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Empowered Founders Drive Change in the Venture Capital Industry

The VC industry is still undergoing transformation regarding diversity and inclusion. In the meantime, founders, especially women and underrepresented entrepreneurs, can take steps to navigate investor bias. Research indicates that investors often ask women-led startups more risk-related questions and men-led startups more growth-related questions during due diligence. Founders can disrupt this bias by preparing growth-related responses to risk-related questions, highlighting opportunities that managing risks may bring. Demonstrating the evolution of your strategy over time can counter investors’ reliance on gut instinct. Keep track of changes made based on user or funder feedback, showcasing adaptability and progress.

Moving beyond venture-based capital financing is another strategy. Explore non-VC funding options, such as grants, revenue-based financing, or loans. Consider participating in startup support programs that offer valuable resources and connect with networks for underrepresented founders. These networks can help you connect with investors interested in your demographic or sector. Additionally, engage in programs that help refine your pitch, business model, and growth strategy. Finally, founders should leverage their community of fellow entrepreneurs and supporters, as well as build relationships with investors through various channels.

While these tips can help founders navigate bias in the short term, the responsibility lies with investors to address and rectify the existing biases within the funding system by hiring more diverse teams and improving evaluation processes.

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