Solving the Implicit Bias Problem in the Startup Industry

Solving the Implicit Bias Problem in the Startup Industry

I got a deep dive into neuroscience when I was working on my startup, NeuroFocus. For years I pored over brain studies and thought about how the brain reacts to stimuli. I learned a massive amount about the brain, and I took away some critically important learnings from my experience at NeuroFocus. One of the most impactful to my daily life was this: much of what drives our behavior is not accessible to the conscious mind. Specifically, we sometimes act in a biased manner towards a specific group of people due to attitudes that are buried deep in our brains that are not consciously accessible, even after introspection. Neuroscientists call this phenomenon “implicit bias.” When I first heard terms like “implicit bias” they were quite unknown in popular parlance. Today, the term is better known, and starting to pop up in blogs and articles.

It’s about time.

For many years we used a mostly pejorative term for all things not accessible to the conscious mind: “the subconscious.” The term, introduced to popular language by Freud, implied dark forces that drive humans to do bad things. While this is sometimes true, this negative perception of the term “subconscious” made it difficult to have a productive discussion about anything that happens beyond conscious thought. The more accurate and neutral term is “non-conscious.” Armed with this term, we are on much stronger footing to discuss what can be done to combat the effects of our (unwanted) non-conscious attitudes.

A recent study by Dana Kanze, Laura Huang, Mark A. Conley, and E. Tory Higgins published in the Harvard Business Review reveals actionable insights into what can be done about implicit bias in venture capital. Finally.

From the study: “Female entrepreneurs receive only about 2% of all venture funding, despite owning 38% of the businesses in the country. The prevailing hope…has been that this gap will narrow as more women become venture capitalists. However, homophily does not seem to be the only culprit behind the funding gap. Over the past several years, the U.S. has seen an increase in the number of female venture capitalists (from 3% of all VCs in 2014 to an estimated 7% today), but the funding gap has only widened.”

So, having more women as VCs doesn’t appear to be a one-stop solution to the problem.

The authors of the study observed Q&A interactions between 140 prominent venture capitalists (40% of them female) and 189 entrepreneurs (12% female) that took place at TechCrunch Disrupt New York, an annual startup funding competition.

“When we analyzed video transcriptions of the Q&A sessions…we learned that venture capitalists posed different types of questions to male and female entrepreneurs: They tended to ask men questions about the potential for gains and women about the potential for losses. We found evidence of this bias with both male and female VCs.

According to the psychological theory of regulatory focus, investors adopted what’s called a promotion orientation when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals. Conversely, when questioning female entrepreneurs they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance. ..67% of the questions posed to male entrepreneurs were promotion-oriented, while 66% of those posed to female entrepreneurs were prevention-oriented.”

I guarantee that those investors had no idea that they were asking male and female entrepreneurs different questions. Their behavior was probably entirely due to implicit bias and inaccessible to the conscious mind. As the director of a startup accelerator who has posed thousands of questions to male and female entrepreneurs, I have no idea whether or not I myself am guilty of this behavior, despite my very conscious intention to treat female and male applicants to SkyDeck absolutely equally.

Fortunately for all of us, the authors pursued the finding to the place where we in the startup industry can actually take action. To confirm their finding that promotion questions lead to more funding than prevention questions, they took clips from the TechCrunch event and presented them to a group of angel investors, plus a group of ordinary investors and asked both groups to make theoretical investments. As with the real TechCrunch scenario, the theoretical scenario resulted in the same outcome: promotion questions led to more investment.

But the study authors took it a step further and re-mixed the questions from the investors and the answers by the startups.

And here’s why this study is so actionable.

When the clips presented a prevention questions with promotion answers to those questions, angel investors allocated 1.6 times more capital than they did with a prevention question – prevention answer scenario. They then did the same thing with ordinary investors and the result was 1.7 times more capital allocated.

Investors allocated more capital in the prevention question/promotion answer condition than to those in the prevention question/prevention answer condition.

Reflect on this finding and then go coach your startups accordingly. Ask your female entrepreneurs (and your male ones) promotion questions and prevention questions and coach them to give promotion answers to every question.

The promotion/prevention questions cited in the study are a good start. Think of your own. Be creative. Share methods that you find useful with others in the startup community.

We spend our days helping our startups solve hard problems. This is a hard problem.

Let’s solve it.

by Caroline Winnett, SkyDeck Executive Director