Blue Switch Consulting
Talent Optimisation Consultant


Commentary and Analysis

Startup Investors are Missing a Priceless Opportunity


The Potential at the Intersection of Venture Capitalism, Diversity & Inclusion, and Startups

Recently, Arlene Dickinson sparked a LinkedIn firestorm when she suggested that banks make lending decisions affected by implicit gender bias.

The Canadian business leader, investor, author and television personality asked,

“Wouldn't it be interesting to really explore unconscious bias in lending? Systemic bias is so difficult to unpack. I have often wondered what it would look like if banks reported on lending stats broken down by gender. Being an entrepreneur is hard.  Whether you are a woman or a man. But raising money is harder for a woman than it is for a man. This is a fact.”

The responses to Dickinson’s pointed questioning ranged from thoughtful and inquisitive to downright defensive and dismissive. The negative reactions reflect how prickly we can get when someone proposes we might not already be basing our decisions on facts and merit, and that maybe we have implicit biases.

But there is no argument when it comes to implicit bias.

You might believe you are unbiased, but the fact is, we are all biased.

(If you aren’t convinced, take this test.)

Jake Stika says, “Implicit bias isn’t good or bad, it just is.” And Jake’s advice for anyone wondering how to deal with their implicit bias? “You need to be smarter than yourself.”

Stika, Executive Director of Next Gen Men, co-founded the grassroots organisation with the objective of building better men. But before he entered the nonprofit space, Jake worked in business development and sales across a variety of tech startups, has been named an Ashoka Emerging Innovator, and served as the Entrepreneur Director of Western Canada’s largest angel group.

Implicit bias, and how it intersects with lending and investment practices, is something worth considering for two reasons:

1. Implicit bias can lead to investment in sub-par projects

Of course, we all like to think we make decisions based on careful consideration of the facts. Investors are responsible for making smart decisions that will make good returns; imagine if they were judging the quality of a startup based on the gender or attractiveness of the entrepreneur delivering the pitch.

Well, it turns out, they are.

One study from the University of Pennsylvania showed that investors don’t make decisions based solely on a startup’s merit or potential. In fact, investors preferred pitches presented by male entrepreneurs (compared to pitches made by female entrepreneurs), even when the content of the pitch was the same. The study concluded that “investors were found to make funding decisions based on the gender and physical attractiveness of the entrepreneurs themselves.”


Google has faced significant criticism in recent months. While the tech giant has taken important steps to build bias-interrupters into its talent acquisition process, Google’s culture and systems are still vulnerable to the effects of implicit gender bias.

First, there was the anti-diversity manifesto. Now, Google is facing a potential class-action lawsuit on behalf of employees claiming gender-based pay discrimination and systematic placement in lower-tier roles.

Imagine if, twenty years ago, Google had injected gender equity measures into the DNA of its corporate culture and systems infrastructure -- measures as simple as:


Making salaries and bonuses transparent internally is proven to greatly reduce the likelihood of entertaining a gender pay gap.

  • Annual reporting on internal statistics related to gender

How many women are we hiring? At what rates?

How many women are we promoting? At what rates and at what salaries?

How does female mobility and compensation compare with male mobility and compensation?

When a company publishes answers to these questions, it is better equipped to lead instead of react to any gender-based discrepancies which arise.

  • Transparent promotion practices

Too often, the pathway to the c-suite is shrouded in mystery and guided by subjective, inconsistent decision-making.

Women--who are just as qualified, in some cases more qualified than their male peers--are often at a disadvantage in a system that privileges those individuals who already possess the characteristics (read: masculine characteristics) of existing c-suite members, and who also benefit from advantageous social ties.

(As an aside, if you feel quite certain that CEOs are appointed based purely on merit, consider the following:

  • In 2015, 477 Fortune 500 global companies were run by male CEOs.
  • 58 percent of Fortune 500 company CEOs were over 6 feet tall, compared with 14.5 percent of the US population.
  • For every female CEO, there are 4 CEOs named “John”)


The above strategies not only mitigate the negative fallout associated with gender-based discrimination in the workforce, they also have the effect of making the workplace more gender equitable; they allow the best -- not just the best male -- talent to bubble to the surface.

But why should investors care about whether or not the startups they invest in integrate gender equity planning in their growth model?

Recently, the CEO of a prominent incubator expressed to me that “A founder’s job is to win. When they bring in other people’s money, it amplifies the pressure. What they do, how they do it, is up to that team. It makes 100 percent sense to have diverse teams, but they, and we, don’t have time to work on this.”

This is short sighted,” says Stika. “It’s always a race to product/market fit, but missing out on building a diverse team, may just mean you miss the market, or a crucial bug or a pivot to a golden customer, just because your team’s view lacked diversity. The difference between a unicorn and a bust.”

The jury is in: the more women you have at the table, the more money you are going to make.

  • More gender diverse offices generate more revenue.

  • Startups with at least one woman among the first hires are more successful and stay longer in the market than all-male startups.

  • There are positive correlations between the fraction of female directors and company performance.

  • Companies with at least three female directors have higher ROE’s (returns on equity) and net profit margins.

In other words, when investors do not encourage founders to integrate gender equity measures into the organisational infrastructure before it scales, they are missing out on a lucrative opportunity to grow their returns.

According to Stika, “Diversity, equity, and inclusion should absolutely be a part of an investor’s due diligence, if not a caveat to receiving funding. If you want to make a solid return on your investment, protect it by influencing the DNA of your investment to be primed for that 10x you seek.


© Dr Kristen Liesch 2017. All rights reserved.