Plum Alley

June 15, 2016 10:38 AM

The Men Women Love Rightfully so, others and I wag our fingers at male investors, most especially venture capitalists, who don’t invest in women-led companies. But, what if, rather than shame bad behavior, we rewarded good behavior by recognizing it. That was the suggestion of Deborah Jackson, founder and CEO of Plum Alley, an investing platform that gets capital to the most promising women entrepreneurs and, yes, guys are welcome to join.

Plum Alley was also profiled earlier this year on Fortune and featured 2 years ago in The Huffington Post

posted by Michele in California (2 comments total)

This is a topic that I do a decent amount of academic work in (I also know the Plum Alley folks and some other people in the FPP), and I think the article covers a lot of the areas in the field.

A little more on the current state of the research: The core issue is that women have a huge amount of trouble raising venture capital. Somewhere between 3% and 8% of VC-backed companies have female cofounders (women make up about 38% of all business owners.) This is due to a variety of reasons (of which sexism is a huge part):

1) Straight up misogyny. I have heard female founders tell me that they were asked by VCs what type of birth control they use. There are also deeper social issues that lead to misogyny, such as evidence that women giving the same pitch as (attactive) men are given lower ratings by both women and men.

2) Different kinds of companies. Women overall are more likely start companies to supplement income from home, and thus start lower-growth companies which seek less capital. Interestingly, if you provide state-sponsored child care women start less companies but they are of higher quality, since they don't have to use starting a business as a plan B.

3) Differences in attitudes. In every country but Ghana, women report that they are less interested in starting companies than men. We haven't been able to fully pin down the source of the attitudes, but the strong expectation is that the are socially generated, rather than biological.

4) Homophily ("birds of a feather flock together"). Historically, VCs are mostly white men. Even if they are allies of women, people tend to make friends that look like themselves, so the networks of VCs tend to consist mostly of other men. Since information about investments comes through networks, women are often frozen out of VC, even if the individual VCs want to meet women, they can't do so as easily.

There is hope though. In crowdfunding, women outperform men by 13% (mostly because other women help them) and, as in the case of Plum Alley, there are increasingly popular sets of tools and female-led VC networks that are helping reduce discrimination. There is also more and more objective evidence that gender diversity helps companies succeed.

This stuff isn't just important for equality. Entrepreneurship is a main conduit for innovation. We are only letting a small part of society fully engage in innovation and entrepreneurship, and we would all benefit from more diversity.
posted by blahblahblah at 11:11 AM on June 15, 2016 [22 favorites]

Thanks for your detailed reply.

Not hugely long ago, I did a previous post about the fact that diversity helps companies succeed. It has a different link from yours and a little more discussion than this post has so far generated.
posted by Michele in California at 3:14 PM on June 15, 2016