Alison Davis: Difference in Female and Male Brains Reflect Funding Issues

Transcript follows & video below

I wondered if you could tell me about the initiatives that you’ve been involved with in helping women entrepreneurs?

Well I have experience from different angles. For the last 7 years I’ve been running a private equity firm that invests in financial services businesses. You know the leadership, the CEO is critical to the investment community in terms of making outsize returns. You’re really backing a person & a team. So I’ve had experience there backing female CEOs versus male CEOs. I’m also a member of Keiretsu Forum, so I’m an angel investor myself. So I see all the entrepreneurs coming through & have chosen to invest in several myself. This is not my day job but my non-profit passion at the moment is an organization called Women’s Initiative for Self Employment . I’m the Chairman of the Governing Board for that. We’re America’s biggest Micro Enterprise Development Agency. We do 3 things: we train women to start their own businesses, low income women. We make them a loan to help fund their own business. Then we provide them with an ongoing mentoring network system. So it’s like a 3 legged stool: the mini MBA program, the loan & then the ongoing mentoring. We’ve met with phenomenal success. Our entire client base is low income women & it’s phenomenally inspiring to see what these women can do when they have all the tools. I think women can be incredible entrepreneurs but they tend to be more risk averse. So sometimes they’re not willing to jump in but if you have a female entrepreneur with a passion, there’s no stopping them. Especially if they have the tools, the training & the support network & the resources.

Alison Davis

The numbers are quite low, I think 3 to 5% (Illuminate Ventures mentions) of women that actually raise venture capital. I think it’s a little bit higher for angel investment. Do you have any ideas about why that would be, why women are such a small percentage? When really, I agree with you, absolutely creative, smart, fantastic women that I know of, who are entrepreneurs.

If you look at the number of small businesses in the country, small business creation that is driving our economy, a much higher percentage of small businesses are started & run by women. It’s much closer to 50/50. I think what happens is that when women are starting a business, they’re thinking how do I get to $100k, $150k, $200k cause then I can put my kids in school, I can buy the groceries, I can be comfortable, I can have a car. They’re not sitting there thinking how can I make $100m & be the CEO of facebook. So women start businesses because they have a passion they want to pursue. I don’t think they’re shooting for the big payout. They’re tend to be less focused on being an entrepreneur for the big money. Self sufficiency is important because then they can look after their families & then pursuing a passion & doing something they love. I think that’s why you see the percentages go down. But I have a lot of female networks, and there are plenty of women looking for venture capital who say they just don’t get funded. So I think there’s a bit of that going on as well.

Alison Davis

What’s the feedback from those people about why they’ve had difficulty getting funded?

This is my view, I think some of them just don’t have the networks they don’t know someone who knows someone at Sequoia, as much. But often their business plan they’re not thinking big enough. Their pictures are maybe not focused so much on outsize returns on investment. Then the thoughts of having a venture partner, there are probably women that could do with funding, their businesses could be better & stronger & more successful, I think if they had a strong venture partner. But it’s a little scary to have some powerful investor sitting at the table with you. So I think some of them are just nervous about what it would mean & to seek it & would rather raise more advance money from people they know well.

Alison Davis

Why do you think there’s fear around that? What’s your understanding of that fear in women?

Many things, maybe a loss of control, maybe a lack of knowledge about the venture industry? There are very few women in the venture capital industry. So if you had more women in the industry, probably they would be able to articulate the benefits of venture capital funding to women entrepreneurs.

Alison Davis

Yes that’s why I’ve been doing this project. Just to make it much more accessible, For women to see that there are human beings involved in the venture industry & many, even male venture capitalists, who really appreciate women entrepreneurs & what they bring to the table. One of the things that I’ve had feedback on is that women don’t like to ask for money. Do you have any thoughts about that?

I do & there’s a lot of research to support that. Women don’t like to ask for increase in salaries. One of the reasons that women are paid less than men, is that women are reluctant to go ask for it. That’s a common theme.

Alison Davis

Why do you think that is? Why would we be reluctant to ask for money? I can identify that myself, that I had to fight that when I was sourcing venture.

I don’t know whether you’ve read those books The Female Brain and the Male Brain .  They’re excellent books by a Harvard Medical School Professor who is now at UCSF. They’re worth reading & provide a bit of perspective on the female brain & how it has evolved through adulthood. The chemicals that are flooding women’s brains versus men’s brains. I think for men, the accumulation of power & resources, it’s something that comes much more naturally to them. If you’re a man with power, money & resources then you’re able to protect your family & your clan & keep your community safe. So men through millenial development are more oriented if there’s an opportunity to be more powerful or to get more resources. They say money is power, they’re very oriented to go get it! It makes them more able to perform their role of being protector & to compete. Whereas women are just geared very differently & our brain chemistry is from birth onwards more about community & nurturing & relationships. You do find that women can go & ask for money if it’s not about them. If the messaging is we need this money to put your children through school, then they can get up the confidence to go & ask for it because it’s principle based, it’s doing something that’s not about them, it’s for someone else. When I had women reporting to me over the years, I would tell them, it’s about fairness & equity. You should go & ask for that bonus & that increase because it’s about fairness & also you have your family to look after. If you get a bigger bonus you can write a bigger check for the non-profits you care about or help more people with it. I think women can get their minds around asking for money when they can come to terms with the message that seems right to them.

Alison Davis

That really makes sense. I had one entrepreneur early on in the project who said what made her step up to the plate was that she had finally got a team around her that were dependent on her to get the money. That encouraged her to then go & do the pitching. She said when it was just her, she could think of every reason why not.

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