When venture capitalists (VCs) evaluate investment proposals, the language they use to describe the entrepreneurs who write them plays an important but often hidden role in shaping who is awarded funding and why. But it’s difficult to obtain VCs’ unvarnished comments, given that they are uttered behind closed doors. We were given access to government venture capital decision-making meetings in Sweden and were able to observe the types of language that VCs used over a two-year period. One major thing stuck out: The language used to describe male and female entrepreneurs was radically different. And these differences have very real consequences for those seeking funding — and for society in general.
We Recorded VCs’ Conversations and Analyzed How Differently They Talk About Female Entrepreneurs
When venture capitalists evaluate investment proposals, the language they use to describe the entrepreneurs who write them plays an important (but often hidden) role in shaping who is awarded funding, and why. A study from Sweden, in which researchers were able to observe real-life conversations between government VCs, finds differences in the way men and women are discussed, with men more likely to be described as having potential and being competent. And while this stereotyping has clear implications for the women seeking funding, it also has a larger impact on society. Because the purpose of government venture capital is to use tax money to stimulate growth and value creation for society as a whole, gender bias presents the risk that the money isn’t being invested in businesses that have the highest potential.