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Blow jobs for investment: Sexual harassment claims spiral in tech industry

Cara Waters

Atlanta Daniel was dumbstruck. The Australian entrepreneur was pitching to a prospective backer for her business when the conversation took a distinctly unpleasant turn.

"[The] investor told me I owed him a blow job for his help," says Daniel. 

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Promoting female entrepreneurs

Elizabeth Galbut and Pocket Sun co-founded SoGal Ventures with the goal of building a global female entrepreneur community.

The same investor told her "I'll know your age when I see you naked" and "I have a job for you under the table".

Daniel says she tried to brush off the remarks not knowing how to handle it.

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"At the time I really thought I had no avenue to deal with that behaviour," she told Fairfax Media. "He had quite a lot of power. For me in the end I chose avoidance, which wasn't necessarily the best thing for me."

It was not a one-off in the industry; another investor asked her if orgasms were her hobby.

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It is stories like Daniel's that illustrate the Australian start-up scene is facing similar problems to the high-profile scandals that have rocked the United States tech industry. But, for now, many women are still reluctant to speak out.

More allegations of harassment emerge

Daniel, who is now a partner at venture capital firm Blue Sky Ventures, says she told some people about the harassment but nothing happened to the perpetrator, he got wind of the allegations and deleted connections to her on Facebook and Twitter.

Daniel doesn't want to name the perpetrator but says after publishing a post on Medium detailing her harassment, she understands he may lose one of his board positions. 

"We are not at a point as a community where a person in my position naming someone will have an effect that is positive," she says.

"At this point it would still be an accusation that would reflect negatively on me as a victim of that behaviour as much if not more than the perpetrator." 

She wants people in the tech community to call out harassment when they see it or experience it. 

"I'm burnt out on apologies," she says. "I want actions."

Daniel says there is a culture of  ignoring sexual harassment. 

"As a society, we consider the potential harm to a man from sexual harassment allegations as doing greater damage than the damage of his behaviour towards victims," she says.

"No one wants to be near an allegation, or someone who makes allegations. So the behaviour is often allowed to continue uninterrupted. Too many of us sit in the middle knowing it's wrong but not wanting to take what we consider to be 'extreme' action to stop someone behaving like this."

'I would never go public'

Fear of the backlash that could result from speaking out about sexual harassment is an issue for many of the women Fairfax Media spoke to who asked to remain anonymous.

Tech company employee Susan* is in the process of bringing a sexual harassment claim in court against one of her former employers. 

"My treatment affected my self-esteem, my ability and after a 12-year career in IT, I have left it behind, believing I am worthless and have achieved nothing," she says. "I would never go public with my story, the stakes would be too high".

Susan says this is also the case with other women she has met within the tech industry. 

"There's an unconscious bias in the industry that creates discrimination due to the ratio of men to women, it's nothing new – I guess it's more prevalent due to how tech industry has evolved," she says.

"It's important to remember that we are not born with this bias, it's not an [inherent] gender trait, but something we are taught as we grow up. This is one of the reasons why the numbers don't add up: not as many women are choosing to enter the IT industry."

'It's just the tip of the iceberg' 

Pocket Sun and Elizabeth Galbut are the founders of SoGal Ventures.

Pocket Sun and Elizabeth Galbut are the founders of SoGal Ventures.

At the Dell Women's Entrepreneurs Conference in San Francisco last week, sexual discrimination and harassment towards women was a key topic of discussion.

Angela Fox, co-leader of Dell EMC in Australia and New Zealand, told Fairfax Media on the sidelines of the event, that she was shocked to hear of the experiences of many female entrepreneurs. 

"One of the things that has blown me away at this conference is the amplification of the discrimination that is still going on," she says.

"I guess I didn't come with a perception that it was as bad as it really is, so I was grilling some of the Australian attendees saying 'Is it really this bad?' and their view is 'Yes it is'."

Fox says corporates such as Dell need to lead the way.

Elizabeth Galbut, the 28-year-old co-founder of New York-based venture capital fund SoGal Ventures, was one of the attendees with her own story of discrimination, beginning when she first finished university. 

"I'd go to conferences and I'd say 'Hi, I've just graduated from my MBA, are you looking for associates or analysts?' and some of the responses I got back was 'We don't hire women'," she told Fairfax Media.

"In the US it is illegal to say something like that but it didn't even faze them it was just, that is what it is. I really felt like I didn't have a place."

Galbut decided to make her own place and set up SoGal with co-founder Pocket Sun to invest primarily in female-led businesses.

"In fact 94 per cent of VCs [in the United States] are men, which means that women are largely absent when it comes to making important investment decisions regarding where the world is going," Sun says. "As a result in 2016 only 2.2 per cent of VC funding went to female CEOs."  

In less than two years SoGal has invested in 40 start-ups of which two have been acquired.

"We thought this is the moment and it's time to do it because nobody else is going to do it," Galbut says. 

But it didn't take long for Galbut to experience sexual harassment herself.

"I've had people when we've been raising our funds say 'Do you want to have a threesome?' and I'm there trying to talk business and help some of the biggest funds in the world raise money," she says. "It's really tough."

Galbut says female-led firms come to SoGal as a result of harassment.

"Every single one of the entrepreneurs has a story like that or multiple stories," she says.

"We have had entrepreneurs who have turned down significant amounts of money because of comments ranging from, 'You know if I invest in you it would be so nice to get to know you better because I think I like you more than my wife' to things as blatant as 'Do you give good blow jobs and if I invest will I get blow jobs?'."

Galbut says the tales of sexual harassment coming out have been harrowing. 

"The last couple of weeks have been very challenging for us," she says. "Everyone is hurting. There is a bit of PTSD every time you hear one of those stories and relive your own experience."

Galbut believes there are more revelations to come.

"That bias is incredibly rampant, what has come out so far has been just the tip of the iceberg," she says.

Fallout continues

Dave McClure, founding partner at 500 Startups.

Dave McClure, founding partner at 500 Startups. Photo: Bloomberg

The fallout from the sexual harassment claims continues around the world and in Australia. 

In the US, Justin Caldbeck of Binary Capital and David McClure, chief executive of 500 Startups, both resigned after confessing to "inappropriate interactions with women in the tech community".

McClure's demise had ramifications in Australia with LaunchVic putting on ice the $3.2 million in funding it had committed only weeks earlier to 500 Startups to bring the accelerator to Melbourne.

LaunchVic has stated it will not work with 500 Startups until it addresses its sexual harassment problem.

"The future of the 500 Melbourne program is dependent on the delivery of a remedial plan that not only addresses sexual harassment in the startup ecosystem but also promotes women and other under-represented groups," LaunchVic said in a statement.  

Speaking out

Annie Parker co-ordinated the statement calling out sexual harassment in the Australian tech community.

Annie Parker co-ordinated the statement calling out sexual harassment in the Australian tech community. Photo: James Brickwood

Broader change is in the pipeline as well with Daniel and Annie Parker, interim chief executive of Fishburners, co-ordinating an open letter from leaders in the Australian start-up community speaking out against sexual harassment. 

"We, the undersigned, declare the Australian start-up community will, to the very best of our ability take action against the kind of behaviour that makes women feel exploited, secondary or unwelcome," it says.

The statement has been signed by over 100 people including Paul Bassat, the co-founder of Seek, investor and Shark Tank star Steve Baxter and investor and entrepreneur Susan Wu, who helped highlight Caldbeck and McClure's behaviour. 

Melanie Perkins is the co-founder of graphic start-up Canva.

Melanie Perkins is the co-founder of graphic start-up Canva.

Melanie Perkins, chief executive and co-founder of Canva, is one of the high profile signatories to the statement but told Fairfax Media more needs to be done.

"As an industry here in Australia, it's great the conversation has been kick-started, but now real change needs to occur," she says. 

Perkins says as a female with "brown skin" from outside the US she initially struggled to attract investment. 

"While statistically odds were definitely not stacked in my favour, we eventually found investors who believed in me and our vision and we landed investment, even if it took three years, six months in San Francisco and hundreds of revisions to our pitch deck," she says.

Perkins says change requires action.

"It comes back to what every VC firm and every company can do to ensure that we're doing the right things to encourage diversity, make it clear what behaviour should and shouldn't be tolerated, and have clear ways for dealing with any issues that do arise."   

*Name changed to protect anonymity. 

If you would like to talk to someone about sexual harassment call:1800RESPECT (1800 737732)

The reporter attended DWEN in San Francisco as a guest of Dell.

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