Kanze, now a doctoral fellow at Columbia Business School, was once an entrepreneur. When she and her male co-founder tried to raise money for their mobile tech company at TechCrunch Disrupt, they got very different questions from potential investors. Even though the two had similar titles, went to the same school, and both had 10 years of experience in finance.
Kanze was mainly asked questions about what could possibly go wrong. (She now terms these "prevention" questions.) Her male co-founder, she says, was more likely to get the questions about how fabulous everything could possibly be--a category Kanze now refers to as "promotion" questions.
Kanze's current research, recently published in the Academy of Management Journal, digs into the relationships between the questions entrepreneurs are asked and the funding they get. Kanze says her findings indicate that if women were asked the same questions as men, they'd be equally successful in raising money.
"It's not conscious," Kanze says. "No one is sitting there saying, 'Hey, you asked him different questions.' This is the cycle of bias we are trying to break."
A Better Way to Ask--and Answer--Questions
Kanze and her team, which includes Laura Huang of Harvard Business School and Mark Conley and E. Tory Higgins of Columbia, dissected the video of 189 company presentations at TechCrunch Disrupt from 2010 to 2016. They found that 67 percent of the questions posed to male entrepreneurs were so-called promotion questions, on subjects such as the total addressable market. By contrast, some 66 percent of the questions asked of female entrepreneurs were prevention-focused: How to defend market share or protect intellectual property, for instance.
The entrepreneurs, not surprisingly, reacted in kind. Ask a guy how big his market is, and, not surprisingly, he'll tell you. Ask a woman how she'll defend her market share, and she'll answer. But the net result is that the women end up looking like they're playing defense, while the men end up looking like the ones with the big visions who are going to change the world. "You're going to walk away from that conversation thinking the women just care about not losing money," Kanze says. Her research found that for every additional prevention question an entrepreneur is asked, he or she raised $3.8 million less in aggregate funding.
Kanze says there are at least two ways to fix the situation. The first is to get investors to ask similar questions of both men and women. Kanze was recently presenting at the Angel Capital Association's annual conference, and says the investors there could see the business case for changing their lines of questioning. By not asking male entrepreneurs prevention-focused questions, they're exposing their portfolios to unnecessary downside risk. They're not seeing the weak points in the companies they're backing. And if angels don't ask women promotion questions, they're missing out on many companies with high upsides.
The second fix is up to entrepreneurs to carry out. Kanze says entrepreneurs should reframe prevention-focused questions so that they can deliver a promotion-focused answer. So, for example, when entrepreneurs are asked how they are going to defend their market share, they'd be wise to frame their answer in terms of the size and growth potential of the market. They might point out that they're in a large and growing market, and point out that they plan to win an increasing share of it by leveraging their unique assets. Then they can move on from that to talk about their unique ability to compete in that space.
This approach will sound familiar to anyone who's ever had media training, which often teaches people to "bridge" from a question they don't want to answer to one that they like better. Such "bridges" often irritate reporters, but Kanze says that during TechCrunch Disrupt, at least, there was little sign that anyone minded. More important, the entrepreneurs who reframed their questions to be more promotion-focused were able to raise more money overall.
I don't know when I'll next be a judge in a business plan competition. But I do know I'll be listening to the judges' questions, and formulating my own, a little more carefully.