Monday, April 19, 2010

Claire Cain Miller: Out of the Loop in Silicon Valley

Out of the Loop in Silicon Valley
The New York Times

CANDACE FLEMING’S résumé boasts a double major in industrial engineering and English from Stanford, an M.B.A. from Harvard, a management position at Hewlett-Packard and experience as president of a small software company.

But when she was raising money for Crimson Hexagon, a start-up company she co-founded in 2007, she recalls one venture capitalist telling her that it didn’t matter that she didn’t have business cards, because all they would say was “Mom.”

Another potential backer invited her for a weekend yachting excursion by showing her a picture of himself on the boat — without clothes. When a third financier discovered that her husband was also a biking enthusiast, she says, he spent more time asking if riding affected her husband’s reproductive capabilities than he did focusing on her business plan.

Ultimately, none of the 30 venture firms she pitched financed her company. She finally raised $1.8 million in March 2008 from angel investors including Golden Seeds, a fund that emphasizes investing in start-ups led by women.

“I didn’t know things like this still happened,” says Ms. Fleming, 37. “But I know that, especially in risky times like the last couple years, some investors kind of retreat to investing via a template.” A company owned by a woman, she adds, “is just not the standard template.”

Though many people say that outright sexism is rare in the tech world these days, the barriers that Ms. Fleming encountered aren’t unusual. Tech communities in Silicon Valley and in other hubs — like New York, Austin, Tex., and Boston, where Ms. Fleming lives — pride themselves on operating as raw meritocracies ready to embrace anyone with a good idea, regardless of education, age or station in life.

For women, though, that narrative often unfolds differently.

Women own 40 percent of the private businesses in the United States, according to the Center for Women’s Business Research. But they create only 8 percent of the venture-backed tech start-ups, according to Astia, a nonprofit group that advises female entrepreneurs.

That disparity reaches beyond entrepreneurs. Women account for just 6 percent of the chief executives of the top 100 tech companies, and 22 percent of the software engineers at tech companies over all, according to the National Center for Women and Information Technology. And among venture capitalists, the population of financiers who control the purse strings for a majority of tech start-ups, just 14 percent are women, the National Venture Capital Association says.

That reality is even more complex when race is factored into the mix. Small percentages of workers in information technology are African-American, Asian or Hispanic, and that number is even smaller for women.

“It’s not like people are making an effort to exclude people, but I see very little diversity in the candidate pool,” says Aileen Lee, a partner at Kleiner Perkins Caufield & Byers, the big venture capital firm. She says this could reflect the different educational paths men and women follow in high school and college: men, for a variety of reasons, are more likely to pursue computer science and engineering degrees and subsequently rise through start-up or management ranks.

WOMEN now outnumber men at elite colleges, law schools, medical schools and in the overall work force. Yet a stark imbalance of the sexes persists in the high-tech world, where change typically happens at breakneck speed.

And analysts say more than social equity is at stake. A dearth of ideas and participation by women in the technology churn has business consequences as well.

The latest Web start-ups — for socializing, gaming and shopping — often attract more women than men as users. And many products from tech giants are aimed at women. But when Apple unveiled its new mobile computing device, it called it the iPad — a name that made many women wince with visions of feminine hygiene products.

Research indicates that investing in women as tech entrepreneurs is good for the bottom line. Venture-backed start-ups run by women use, on average, 40 percent less capital than start-ups run by men and are increasingly involved in successful initial public offerings of stock, according to a recent white paper by Cindy Padnos, a venture capitalist who compiled data from 100 studies on gender and tech entrepreneurship.

“When you have gender diversity in an organization, you have better innovation, and I don’t know where innovation is more important than in the high-tech world,” says Ms. Padnos, who recently founded Illuminate Ventures, which invests in start-ups led by women.

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