TOKYO (TR) – An online survey conducted over the summer revealed that around half of all female employees involved in start-ups have experienced sexual harassment.
This is especially true for female entrepreneurs, whose start-ups are tasked with raising funds from individual investors and venture capitalists rather than financial institutions.
Public broadcaster NHK (Aug. 28) wonders what is happening in this industry, one that is expected to act as a catalyst for the Japanese economy since they aim to create innovative businesses take risks and aim for growth in the short term.
To find answers, NHK speaks with women in the industry, who regale the broadcaster with stories about inappropriate remarks and physical contact and being forced into unwanted relationships.
“He didn’t even look at the business plan I had prepared”
Miho Matsuzaka is one woman who experienced sexual harassment as an entrepreneur. “I want the current state of the industry to change,” she tells the broadcaster.
For some time, she has wanted to establish a counseling business for married couples after learning that the deterioration of relationships between couples also affects work performance, and wanted to use this to solve the problem.
“In the United States, it is common for couples to go to couples counseling if they have problems, but in Japan it is not taken seriously, and the divorce rate is increasing rapidly. I wanted to spread this in Japan, so I aimed to develop my business.”
Start-ups are generally raise funds from individual investors and venture capitalists rather than financial institutions. It was at this point in her business development that Matsuzaka suffered problems.
One time, while explaining her business plan to an investor, she was met with comments that were hard for her to believe.
“A well-known private investor in the industry said to me, ‘I’ll invest in you, and I’ll pay you 1 million yen a month, so let’s become lovers,'” she remembers. “I was shocked that he didn’t even look at the business plan I had prepared, and that I had to do such things to get investment.”
“He suddenly kissed me”
After that, she repeatedly suffered harassment in her interactions with other investors. This included being asked to provide sexual favors.
“Even when I said I wanted to talk about work, [the investor] would change the subject and ask me for a date, and when I arranged to meet him to show him my business plan, we ended up eating there, and he suddenly kissed me afterwards. If he had simply refused to invest, I would have thought, ‘I’ll try again,’ but when he asked me for something sexual in return, I was heartbroken.”
Matsuzaka tried to talk to acquaintances in the industry, but they told her, “You’re lying to try to humiliate the other person,” and “You’re just paranoid,” and she became increasingly isolated.
“I was left alone, and everything I thought I had — money, connections, health — was gone,” she says. “I thought my life was to start a business, and at the time I was very confident and thought I could do it and it would work out, but even though I still can’t give up on my dream, I can’t [make this work], so it’s very painful.”
As her distrust of the industry grew, she developed symptoms of depression and had no choice but to give up on starting a business altogether.
Forced into unwanted relationships
NHK wonders: How widespread is this kind of harassment?
In an online survey on sexual harassment in the start-up industry released in July, 47.7 percent of 153 women who responded said they had been sexually harassed within the past year. For female entrepreneurs only, the figure rose to 52.4 percent.
In addition to inappropriate remarks and physical contact, 30 percent of the victims were forced into unwanted relationships, or quid-pro-quo sexual harassment, where they were forced to give something in return. The perpetrators were mostly people in powerful positions, such as investors or business partners.
Harassed by a business partner
One survey respondent, a woman in her 30s who served as vice president of a start-up, said she had been harassed by a business partner.
“When we held an event, the president of the sponsoring company came and called me out when no one else was around,” she says. “He said, ‘Let’s take a commemorative photo,’ so I agreed, and he suddenly kissed me and took a photo with me. It was a shocking experience for me, as it happened to someone I’d barely met before.”
A woman in her 20s who started a business as a student said she had been asked by investors to marry her or had her hand around her waist on multiple occasions.
A female student entrepreneur remembers an encounter six months ago. “During a meeting, a venture capitalist said, ‘I’ll give you a shoulder massage,’ and touched my chest from behind. The assailant himself didn’t seem to feel any guilt, and sent me trivial messages like, ‘How’s business going lately?’ I still have flashbacks to this incident, and I’m tormented by regret and regret for not going to the police. This is not an issue that can be dismissed just because it’s the start-up world, but I want people to have a sense of compliance as a matter of course.”
Another female student tells the broadcaster, “Even though I say I want to develop a generative AI business, I’m often told, ‘You’re a girl, so don’t try so hard to start a business, just get married,’ or ‘You were born pretty, so why don’t you start a beauty business?’ A famous private investor once told me, ‘I don’t think you’ll scale because you’re a woman,’ and I couldn’t show up to any investment events he hosted, so I thought one of my chances of receiving investment had disappeared.”
“You’ll be crushed”
Many people also said that the problem with trying to deal with sexual harassment and prejudice against women is the structure that can have a negative impact on the growth of a start-up.
Amina Sugimoto has raised hundreds of millions of yen and is developing a business related to women’s health.
She consulted with other investors and entrepreneurs about the sexual harassment that a female member of her company experienced from an investment company, but was advised that “it’s better to keep quiet if you want to continue growing your business.”
“Most of them told me,” Sugimoto says, “‘They are powerful people in the industry, so don’t make them angry, you’ll be crushed.’ If you don’t build a good relationship with investors, it will affect your evaluation when you make your next big investment or deal, so there is an invisible power relationship. Also, the level of the Japanese start-up industry is so low. Even if they say cool things, in the end it’s only at the [Japan] level, so I wonder if it was a mistake to start a business in this country.”
Start-ups grow by repeatedly raising funds from investors, and usually aim for an initial public offering (IPO) or merger and acquisition (M&A) in about 10 years, but only a few make it this far. Some people say they hit an unexpected wall just before it all ends.
A female start-up CEO preparing to go public tells NHK that when she tried to appoint a trusted female member to a management position she was met with strong opposition from the person in charge of the external agency that reviews the company for the IPO.
The female start-up CEO says, “I was told, ‘Women are not good at looking at things from a bird’s-eye view, so they can’t be managers,’ and ‘Women are at high risk of embezzling money when they are in financial difficulty because they are raising children and caring for the elderly.’ I think she may have good intentions, but I was surprised and uncomfortable with such strong prejudice.”
However, since the review by this external agency will affect the start-up’s corporate value and evaluation when it comes to going public, she says that she cannot ignore it even if she thinks something is wrong.
“If I make him angry,” the same female start-up CEO says, “it could affect our major fundraising and IPO, so I am very nervous about how to respond. Not only investors but also these external agencies are like gatekeepers for the growth of a start-up, and unless these people are convinced, we cannot move on to the next stage.”
“Small, male-dominated world with little diversity”
The aforementioned survey was conducted by Takanori Kashino of the University of Chicago. He says there are three reasons why sexual harassment is so prevalent in the start-up industry: gender-based prejudice and discrimination; power balance within the industry; and lack of protection measures.
“There are still strong prejudices against women and social norms about how women should be in society,” says Kashino, “and there are quite a few people who question or belittle women’s abilities. On top of that, the start-up industry is a small, male-dominated world with little diversity, which is likely to exacerbate discrimination and prejudice.”
The ratio of men to women in the start-up industry is highly skewed. For example, in venture capital that invests in startups, only 7.4 percent of those with investment decision-making power are women. Further, only 2% of newly listed companies have female presidents.
In recent years, start-ups have been expected to act as a catalyst for the sluggish Japanese economy. As full-scale support begins, such as the government announcing that it will increase investment to 10 trillion yen by fiscal 2027 as a part of its Five-Year Start-up Plan, Kashino points out that immediate measures are needed.
“The government is also actively trying to increase the number of start-ups,” he says, “and a number of entrepreneurship programs aimed at women are being launched. In recent years, we’ve seen more women entering fields that have previously been male-dominated. If we continue as we are now, with only measures to promote startups and no protection measures for entrepreneurs, I fear that the number of people who become victims will increase.”
