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Pride and equity: What venture capital firms can learn from a 200 year old masterpiece

| Monday, March 1, 2021

Kerry Schneeman | The Observer

According to Forbes, “women drive 70-80% of all consumer purchasing decisions.” This is a truth of which publisher Thomas Cadell was woefully unaware when he declined to publish Jane Austen’s “Pride and Prejudice” (then called “First Impressions”) in 1797, sending it back with “frankly insulting speed.” 

After 16 years, one of the most influential novels ever written was published. “Pride’s” characters are relatable, emotionally astute, intelligent, independent, deep and timeless. (What? You’re telling me you’ve never wanted to make smug and assured eye contact with an unfriendly nobleman 10 times your material consequence after he publicly slighted you at an 18th century contredanse? Ladies, please.) 

In Jane Austen’s time, male publishers may not have understood why a novel about a bunch of girls not wanting to be commodified in loveless marriages would appeal to a young, female audience. But it did. And it continues to do so today. Two hundred years after “Pride and Prejudice” was initially rejected from publication, film adaptations of the classic story were being enjoyed by viewers around the world, including the BBC’s fantastic 1995 mini-series. “Pride” has stood the test of time and adapted to new media with each generation of women (here are 15 well-known modern-day adaptations).

Sure, writing is a creative art that can be tainted by the anticipation of a commercial audience. Kurt Vonnegut used to start his classes saying, “the role model for this course is Vincent van Gogh — who sold two paintings to his brother.” But publishing is different — the decision to publish someone else’s work is as commercial as it is artistic. Publishing decisions can also affect future readers’ tastes, such as when the decision to publish a work pioneers an entirely new genre (looking at you,Gulliver’s Travels” and “Frankenstein). There is a delicate balance between creating something new (something “novel!”) and something that has the potential to be commercially successful. In the business of books, publishers pass judgment on the latter. In the business of … business (better known as “entrepreneurship”) that responsibility falls on venture capital firms and investors. 

In 2020, female-founded startups received only 2.6% of total funds invested by venture capital firms. Yes, 2.6%. But for companies with at least one male co-founder, the percentage of total venture capital funds received jumps to 12.3%. For female founders of color, the gap is even wider. A 2020 article from TechReach notes, “Black women founders received 0.6% of the funding raised since 2009, while Latinx female founders saw only 0.4% of total investment dollars.” Considering that, today, about 40% of all entrepreneurs and business-owners are women, these are dismal numbers. Like the allocation of publishing deals, the allocation of venture capital funds is supposed to be based on merit, feasibility, creativity, novelty and market opportunity. So what explains the gap? 

Experts propose several explanations. Harvard Business Review concludes from video evidence that investors tend to ask women and men different kinds of questions during a pitch session. Investors tend to ask men questions focused on the potential of their business for future success (promotion-oriented), while they tend to ask women questions about how they will prevent and mitigate future losses and risks (prevention-oriented). The Harvard Business Review study found that promotion-oriented questions made up 67 percent of all questions asked to male entrepreneurs, while prevention-oriented questions made up 66 percent of questions asked to female entrepreneurs. It found that on average, entrepreneurs who “fielded mostly prevention-oriented questions … went on to raise about seven times less than entrepreneurs who were asked mostly promotion questions.” 

As the ownership and equity management company Carta sees it, differences in questioning may be instances of a “well-known form of gender bias” where “men are judged based on their potential and women are judged on past performance.” In a study from the University of Kent, participants “valued leadership potential more highly than leadership performance, but only for male candidates. By contrast, female candidates were preferred when they demonstrated leadership performance over leadership potential.” 

Another reason for the gap is a stark lack of female representation in venture capital. According to TechCrunch, “currently, less than 10% of decision-makers at VC firms are women and 74 percent of U.S. VC firms have zero female investors.” Representation and gender-equity in VC isn’t cosmetic: It literally drives industry trends and business successes (or failures). This article from the Atlanta Small Business Network suggests that women should start venture capital firms themselves and that venture capital firms should include diverse voices in executive positions. Female VCs, entrepreneurs and marketers from diverse backgrounds can often understand female consumers better than their male counterparts can (see: Peggy Olson’s success in Mad Men). 

Publishing was considered a gentleman’s profession, too, until well into the 19th century. In America, women had been taking active roles in family publishing houses pre-American Revolution, but were not legally allowed to become publishers until the late 19th century. Although Jane Austen wrote in Britain, you can imagine the barriers to becoming a female publisher there were not so unlike those in the U.S. 

The point is, whether you are Jane Austen or an aspiring entrepreneur, having a publisher or a VC who believes in you can make all the difference not just for you, but for the ability of your product to fill the real needs of consumers in the market. 

Renee Yaseen is a junior who majors in economics with minors in theology and the philosophy, politics, & economics (PPE) program. In her free time, she writes poems, hangs out with loved ones, and works on her software startup. She can be reached via the chat on a shared Google Doc at 3 a.m., on Twitter @ReneeYaseen or by email at [email protected].

The views expressed in this column are those of the author and not necessarily those of The Observer.

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