Entrepreneurs are serious players in today’s innovation economy, leaders who can generate wealth, create jobs, and transform the lives of customers and employees alike. And yet only a few women can be found among the entrepreneurial elite. When you examine the venture-capital money going to fund the Biogens and Akamais of tomorrow, only 7 percent is won by female entrepreneurs. Although it is true that fewer women overall found businesses — and those they create tend to be in industries that don’t appeal to venture capitalists (VCs) — research shows that other factors are at play.
Each time I organize panels for my students at the MIT Sloan School of Management, I listen as VCs list their investment criteria: market size, competitive advantage, customer need. But when pressed about the uncertainties inherent in their evaluation, the VCs inevitably fall back on their assessment of the company’s leaders. “I ask myself: Is this a person I want to have breakfast, lunch, and dinner with,” one man told the class. “Are they the first person I think about when I get up in the morning?” asked another. This approach struck me more like a search for a soul mate than for a financial investment. In this process, female entrepreneurs fare poorly.