 38 percent of the nation’s businesses. What’s more, having more women as VCs doesn’t appear to be a one-stop solution to the problem. Says the study, “Over the past several years, the U.S. has seen an increase in the number of female venture capitalists (from 3 percent of all VCs in 2014 to an estimated 7 percent today), but the funding gap has only widened.”
The authors of the study observed Q&A interactions between 140 prominent venture capitalists (40 percent of them female) and 189 entrepreneurs (12 percent female) at TechCrunch Disrupt New York, an annual startup funding competition.
“When we analyzed video transcriptions of the Q&A sessions…we learned that venture capitalists posed different types of questions to male and female entrepreneurs: They tended to ask men questions about the potential for gains and women about the potential for losses. We found evidence of this bias with both male and female VCs....Investors adopted what’s called a promotion orientation when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals. Conversely, when questioning female entrepreneurs, they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance.”
For example, male entrepreneurs might be asked their plans to monetize their company whereas female founders were asked how long it would take them to break even. In fact, male entrepreneurs were posed promotion-oriented questions 67 percent of the time. Female entrepreneurs were asked prevention-oriented questions 66 percent of the time.
I guarantee that those investors had little or no idea that they were asking male and female entrepreneurs different questions. Their behavior was probably entirely due to implicit bias and inaccessible to the conscious mind. As the director of a startup accelerator who has posed thousands of questions to male and female entrepreneurs, I work very hard to avoid this behavior and have a conscious intention to treat female and male applicants to SkyDeck equally.
Fortunately, the research offers actionable solutions. To confirm their finding that promotion questions lead to more funding than prevention questions, they took clips from the TechCrunch event and presented them to a group of angel investors and ordinary investors and asked both groups to make theoretical investments. As with the real TechCrunch scenario, the theoretical scenario resulted in the same outcome: promotion questions led to more investment.
But the researchers took it a step further and re-mixed the questions and answers.
When the clips presented prevention questions with promotion answers to those questions, angel investors allocated 1.6 times more capital than they did with a prevention question/prevention answer scenario. With ordinary investors the result was an allocation of 1.7 times more capital.
Again: Investors allocated more capital in the prevention question/promotion answer condition than to those in the prevention question/prevention answer condition.
Reflect on this—then coach your startups accordingly. Ask your female (and male) entrepreneurs promotion and prevention questions and coach them to give promotion answers every time.
We spend our days helping our startups solve hard problems. This is a hard problem.
Let’s solve it.
Caroline Winnett, MBA 90, is executive director of SkyDeck, UC Berkeley’s startup accelerator, where she leads a program that hosts over 100 companies per year. She recently launched the Berkeley SkyDeck Fund,a VC fund investing in SkyDeck startups that donates half of fund profits back to UC Berkeley. Prior to SkyDeck, Winnett was a serial entrepreneur and co-founded the pioneer company in the neuromarketing industry, NeuroFocus, which was acquired by Nielsen. Before her career in startups, Winnett was a professional concert violinist.