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‘Never wear pink when pitching to investors’

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Published: 18 October 2021

​​Not even impact investors are immune to gender bias. In a series of articles we look at why investors are missing opportunities and what it means for non-male entrepreneurs.

Woman standing front of a yellow wall
“Reclaiming symbols is great. But in the world of finance, there is nothing for women and people of colour to reclaim,” a female impact entrepreneur told Impact Investor. Rodion Kutsaev/Unsplash

Many of us have been mesmerised the past few weeks by the trial against American ex-entrepreneur Elizabeth Holmes, accused of defrauding investors buying into a blood testing technology which was proven virtually useless.

One of the remarkable aspects of the story is how Holmes, a Stanford drop-out, managed to get her company Theranos valued at $10bn. Despite lack of scientific evidence that her blood diagnostics device worked, the founder convinced investors to go along with the project.

Holmes’ gender worked against her, as figures show that only 2.3% of venture capital goes to female-founded start-ups in the US. In Europe, 1.7% of all capital went to female founders in the past five years, according to venture capital collective The Venture City.

In hindsight, it is clear Holmes checked several boxes for how female entrepreneurs should behave to attract venture capital.

Steer away from the question

British impact entrepreneur Tessa Clarke knows what it is like to battle investor gender bias. When she wrote a blog post on how she did this as co-founder and CEO of food-recycle app Olio, she was flooded with messages.

“It is clear that many women entrepreneurs are struggling with this,” Clarke said to Impact Investor. Researchers’ claims that women invest in women is supported by Olio’s track record: According to Clarke, women make up more than half of all investors who have bought into the venture thus far.

So what is Clarke’s and co-founder Saasha Celestial-One’s recipe for success? Their first advice is to steer away from prevention-based questions that female entrepreneurs tend to get from investors, such as: “What would happen to your product if Facebook or Google gets into the market?”

Focus on problem-solving

Research shows that promotion-based questions and answers are much more likely to attract venture capital (read our story with Dana Kanze of London Business School to learn more).

The method of steering away from prevention to promotion-based questions was highly successful for now-fallen star Elizabeth Holmes, who managed to raise $1.3 bn from Silicon Valley investors.

“It does take some practice to steer away from a question you actually don’t want to answer,” said Clarke. “You just briefly answer their (investors’, ed) initial question, and then you go on to tell them about your vision and what problems your service or product can solve,” said Clarke, who for the record has little in common with Elizabeth Holmes except for the fact that they are both female successful fundraisers.

Clarke also advised non-male entrepreneurs to “overemphasize numbers and finance to prove you are not only a nice fluffy woman” when pitching to investors. “And I’d never ever wear pink to a pitch meeting, it is too feminine. Just like massive jewelry.”

“Speak to investor bias”

Clarke advises non-male impact entrepreneurs to “speak to investor bias” rather than try to challenge stereotypes. Extremely successful fundraiser and former Theranos CEO Elizabeth Holmes took this to the extreme. Her trademarks were her male-sounding, baritone voice, and a black turtleneck uniform – a direct inspiration from Apple founder Steve Jobs.

Clarke only partly agrees with the idea that women running impact companies are better off with investors than women running conventional companies. “Most investors see impact and the tech4good space as charity, really. There is not very much capital.”

Quota among investors

Women-led VC firms manage less than 10% (or €5 bn) of venture capital in Europe, according to a Venture City estimate. This is a major reason for the structural underfunding of companies run by women, according to Tessa Clarke. Her claim is backed up by research, concluding that gender-diverse investing teams are 2.6 times more likely to invest in women-led ventures.

Countless reports (this one [pdf] from Pitchbook and AllRise is one example) showing that female-founded companies are more profitable for investors doesn’t seem to convince VC firms to invest more in ventures run by women.

To change the status quo Clarke advocates a quota among investors.

“If 50% of all VC partners with check writing power were women, the problem would be solved immediately.”

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