Until 1988, any woman who wanted a business loan in the U.S. needed a male relative to co-sign for her. Thirty-one years later, women are founding startup companies on their own, but good luck getting investment money to do it.

“We’re still getting 2%, maybe 3% of venture capital funding, so something is amiss,” Amy Sorrells (pictured, far left), director of global communications at Oracle for Startups, said during a panel discussion on Monday at the Ascent Conference in New York City. “This is not a supply problem, this is a cultural problem.”

Indeed, Crunchbase reported in July that a mere 3% of the money raised in the second quarter went to female-founded startups, 8% was allocated to male-female-founded companies and 89% went to male-only firms.

What’s behind these startling numbers? In a panel discussion moderated by Sorrells, the consensus was there was no singular overriding reason but rather a combination of factors that have led to the current situation.

Following the playbook

One is that the venture capital world appears to be following a playbook based on previous success and has so far shown great reluctance to stray from models and networks that are outside the lines. It’s an ironic problem, given that the tech industry of the past decade has taken great pride in disrupting everything from taxis and TV distribution to licensed software and on-premises computing.

It took much of 2018 for the Female Founders Fund to launch its $27 million capital pool. It took 48 hours for three venture capital firms to raise $4 billion for six new funds last year.

“Pattern recognition and networks are what venture capitalists rely on,” said Jennifer Neundorfer (second from left), co-founder and managing partner of Jane VC. “It’s all about how capital cascades down the capital stack.”

Male-dominated network

Tech companies which lack strong numbers of women in the workforce are certainly a contributing factor. A study conducted in 2017 found that women-led firms had twice the tech industry average of female employees, 48% versus 24% on average. This means venture capitalists are often drawing from a tech company network that is approximately 75% male.

There is also mounting evidence that pregnancy and ageism are essentially creating a double-barreled negative impact for women in the startup world as well. While it’s hard to find a large tech firm that does not have a maternity leave policy for its employees, it’s also difficult to find startup tech firms that do.

Erika Jolly Brookes (second from right) worked for a number of startup companies before landing her current role as chief marketing officer at Springbot, a data-driven e-commerce marketing automation platform.

“Not a single one of the startups I worked for previously had a maternity leave policy,” Brookes said. “It’s one of the most paramount things that businesses can look into doing and it will make a big difference in establishing women in their careers.”

The pregnancy penalty

The prospect of women leaving the tech workforce to have children is also viewed as a contributing factor, especially when it comes to age. A funding survey by Jane VC of early-stage founders found that the amount raised dropped over 40% after the age of 45. Because women often take the “offramp” to have children, their window of fundraising opportunity becomes automatically smaller as a result.

“One of the things that just jumped out of the data was ageism,” Neundorfer said. “The discussions we had suggested this pregnancy penalty.”

Salary differences can be a factor as well, even among some of the larger, established tech companies. Dierdre Bigley, global chief marketing officer at Bloomberg LP, analyzed the compensation structure of her own group and was surprised to find that women were being paid significantly less.

“I suddenly noticed I had this astounding inequity among women,” Bigley said. “It turned out that they were asking for less. I hope women start recognizing what they’re worth.”

Will Bigley’s hope come true? Issues around both bias and biology are forcing women out of tech at a 45% higher rate than men.

“Keeping women in tech is a really big problem,” said Kris Beck (far right), chief executive officer at Proformex Inc. “Males are more aggressive in asking for their role.”

Oracle-backed startups

To counterbalance the effect of multiple contributing factors, a number of companies have stepped forward with initiatives designed to foster the growth of female-founded startups. One of these – the Oracle for Startups program – is being led by Oracle Corp.

By offering free cloud credits, mentoring resources and migration assistance, Oracle hopes to encourage startup founders to take full advantage of the opportunity. Three firms that have – Snap Tech, Gapsquare and Transmute – are led by female founders and have proved to be rising stars in Oracle’s program.

“They’re probably three of the most successful of the startups that have come through,” Sorrells said in an interview with SiliconANGLE. “We’re not promoting women because it’s the right thing to do. It’s the right business thing to do.”

Another group that has helped make progress for women in business is OnBoard. Founded 26 years ago, the group is dedicated to increasing the number of women on corporate boards of public and private companies.

Increased board representation could make a significant difference when it comes to addressing network issues. California has passed phased legislation which mandates that public firms in the state must have at least one woman on the board by the end of 2019 and two by the middle of 2021.

Perhaps more significantly, major investment funds are beginning to take an active interest as well. BlackRock Inc., with over $6.2 trillion under asset management, has announced that it expects the firms it invests in to have at least two female board members. BlackRock’s position could influence a sea change in board representation, since it has been pivoting more strongly toward technology investment.

“There’s never been more choice for capital at the earliest stage,” Neundorfer said. “Having diverse gender balance on a founding team really leads to successful business results. It’s not just women together, it’s men and women.”

Photos: SiliconANGLE