Bidiversity

In this article, originally published in Fast Company,expert blogger Allyson Kapin investigates the main reasons for the lack of women as tech entrepreneurs and recommends activities in order to redress this situation.

Why aren’t enough women seeking angel and VC money? And why aren’t more women-led startups getting funded? Consider these little known facts:

* Women-run tech startups generate more revenue per invested capital and fail less then those led by men, according to New York Entrepreneur Week.

* “Companies, including information technology, with the highest percentages of women board directors outperformed those with the least by 66%,” according to research by Catalyst.

* “Gender diversity [is] particularly valuable where innovation is key,” according to studies by Illuminate Ventures.

* In 2009 angel investors dished out $17.6 billion to fund startups. Wonder how many funded startups were women-run? 9.4%, according to the 2009 angel investor report Center for Venture Research at University of New Hampshire.

* Women-owned ventures accounted for 21% of the entrepreneurs that sought angel capital. “Both the number of women seeking angel capital and the percentage that receives angel investments are low compared to the overall market,” said the 2009 report.

So why the gender discrepancy?

It’s a Multi-part Problem

1. Women fear failure and taking risks more so then men.

2. There are too few women investors. “Among venture capitalists, the population of financiers who control the purse strings for a majority of tech startups, just 14 percent are women,” according to the New York Times and National Venture Capital Association.

3. It’s a male dominated culture that can be hostile at times. It often can feel exclusive rather then inclusive, though some women interviewed feel it’s improving as more open and transparent discussions happen around this issue.

4. There’s a lack of mentorships for women and women role models.

5. Networking and promoting occur in silos. Women entrepreneurs are not networking enough with investors and the entrepreneur community as well as promoting their names and companies. But VC’s need to do a better job too. They need to make a concerted effort to connect more with women entrepreneurs and become more accessible. How about organizing a series of Reverse-Pitch Parties for women entrepreneurs at SXSW and in different cities?

6. We work in a culture that promotes and rewards 70+ hours work weeks and little work/personal life balance.

“Women entrepreneurs do fear failure and they believe they have to do a…to z and prove themselves before they start their own company. Men don’t have that trait, said Amra Tareen, CEO of AllVoices.com and former Partner at the VC firm Seven Rosen Funds. “Men promote themselves even if they cannot do it…they may think they know it all but THEY DON’T. Women on the other hand may have the skills but they will not promote them, and will always feel they need more skills.”

“You have to get over the idea that you need to have deep experience in every area,” said Mary Hodder, who is developing her second startup Wellness Mobile. And you need a network of people you can ask for answers from when you need perspective on a problem you don’t have experience with.”

Failure Is a Good Thing

Why are women so concerned about failing, when learning from failure makes for stronger business leaders? The negative messages women give themselves start as young girls, says Rachel Simmons, author of the book The Curse of the Good Girl. “Many young girls define their self-worth according to how liked they are by others. They also equate success with being liked. Failure, or even constructive criticism, leaves many girls feeling as if they’ve personally let someone down, or that a relationship is damaged. Failure can feel personal and global, raising the stakes for a risk.”

“Men are a lot better at letting ‘perceived failure’ roll off their backs,” said Deborah Schultz, a partner at the Altimeter Group. “There’s a great quote. If women fail, we blame ourselves, if men fail they blame the situation.”

Failure is very common in the startup business. “8 out of 10 start up businesses fail,” said Tareen. “Some of the most successful startups in the software and telecom businesses were started by serial entrepreneurs who had one or two failures. Why? Because they learned from there previous companies what to do and what not to do. You cannot learn how to do a startup right until you do one — this is from a woman (me) who went to Harvard business school and sat on the other side of the table funding startups at Sevin Rosen — you just have to DO IT!”

Caterina Fake, co-founder of Flickr, Hunch.com and one of the Partners at the Founder Collective, which has funded three women startups, says there’s no better way to learn the process than to dive right in. “Do as many pitches as you can, screw up and sink or swim. Almost all entrepreneurs have been through that process, and it’s painful, but that’s how you learn the ropes.”

Tareen recommends making a list of VCs who have funded similar businesses to your plan (remember they are pattern recognizers) and just go and pitch to them. Don’t get discouraged when they say no. Keep at it.

Fail Fast! Iteration Trumps Perfections

When embracing failure, it’s important that you fail quickly and in a relatively contained/smaller space than let things get big and out of control, said Schultz. “That is why I am such a big believer in iteration trumps perfections — especially in the tech/business world today. Things are moving too fast to sit around and plan the perfect scenario — you have to take your ideas and bring them to action — so you can iterate, improve or adapt quickly.”

Read the rest of the article here.