Founders are twice as likely to experience inappropriate behaviour from angel investors while fundraising compared to investors from VC firms, a new survey suggests.
Survey respondents, who are all UK-based early-stage founders, reported behaviour ranging from comments about their appearance to sexual harassment and physical boundary violation.
75% of respondents said they had experienced inappropriate behaviour while fundraising. The survey, which was conducted by workplace reporting platform InChorus and impact investment community Daring Capital, received 92 responses.
“Investors must reckon with the fact that capital allocation is currently being distorted by safety concerns,” commented Jem Stein, founder of Daring Capital.
Angel investors
Fifty three survey respondents reported instances of inappropriate behaviour from angel investors — constituting 58% of all instances of such behaviour, compared to 33% from investors at VC firms. The remaining instances detailed inappropriate behaviour from accelerators and incubator staff.
"One investor made it clear he would only invest if I'd had dinner with him — another if I had sex with him,” said one founder who responded to the survey.
"I've been asked on three separate occasions whether I plan to have children. Always by male investors,” said another.
‘You just adjust’
77% of respondents said they believed addressing the behaviour would "definitely" or “probably” negatively impact their fundraising prospects.
"It's a small ecosystem. You don't want to be known as difficult,” said one founder.
Over 50% of founders said they changed their approach to fundraising to avoid specific investors, or brought another person to meetings to mitigate risk. "You don't report it. You just adjust,” one founder said.
“The fundraising dynamic creates particularly vulnerable conditions: founders seeking capital must cultivate relationships with the investors controlling that access,” said Rosie Turner, founder of InChorus. “Our research found that silence is being used as a pragmatic survival strategy.”
Survey respondents were asked to propose solutions. Suggestions included establishing professional standards to set out expected behaviour and for angel networks to share codes of conduct with their members.
