The Massachusetts sexual harassment and discrimination laws that call for fair workplace treatment do not include investors or financiers, but a bill working its way through the Legislature would change that.
At the same time, the industry group that represents venture capital investors — which just two years ago held forums and discussions asking its VC members to sign a pledge against sexual harassment in the venture-backed startup community — isn’t supporting the bill.
The proposed bill (S939) by state Sen. Cindy Friedman, a Democrat from Arlington, calls for the sexual harassment and discrimination laws to apply to investors, and private investors such as venture capitalists, in particular. A similar law went into effect in California this past January.
The purpose of the bill, according to its authors, is to ensure investors be held to the same standard as other employers and that women get the lawful protection they lack right now.
“We don’t allow employers to harass employees,” Friedman said. “Why should there be this loophole for (VCs)?”
Last week, a joint judiciary committee heard testimonies on Friedman’s bill. Among those testifying was Gitanjali Swamy, founder and advisor to the University of California Berkeley’s Witi@UC Women. She is also a representative to the EQUALS Leadership Coalition at the United Nations and worked with Friedman in the drafting of the Massachusetts bill.
Swamy said the New England Venture Capital Association was invited to collaborate on drafting the proposal but that request fell on deaf ears. "We invited the NEVCA while we were drafting the legislation," Swamy said. "But they waited until it was in front of the committee, and then they found every woman they could to testify that the laws against sexual harassment and discrimination, for some reasons, should not apply to them, even though they impact lives and livelihoods."
Friedman said she has heard similar pushback from the investor community.
"What I hear is, Oh, if we start holding this class of people [investors] accountable, they are not going to talk to women anymore or deny access," Friedman told BostInno. "They say that we will stop meeting with women. But that’s discrimination, and one could argue that it wouldn’t be lawful."
The NEVCA’s stance is in stark contrast to what the association was saying publicly just two years ago, when in June 2017 it asked its member companies to sign an ‘Anti-Discrimination and Sexual Harassment Pledge’ and enlisted VC companies to attend a training program to address conscious and unconscious bias, to “double down” on programs like Hack.Diversity and to promote black and Hispanic engineers in the ecosystem.
When asked why the NEVCA is unwilling to back the law that promises to fix the problems it has supposedly been addressing since 2017, NEVCA president Jody Rose said the industry group “harbors serious concerns about unintended consequences for minority entrepreneurs.”
In an email response to BostInno, Rose said, “When we were first invited to meet with the bill's primary author, the legislation was still in draft form. In that early meeting, we expressed our support for the spirit of the bill, along with high-level concerns about the mechanics and agreed that investor perspective and support would be helpful. Unfortunately, more of that collaboration didn't happen before the bill moved along. We are eager to partner more effectively in the coming months."
The said "unintended consequences" refers to investors taking fewer meetings with women founders and in turn, affecting the cause in an adverse manner.
“These are scare tactics used to halt the legislation,” said Amy Spurling, CEO and co-founder of Compt, an employee perks software startup. "The VC community is shaking in their shoes. They are worried about discrimination because they are only funding men, and yes, they should be worried."
THE COST OF BIAS
A study commissioned by American Express last year found that women started an average of 1,821 new businesses per day in the U.S. between 2017 and 2018. Those businesses generated in revenue more than double the amount invested.
Female-founded companies raised $2.88 billion last year — progress when compared with the $1.9 billion raised by women-led startups in 2017, but as Fortune Magazine put in perspective, that $2.88 billion is still $10 billion less than the capital infused by the singular e-cigarette company Juul last year.
Friedman said her bill is intended to open up the funding network to female entrepreneurs. "We are trying to broaden a closed network," said Friedman. "And it is closed because the founders are women, not because of their ideas. You cannot tell me that women are not as creative and innovative."
Bobbie Carlton, founder of online speaker's bureau for entrepreneurial and technical women, Innovation Women and Innovation Nights, attributes the lack of funding for women to many reasons including unconscious bias and lack of visibility.
“If you are not in the room, then you are not visible or included,” Carlton said. “It’s hard to be on a keynote if you have to put a kid on a bus at 8 AM."
In other cases, the bias is more blatant. Take Deborah Zanforlin's case for instance: Zanforlin, CEO and co-founder of cancer diagnostics startup ConquerX and a Brazil native, founded her startup in 2015 after completing the global entrepreneurship bootcamp at MIT. She wanted to make Boston home and envisioned a bright future for her startup. But she found herself being compared to the female founder of scandal-ridden Theranos.
"I am compared to Elizabeth Holmes all the time," said Zanforlin. "We have had so many scandals involving men, but that doesn't seem to be a problem."
This instance, unfortunately, isn't the only unpleasant interaction Zanforlin has had with VCs. She recalled an incident where she was refused funding because the investor couldn't understand her accent.
"An investor once told me 'It's too complicated, I cannot fund you because I don't understand you," Zanforlin said. "We are advised to have a white man on our advisory board."
Zanforlin admitted that this treatment is amplified for women in biotech, especially if they are non-native or young. "Fundraising in health care and biotech is not easy. It tends to be an old white man industry."
This phenomenon is not an issue plaguing just the Greater Boston ecosystem. A Harvard Business Review article from 2017 analyzing closed-door conversations of government VCs in Sweden found gendered differences in how investors evaluate men and women entrepreneurs. The article stated that in investor conversations, young men were described as “promising” but young women as “inexperienced.” Cautiousness or risk appetite was also viewed very differently for men and women.
Friedman, for her part, is realistic about the change her bill would bring about.
“I don’t have any illusions that it will change the world, but it gives women some protections and means of being able to fight harassment and discrimination.”
The next step for the for the bill is to pass the judiciary committee. Once it has the committee’s recommendation, it will move to the Legislature for a floor vote.
