‘Venture bearding’ masks Silicon Valley’s big gender problem

Imagine the archetypal Silicon Valley startup founder. If you envisioned a young Mark Zuckerberg or some other gangly white male, you are not alone. 

Venture funding flows overwhelmingly to men. In 2016, all-male startups raised $58.2 billion compared to $1.46 billion for all-female firms. Massive funding for men means that Silicon Valley has an established, self-perpetuating, pattern-matching preference for a masculinized founder archetype.

{mosads}As a founder’s identity approaches that archetype, investors view the opportunity more favorably. Just a masculine voice can shift the odds. One study found that when investors heard otherwise identical pitches voiced by men or women, investors preferred the man. How do founders without these identities raise money?

Presenting the right identity may unlock millions in funding and bypass close, critical reviews. Consider Elizabeth Holmes, the recently indicted founder of Theranos. Flanked by a board sporting retired military officers, she presented herself as a masculinized take on the Steve Jobsian ideal — aping his wardrobe choices with a black turtleneck sweater.

Her costume was often complimented by a blazer’s broad shoulders, and she spoke with a startlingly deep voice.  The presentation exuded a hard-charging masculinity, allowing backers to see her as a Jungian fantasy of Jobs’ second coming. 

Savvy women see the investor preferences that allowed the Theranos hoax to raise millions and decide how to present themselves and their startups. A founder’s identity contours her business environment and affects all interactions. 

One described herself as essentially pitching in drag — presenting a masculinized caricature to collect cash. In an article forthcoming in the University of California, Davis Law Review, we coined the term “venture bearding” to describe how founders now work to craft and present masculinized identities to gather capital and lower the transaction costs. 

With millions on the line, presenting the right identity makes the difference between raising a round and laying off employees.

Founders use different strategies to present more masculine images. For example, a founder may subtly downplay her identity and incorporate more sports metaphors and aggressive rhetoric about market domination to put the male venture capitalist population at ease. These presentation shifts may enable a funder to forget that the woman pitching is, well, a woman. 

Other strategies take women out of the room entirely. With what we term a “substitution” strategy, the true founder designates a man as a cofounder mostly so that she can send in her male marionette to raise capital.

This puppet-show dynamic imposes enormous costs on female founders. They surrender additional equity just to get their ideas a fair hearing. Although these strategies obscure women’s contributions and reinforce dominant norms, we cannot condemn founders fighting to raise capital in a fundamentally unfair environment.

Another strategy, one we term “manclusion,” involves including men in meetings simply to induce better behavior from the men on the other side of the table.

For example, Janica Alvarez, the CEO of Naya Health, a breast pump manufacturer, adopted a manclusion strategy after investors looked at pornography during her pitch meeting. She started bringing her husband along to pitch meetings to induce decent human behavior from investors. 

Manclusion strategies have been used in other contexts as well. The strategy rings familiar to women who have copied trusted men on email exchanges with creepy colleagues or hauled men along as patriarchal props to automobile repair shops. 

Notably, the dynamic works one way. Men need not bring women from their own organization to productively interact with outside women.

Men actually benefit, getting dragged up into meetings gaining access to opportunities whenever a woman needs a totemic masculine presence. In contrast, men pitching their own startups face no similar incentive to share the limelight with women.

When sophisticated investors recognize that the current status quo overly rewards masculine identities, it suggests a different play. Because women with promising ideas struggle to raise capital, smart investors may collect outsize profits by allocating more capital to women and minorities. 

This strategy allows funds to avoid competing to invest in overvalued startups with all-male co-founders. Greater returns on investment may come from seeing and seizing the opportunities overlooked by investors blinkered by their bias. Today, some venture capital funds already explicitly embrace this thesis.

Still, we remain skeptical about whether market forces alone can correct an environment that now forces founders to contort themselves. If raising awareness fails to drive change, public intervention may be necessary to create equal opportunities. 

Ultimately, the venture bearding behaviors that allow women to access capital also mask their presence. As long as women lack visibility in the space, venture capitalists will fail to confront their biases and women will continue to cloak their identities to raise capital. 

Ann C. McGinley is the William S. Boyd professor of law at the University of Nevada, Las Vegas William S. Boyd School of Law and the co-director of the UNLV Workplace Law Program. Benjamin P. Edwards is an associate professor of law at the UNLV William S. Boyd School of Law.