In the increasingly crowded world of venture capital, a growing number of firms is producing research as a way to differentiate themselves from the pack. Earlier this year, for example, Wing, a venture firm that focuses primarily on enterprise startups, published a state of the industrial IoT market. The consumer-tech investment firm Goodwater Capital is becoming known for its occasional equity research report on a still-private company.
Now Illuminate Ventures, a nine-year-old, woman-led, early-stage venture firm that’s focused on enterprise cloud and mobile computing startups, has produced some thought-provoking research of its own around how women and male founders view entrepreneurship, from why they do it to how much support they receive from family members.
First, a little about Illuminate’s methodologies. According to firm founder Cindy Padnos, the firm initially reached out to 1,200 tech founders and venture capitalists who Illuminate presented with a litany of questions about entrepreneurship and motivations and challenges that people face in starting companies. In the end, says Padnos, Illuminate had a response rate of just more than 30 percent, or slightly over 400 completed responses, which it used SurveyMonkey tools to collect.
Roughly half the responses came from partner-level VCs at 150 different venture firms; the other half came from U.S.-based founders who raised venture funding in 2017.
So what did they have to say? A lot. If we’re being honest, the survey so wide-ranging as to be a bit overwhelming. (You can check out the full paper here.) In the meantime, some of the most interesting takeaways can be grouped into a couple of different categories. One of these seems to disprove old myths. Among them:
1.) The belief that entrepreneurs launch companies chiefly for financial gain is seemingly a myth. Only 15 percent of male founders and 2 percent of the female founders who responded to the survey said that money is their primary motivation.
2l) Respondents – – both founders and VCs — also dismissed the idea that a founder needs to have a STEM degree to be a successful tech founder.
3.) Traditional thinking that women founders are more risk-averse than men or are unable to balance the needs of work and family are also incorrect or, at least, outdated, based on feedback from survey respondents. More than twice the percentage of male founders indicated that “balancing family and work” was a strong barrier to their starting a company (31 percent versus 17 percent of women founders). They also rated the “need for financial security” as a strong barrier in slightly higher numbers (49 percent versus 42 percent of women respondents).
4.) It’s widely believed that both women and men, especially in today’s go-go markets, start companies largely for the potential financial gain, but money actually has little to do with why both women and men start companies. In fact, women say the top three reasons they start companies, in descending order of importance, is to bring their ideas to market, create a long-lasting business, and prove to themselves that they can do it. Men similarly said that bringing their ideas to market is their top motivator, following by creating a long-lasting business. Men did rate the “significant financial gain” that can come with entrepreneurship third on their list, so it’s not entirely a “myth” even if it’s greatly exaggerated.
Interestingly, the survey also showed a real disconnect between how VCs view founders, and how founders view themselves. For example:
1.) Male VCs ranked male founders as likely to be stronger than women in 4 of 10 “success attributes” that were measured. Similarly (and somewhat depressingly), women VCs found only one attribute where they saw women founders as strong than men, being “smart risk-takers.”
2.) In large percentages, both male and female VCs saw 15 of 16 potential barriers to entrepreneurial success as more likely to impact women founders than men.
3.) More than half of VCs said they believe that men are more likely to have attributes like “prior start-up experience” and the “desire to scale a business massively.” But founder responses refuted the notion that they share VCs’ thinking on this front.
4.) Another way that VCs and founders appear to think differently: None of the VCs who participated in the survey selected “gaining the support of family” among the top five barriers to entrepreneurial success, while nearly a quarter of both male and female founders said it was.
5.) A stat we found to be particularly surprising was the disconnect between how male and female VCs view founders who “think big” and have “strategic vision” and how their impacts their odds of achieving their goals. While 40 percent of women VCs said this was a bigger barrier to success when it comes to female founders, just 12 percent of male VCs said the same of female founders. Could it be that women investors think they are more attuned to how women founders are perceived, or are they themselves harder on women founders? It’s impossible to know from this survey, but it definitely gave us pause.
Again, you can check out the full study here. It has all kinds of interesting nuggets that, at a minimum, may start entirely fresh conversations about what’s happening in the startup industry right now.
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