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Why venture capital investors are giving men more money than women

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The world of venture capital investments has a gender problem, researchers say. A seminar Wednesday ahead of a major funding conference in Austin aims to close the gap between the amount of money men and women get from investors.

Women Investing in Women will host women founders and funders to discuss ways female entrepreneurs can get the investments they need in a space that works against them.

It comes a day before the FUND Conference comes to Austin for the first time, bringing together entrepreneurs and venture capitalists from all over the country.

The data and software company PitchBook found that just 2.2 percent of all venture capital investments in the U.S. in 2017 went to companies founded by women, an increase from the year before. In Austin, the number is slightly better, at 9 percent, and it is increasing. Investments are up 9 percent from last year and 342 percent since 2012, according to PitchBook’s figures.

But there’s still a big gap.

It’s one Jenna Zielbauer would  like to close. She founded her company, Rockease, three years ago shortly after her daughter, Maximara, was born and she and her husband were ready to start traveling.

Zielbauer had been using a rocking chair to soothe her daughter, “and I said, ‘What do I do to survive travel without a rocking chair?'”

She searched online for a solution and when she didn’t find it, she decided to make it herself. The result is Rockease, two curved, collapsible plastic skids that fit onto the legs of regular chairs. “Hotels have four-legged chairs, restaurants have four-legged chairs,” Zielbauer said. “Anywhere you go has a four-legged chair.”

The portable rocking chair can disassemble to fit into a diaper, she said, and can be attached in about a minute. She and her husband have self-funded the enterprise to the point of having a working prototype, but they can’t afford the cost of tooling an injection mold to get into production. Zielbauer is “a check away” from getting into production, if she can find someone to write that check.

“If it’s male-to-male,” she said, “I feel like there’s a little bit more respect regardless of the product. Because I am a female, I just don’t feel like maybe I am taken as seriously, especially because I’m a stay-at-home mom.”

One reason for the gap in funding, venture capitalists say, is that potential investors ask women more negative questions about their businesses and ask men more positive ones.

“When women entrepreneurs get asked these risky, risk-mitigation types of questions and men are getting asked how big could it be, what if you got 10 million more dollars, then what happens is the venture capital investment dollars go to the male entrepreneurs versus the females,” said Sara Brand, founding general partner at True Wealth Ventures.

Brand’s firm only invests in companies with at least one woman on the founding team. An advisor to the FUND Conference, she’ll be at Wednesday’s seminar to speak with women about how to answer the negative questions more positively.

Of the ten big cities PitchBook looked at more closely, investors in Chicago provided the greatest percentage of funding to women-founded companies, at 32 percent of all investments. However, the analysts note a large portion of the total went to a single company, Outcome Health. Next on the list was Atlanta, with 28 percent of total investments going to women. That represents an astounding 10,308 percent jump from 2016. 

Austin is last on the list of those ten cities.

“I really think Austin can be the number one place for women entrepreneurs to start businesses,” Brand said. But in order to do that, investors, both male and female, need to become conscious of their unconscious biases and combat them.

In the meantime, Zielbauer is happy to have an outlet like the seminar to connect with women who want to fund women. She sees a bigger market for her rocking chair outside of moms and dads on the move; families and hospitals can benefit from the lower cost and smaller footprint of her design than a conventional rocking chairs, she said.

And once she gets that first investment, she hopes more will follow — and not just from women. “It’s just finding the one person that truly understand the need for the product.”

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