Where can a woman go for funding to start her business? Women entrepreneurs continue to face challenges raising seed money from venture capitalists who are overwhelmingly male, and white. Now a group of women venture capitalists in New York are fighting gender discrimination in lending by starting their own investment companies and incubators. They are even holding women-only pitch nights.
In this blog post, I will look at the problem of gender discrimination in lending. I will review an article about how a group of female venture capitalists are fighting back, and will discuss how anti-discrimination laws can help narrow the gender gap for entrepreneurs and women-owned startup businesses.
One cold night in January, 275 women gathered together in a SoHo coworking club to listen and lend. They snacked on crudites, cheese, and wine, as they laughed and cheered one another on. The Wingable women-only pitch night connected female-founded companies with investors ready to lend. The event answered the question the New York Times posed: “What would VC-funded industries look like if more women controlled the money?”
The Wingable pitch night was hosted by The Wing, a women-only co-working club with spaces across New York City and the country, and Able Partners, a women-owned New York venture capital firm. It featured 10 companies, each with at least one self-identifying female among their founders. The companies had completed Able Partners’ incubator program and were ready to gather seed funding for their new ideas.
The lenders in the room were women, too. In addition to Lisa Blau and Amanda Eilian, the founders of Able, many other women investors had come out to support these new startups.
“‘We need the old girl’s network,’ said Linnea Conrad Roberts, the chief executive of Gingerbread Capital and a former partner at Goldman Sachs, as she waved to Ms. Blau. ‘If you think about the ecosystem that guys have, a Silicon Valley founder will make hundreds of millions of dollars and he doesn’t go home and retire; he starts putting it toward funding other companies.’”
The push for women-owned venture capital companies comes in no small part from the gender discrimination and overt sexual harassment female entrepreneurs feel when starting to launch their companies. According to the venture-tracking site Crunchbase, only 8% of investing partners at the 100 top venture capital firms are women. Across the industry, 89% of venture capitalists are men, and 87% are white.
That gender disparity shows up in their lending too. Last year, female founders received only 2.2% of all venture capital investments. In a $130 billion industry, women only got $2.9 billion. It’s not that women aren’t starting businesses, either. The Department of Labor estimates that over one third of all businesses are owned by women.
Women entrepreneurs actively seek out seed money and capital investments, but often their pitches are met with stereotypes, gender discrimination, and out-right sexual harassment. Attendees of the Wingable shared some of their own stories:
“‘Last year, when I was raising my seed, this guy was like, “It must be really difficult for you to raise money, Shannon, because men dissociate intelligence from attractiveness,”’” Ms. McLay said. Everyone in earshot groaned.
“‘I’ve heard, “I really love you, Chanel, I think you have an amazing company, but I think I might want to date you,”’” said Chanel Melton, 31, the founder of a hair-extension company called RoseGold Pro. More groans. ‘He followed up later, like, “Hey, I hope I didn’t make you feel uncomfortable.”’”
Other women founders have reported sexual harassment when they sought funding within the technology start-up industry. Women report that while making their pitch they have been hit on, touched without permission, and asked for sexual favors.
The trouble is that the investor-investee relationship doesn’t always fit with the legal protections against gender discrimination and sexual harassment. Title VII of the federal Civil Rights Act only applies to employees and employers. The federal Equal Credit Opportunity Act, 15 USC section 1691, protects against gender discrimination in consumer lending, but may not apply in cases between businesses.
But for the women of Wingable, and others in New York, state and local laws may provide a better answer. In 2018, the New York State Human Rights Act was expanded to cover more than just traditional employer/employee relationships. Under New York state law, an employer is now responsible for gender discrimination and sexual harassment by or against:
This broader definition of employee means that complex corporate structures won’t protect venture capital companies that allow their lenders to discriminate. Depending on the relationship formed between a lender and a startup founder it could also give additional protections to women business owners once the first round of funding is complete.
Between women venture capitalists, women-owned businesses, and stronger sexual harassment laws, New York is a great place to start a business. But when old assumptions make gender discrimination in lending a part of doing business, the employment discrimination lawyers at Eisenberg & Baum can help. Our New York-based team can work with you to explore your options and build your case against employers and venture capitalists who treat you or your business differently because you are a woman. If you are a woman entrepreneur facing gender discrimination in lending, contact us today to schedule a free consultation.