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A minor brouhaha blew up on Facebook recently when the Canadian Innovation Exchange (CIX) announced the participants for this year's technology forum, to be held Nov. 18 in Toronto. CIX brings together investors, entrepreneurs and innovative companies to accelerate new technology ideas. A Facebook commenter did a quick calculation and discovered the panels comprised 50 men and four women.

To the organizers' credit, CIX quickly picked up on the boycott threats and reached out to the tech community to rethink the lineup.

Unfortunately, this scenario isn't unique and it highlights a problem that not only plagues the venture capital community but, more important, hurts many aspiring women struggling to build big companies.

Last month, Massachusetts-based Babson College, which specializes in teaching entrepreneurship, published a follow-up to its 1999 Diana Project, which investigated why fewer than 5 per cent of ventures receiving private equity investments included a woman on their executive teams. The researchers discovered that female entrepreneurs were just as prepared to lead high-growth ventures but were left out because of a lack of contacts.

Their follow-up showed that progress is being made on the venture capital front – from 2011 to 2013, more than 15 per cent of companies that received venture capital investment had a woman on the executive team. However, only 2.7 per cent of these companies had a female CEO and the number of female partners in venture capital firms has declined during this period from 10 per cent in 1999 to 6 per cent in 2013. This was a setback because venture capital firms with a female partner are twice as likely to invest in companies with a woman on the management team.

This trend of female entrepreneurs being overlooked has not gone unnoticed by men and women alike in the industry.

Jeff Bussgang, general partner of Flybridge Capital Partners in Boston, noted that venture-backed companies led by women perform just as well if not better than those led by men.

Unfortunately, venture capitalists maintain a bias against female-led companies that's difficult to crack. A study co-written by academics at Harvard Business School, the Wharton School, and MIT'S Sloan School of Management showed that all else being equal, investors favoured pitches by men 68 per cent of the time, even when the content of the pitches was identical.

Susan McPherson, founder and CEO of angel investor McPherson Strategies, said gender bias in the startup and funding communities is pervasive since, since "You can't be what you can't see," a quote she attributes to Rachel Sklar, Canadian co-founder of, a private, members-only network of female executives, professionals and media types.

"With less than 5 per cent of Fortune 1000 CEOs being female, there aren't many examples for funders to see and interact with," Ms. McPherson explained.

Vanessa Dawson, founder and CEO of New York-based Girls Raising, which connects female business founders across North America and helps them secure the resources they need to build high-growth businesses, agrees that this lack of visibility is a vicious circle.

"Early-stage investment is high risk and often based on very little data. For those reasons, investment decisions are made by relying on pattern matching. Since most [venture capitalists] are male, and most publicized success stories are from male founders, this leads to a unconscious bias to follow a cycle of men investing in men," Ms. Dawson said.

Another explanation for the sad state of women raising venture capital is the inability of women to oversell their opportunities.

"It is rare for a woman to walk into a pitch with VCs and say, 'I'm going to disrupt this entire sector.' And that is what is generally rewarded in the VC world," said Toronto-based entrepreneur Vicki Saunders, founder of SheEO, an organization that is building a new model to support and finance female entrepreneurs.

"Recent studies have shown that women often underestimate the impact they are going to have and men overestimate what they can achieve. In the 'go big or go home' narrative that dominates the venture community, brash, bold, bombast wins each time, and that's not generally how women present [their projects]," Ms. Saunders said.

It's a big problem with no easy solutions.

Ms. McPherson suggests that the tide will turn as wealth is transferred to women. She encourages women, if they have the means, to consider angel investing or joining a pool of funders that fund female-run companies. "A very small investment can help a woman's business launch. You can be part of her early success," she said.

It's important not to view investing in female-led startups as charity. Venture capital and startups all want to make money, and women should reap these rewards as well as men.

"We have a huge opportunity to be investing in companies we want to support in the world, instead of leaving another generation of investing to men," Ms. Saunders said.

Leah Eichler is founder and CEO of r/ally, a mobile collaboration platform for enterprises. Twitter: @LeahEichler

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