Faulty Logic in the Venture Capital and Female Founder Discussion

Let's get one thing straight.  The world and every individual in it is a biased place.  We all have our inherent biases and what I am not arguing here is that the venture capital world is a fair playing field for anyone.

I repeat: I AM NOT ARGUING THAT VENTURE CAPITAL IS FAIR TO ANYONE.

HOWEVER...

It weakens your argument, whatever it is, when you use faulty logic.  So, if you're going to argue that the process of venture capital is inherently unfair to women, here's the logic that you *should not* use:

"Less than 3 percent of the 6,793 companies that received venture capital from 2011-2013 were headed by a woman, according to a study from Babson College released Tuesday. That means that out of nearly $51 billion in funding that startups received over those two years, a comparatively teeny $1.5 billion went to women-led ventures."

Sounds awful, right? 

It may be.  It may not be.  We really don't know, because we're missing some critical information:

HOW MANY WOMEN ARE SEEKING VENTURE CAPITAL?

Unless you're tracking that statistic, there's no way to use *actual data* to prove how bad the bias is, or if there is any.  You can broadcast all the anecdotes you want about how badly women were patronized or not respected in other ways, but until you track that statistic, that's all they are--just anecdotes.  

I AM NOT ARGUING THAT WOMEN AREN'T SEEKING VENTURE CAPITAL.

They are, and perhaps not often enough.  There are studies that suggest that there are lots of perfectly fantastic female owned business that are undercapitalized because the founders aren't seeking it--perhaps they believe the system won't support it, perhaps it relates to perceptions of risk.  This is where I think there's a great opportunity for investment.  Right this very moment, I'm in the process of leading investments in two companies where I had to convince a team with a female founder to take capital.  

Whatever the case, the stat that just says that venture capital doesn't wind up in the hands of women is a very weak, incomplete story.

I repeat: I AM NOT ARGUING THAT VENTURE CAPITAL IS FAIR.

What you really want to know is, at the moment a founder pitches, can she get a fair shake?  Right now, half the companies I've backed at Brooklyn Bridge Ventures have female founders.  Does that mean I'm being fair and that I'm bias-free?

Nope.  It doesn't prove squat.  You don't understand basic logic and statistics if you think it does.

For all anyone knows, all things being equal, 80% of the BBV portfolio should have female founders in it because of the best deals I've seen, 80% of them were run by women.  Maybe I've missed out on some amazing opportunities because I'm being unfair and biased.  

You just don't know until you measure every part of the funnel.

It just frustrates me when super passionate people keep making a logically poor argument and get ignored because of that.  I want to see the playing field get more level, but it's not going to happen by just stating where venture capital winds up.

It's a bit like saying that because 99% of donated food winds up in the hands of the 1% poorest people, we've solved the hunger problem.  If you're not measuring how many people are hungry, and how much extra food there is, you're failing to tell the whole story.

I mean, we don't even know what the right number is.  Is it 50/50?  At 50/50, it still could be unfair.  We'd all be patting each other on the back on how level the playing field is, not realizing that its actually still way harder for a company with the same qualifications to raise money.  

Should it be the number that is reflective of how many women-owned businesses there are?  Would that make more sense?  I'm not totally sure of that either--because if all the guys own software companies and all the women own retail brands, and venture capital generally doesn't work for retail brands, then you wouldn't really expect venture capital to invest in women, would you?

And maybe all those steady growth retail brands are much better businesses from a cashflow perspective, but just not appropriate for venture capital where it's about the exit multiple.  

That would perhaps be a great argument for VC being a crappy asset class, but not necessarily an unfair one.  

Of course, that's a stereotype and a gross generalization--but the point is, we're living in a soundbyte culture around a very complex issue and it's really degrading the conversation.  

I repeat: I AM NOT ARGUING THAT VENTURE CAPITAL IS FAIR.