Pathways: A new approach for women in entrepreneurship

05. A sense of "not-belonging" in entrepreneurship

"I was once advised in an investment meeting to take a male colleague to future meetings to make my tech business more 'credible'. I spent the next few days thinking of where I might pick up a man to do this. It was both funny and depressing in equal measure." - Leah Hutcheon, CEO & Founder, Appointedd.

In this chapter, we explore the following proximate cause of female under-participation in entrepreneurship:

Women frequently have a sense of "not belonging" in entrepreneurship, which affects their confidence and self-belief.

The following elements combine to directly create a sense of not belonging in the field of entrepreneurship for women^[53]:

Firstly, and most obviously, the field of entrepreneurial activity is dominated by men, and lacks sufficient female exemplars to properly counter this monoculture. When a group is under-represented and lacks exemplars, all participants – both those who are under-represented and those who are not – consciously or unconsciously seek a plausible way to explain this imbalance. They frequently conclude that a given group is under-represented because it should be, that the system is operating properly in selecting out those demographics because they are not suited to the field for some good, if unspecified, reason.

Such beliefs are obviously comforting to majority participants. After all, the system selected them in, which was evidently the right decision. To doubt the system's selection methods is to doubt one's own validity as a participant.

Meanwhile the same beliefs create friction for members of under-represented demographics and lead them to doubt whether they should proceed in the field or even enter in the first place. In our interviews, several female founders reported that they felt that they bear the pressure of carrying the hopes of an entire demographic, and the increased scrutiny of peers and observers.

Naturally, many will choose to avoid these pressures entirely, through non-participation. Thus, a reinforcing loop operates, removing potential participants from the entrepreneurial ecosystem which, in turn, makes participation more difficult for those remaining.

Women who successfully overcome these challenges are considered to be "exceptional", and therefore potentially legitimate. But, as they progress, many will still frequently experience prejudice and sexism to varying degrees, both conscious and unconscious, to remind them that perhaps they don't belong after all. In our research, 87% of respondents to the Entrepreneurial Voice survey said that they had experienced varying degrees of sexism, racism or both during their careers. This pressure removes still more members of under-represented demographics from the entrepreneurial ecosystem.

Of the established female entrepreneurs interviewed as part of this review many cited barriers that existed for them that did not exist for their male counterparts and reported that they had made progress despite these by adapting their behaviour to the only available system. From our many interviews, the following comments were typical of many: "I had adapted to behave more like a man in order to overcome … some of the barriers." or "I didn't call out blatant discriminatory comments for fear of it compromising my career."

Should we expect female entrepreneurs to need to adapt to an environment that is not fit for purpose for them, or that actively places such constraints upon them?

There are insufficient counterbalances to these effects. Our education system, at all levels, does not educate and encourage female entrepreneurship (indeed, it hardly encourages entrepreneurship at all, as we will discuss in Chapter 7), nor is equality and diversity education sufficiently embedded across the curricula of our schools, colleges and universities.

These considerations lead us to the root causes of the above intermediate causes. Not surprisingly, these are the same two root causes already described in Chapter 4. Recapping, from the earliest age, we experience intensive societal conditioning on what constitutes "normal" gender roles roles. And the education programmes – from birth to adulthood – required to intensively counter and correct this conditioning, are largely absent from our society.

These root causes combine to create a distorted context wherein absurdities such as those just described seem rational and normal from inside the system. Our entrepreneurial ecosystem does indeed believe that gender innately influences suitability for entrepreneurship because society as a whole believes it.

"The further you are from the white male middle-class characteristic the bigger the barriers and obstacles in an endeavor such as entrepreneurship"

Mary Ann Sieghart, Journalist & Author

We can depict this cause-and-effect anatomy as follows. Proceeding from the bottom of the diagram to the top, just two root causes are responsible for creating a set of factors that act to make entrepreneurship what psychologists call a "hostile environment" for women.

Addressing the Causes

Reducing the strength of the above cause-and-effect relationships again requires us to act in two areas. We've already discussed, in Chapter 4, an approach that could start to address the underlying root causes identified above. In this chapter, we'll therefore focus on actions that mitigate the issues resulting from them. In summary, from our diagram above, these are:

• Male dominated business landscape, lack of female role models
• Greater scrutiny and "standard-bearer" pressure
• Lack of education to encourage female entrepreneurship, while equality and diversity is also not embedded across full educational curriculum
• Frequent prejudice, sexism

We'll now take each of these points in turn, and discuss what practical actions we might take to mitigate them to a meaningful extent:

Male dominated business landscape/Lack of female role models

A lack of role models in a given demographic is one of the greatest discouragements to others in that demographic. Conversely, when a "critical-mass" of exemplars is established, then participation is normalised, biases decrease still further, and entry-friction reduces.

In order to reach that tipping point, it is therefore important to actively reduce the friction frequently experienced by female entrepreneurs, such friction existing in the first place because their participation isn't yet normalised.

The friction occurs in two forms. The first is continuous, background discrimination. It arises from the root causes discussed earlier, and manifests in an unconscious or conscious belief that a particular demographic is not as suited as the majority demographic to a particular endeavour. Various actions described throughout this report are targeted towards this form of discrimination.

The second form of friction occurs during "selection events"; those points in the entrepreneurial journey where the entrepreneur is either selected into or excluded from participation in some activity, such activity acting as a gateway to the next level of development or opportunity.

Examples of selection events include participation in accelerator and incubation programmes, founder development programmes and entry into business networks; we'll refer to the organisations that operate such services as Ecosystem Builders in the text that follows.

"As an entrepreneur from an under-represented group myself, I know it's not often the entrepreneurial aspiration but the access to the resources and support from role models that holds back this group from releasing the potential and contributing to society." - Paramjit Uppal, Founder & CEO, AND Digital

The other major category of selection event is investment decisions, largely operated by venture capital firms, investment syndicates and individual investors. This is the subject of Chapter 8, and we'll therefore defer discussion of this point for the time being.

As regards Ecosystem Builders, in many cases the government contributes funding through various channels. We recommend that such funding formally becomes contingent on both the selected participants and the selection panels themselves exhibiting greater gender diversity.

Consider the experience of a woman who has been rejected from entry into a programme as a result of such a selection event. How the Ecosystem Builder manages this rejection process can make the world of difference to the on-going motivation of the founder in question. The difference depends on the quality of the explanation given to that founder as to why she was unsuccessful in her application, pitch, etc. In the absence of high-quality (or any) feedback, the founder is left wondering whether she was rejected because her chosen business domain is not considered relevant to this particular Ecosystem Builder's focal area, or alternatively whether it's just that her idea or execution is lacking within an otherwise valid chosen domain. Or was it simply sexism?

Detailed, thoughtful feedback can motivate the founder to improve and learn, while a lack of quality feedback can feed suspicions, and may result in founders discontinuing their entrepreneurial activity completely.

We therefore recommend that all Ecosystem Builders provide detailed, transparent feedback to all rejected applicants, and particularly so for female founders. They should also collect and publish acceptance/rejection statistics, dis-aggregated by gender and ethnicity. Such a process should be a pre-requisite of receiving government and development agency funding.

We also recommend that Ecosystem Builders seek feedback from rejected founders from under-represented demographics on the selection process operated by the organisation, and have procedures in place to actively consider this feedback, making changes to process where appropriate.

Greater scrutiny and "standard-bearer" pressure

As discussed earlier, women and others from under-participating demographics who are considering an entrepreneurial path often feel additional performance pressures due to the increased visibility and scrutiny that comes from being an exception within a population. For example, potential founders report feeling that they are carrying the hopes of the entire demographic that they represent. In other cases, the pressure takes the form of needing to "single-handedly" prove wrong the expectations from prejudiced observers that they will fail as entrepreneurs simply because they are members of a particular demographic.

This phenomenon tends to dissuade would-be founders in these demographics from participating as entrepreneurs. Incorporating a company or social enterprise is a somewhat visible step in such circumstances and provides little private space in which to attempt to develop an entrepreneurial idea, or to fail in the attempt, and learn from the experience.

Potential entrepreneurs in these circumstances need small amounts of capital to test ideas, and to build early entrepreneurial experience away from that visibility.

We therefore propose to attach a Concept Fund to each Pop-up Pre-start and each Pre-start centre (see Chapter 4 for more on these). The Concept Fund would provide micro-grants (of around £1000) to associate members of the Pre-starts network to support specific proof-of-concept expenditure. Associate members wouldn't need to have incorporated a business or social enterprise in order to apply for the awards. The Franchise Operator of the network would be responsible for ascertaining whether the application was relevant to the intention of the fund. Founders could receive grants from the Concept Fund more than once.

This resource would provide help for very early stage, potential start-up founders to establish proof-of-concepts, following the well-established Fail Fast/Lean-Start-up methodology^[54].

The Concept Fund is intended to work alongside the Journey Fund, discussed in Chapter 8.

Lack of education to encourage female entrepreneurship, equality & diversity not embedded across full educational curriculum

As discussed above, because society has normalised under-participation of women in entrepreneurship, it hasn't previously been considered necessary either to encourage this participation, nor to train general participants in the importance of diversity and equality.

The recommendations below are over-and-above the foundational need to improve general entrepreneurial education, which we cover in Chapter 7.

We recommend that all school and university courses include mandatory diversity and equality education as part of the first-year syllabus. This shouldn't be the tick-box type, but, rather, should be tailored appropriately to illuminate each applicable subject's under-participation origins, on-going exclusionary factors, in addition to more general diversity and equality best-practice education.

For example, in considering current participation rates in STEM subjects, most Computing Science pupils and students probably don't know that programming was performed almost entirely by women in its infancy because it was considered to be an unimportant secretarial task. Later, when the importance and power of software became more apparent, men took more of these roles, and salaries rose. Women were then gradually excluded from the profession because society effectively determined that such work, being now considered important, was cognitively too demanding for women^[55]. Most science students likely aren't aware that it was once forbidden for women to publish in science journals, or to even practice science at all^[56], and so on. These stories set the background to today's gender imbalances in STEM subjects, and should be taught as part of correcting existing biases.

All Ecosystem Builders (defined above) receiving financial support from the government should demonstrate, as a pre-requisite to receiving that support, that a programme is in place to provide all staff with mandatory diversity and equality training.

Frequent Prejudice, Sexism

We can think of sexism as a spectrum, along which varies degrees of the practice are located:

To some extent, the presence of any one type of sexism reinforces and legitimises the others. To meaningfully reduce sexism, we must therefore strategically act upon all three types.

To the extent that sexism contributes to under-participation, our aim in this report, bluntly put, is to raise unconscious sexism to the conscious level, when reasonable people can then reconsider their formerly implicit views in the context of the arguments made herein, and elsewhere. Many of the recommendations in this report are intended to operate in this way.

But what about conscious, extreme sexism, or misogyny? It seems obvious that a society tolerating, for example, aggressive, hate-filled posts on social media directed at women simply because they are women, that such a society will tolerate less-extreme forms of the practice too.

There is currently no existing law in Scotland directed against misogyny. However, the Misogyny and Criminal Justice Working Group published the excellent report Misogyny: a human rights issue in March 2022. The report recommends:

• a new statutory aggravation to relate to misogynistic conduct where a crime such as assault, criminal damage/vandalism or threatening or abusive behaviour is aggravated by misogyny
• a new offence of stirring up hatred against women
• a new offence of public sexual harassment of women, and
• a new offence of issuing threats of, or invoking, rape or sexual assault or disfigurement of women and girls online and offline

At the time of writing, these recommendations have been accepted in principle by the Scottish Government, but not yet implemented.

A timetable for completion of the detailed review of these recommendations, and their implementation, should be published by the Scottish Government.

The above proposals are presented as specific recommendations in Chapter 10: Consolidated Recommendations.