I have the utmost respect for the VC community. VCs effectively play the lottery with billions of dollars. They have tremendous responsibility and pressure to make the right bets. I have incredible investors; They stepped outside of the norm and took a risk on me and my business. In fact, recently Venrock was called out in this Patriot Ledger article as one of the investors “doing their part to help change the ratio and fund more female founders.”
All the books I read about the VC world being a scary process—and I’ve read just about all of them—were bs. I have found that if you are confident (a women or man), with a well thought out business plan and product and a killer team, VCs will not only treat you with kindness but will also show you tremendous respect. You may not get funded, but they are the furthest thing from scary. That being said, the limited numbers of VC-backed female-led startups is obvious and warrants further exploration.
It starts with a dream
I believe that the underrepresentation of women in business starts long before women knock on VC’s doors. The root of the problem starts at home and in schools, where girls are raised lacking the confidence to believe in themselves. It starts with a child’s dream. We’ve come a long way, and girls are increasingly dreaming of being business-women beyond secretarial positions, but the dream of leading at the top still alludes most. Quite simply, girls aren’t dreaming of being the CEO or president.
Aside: That being said, I am all for dreaming to be a stay-at-home mom. In fact, on the other side of my own journey I dream of staying at home and raising a litter of adopted kids on a boat that sails around the world with a school of dolphins that circle the boat and toss the volleyball back up on to the boat when it goes overboard. (Yes, a volleyball court on my boat with dolphins is my dream.)
The VC funding process
Another fundamental reason that women are not closing deals as much as men is the VC process itself. According to a recent blog post from Sean Jacobson of Emergence Capital, VCs are pitched, on average, 1,200 deals a year. They take ~500 meetings. They do due-diligence on ~50 and ultimately invest in about 5 deals year. My mentor once compared it to the trying out for the NBA.
The issue is not that the odds are steep, it’s that the odds are stacked against women from the get-go in the VC funding process. When pitching for 6Sense I was getting several meetings a week, analogous to being invited to try-out. But to make the team I still had incredible odds to beat. VCs are looking for the safe bet with the highest returns. They don’t invest in deals they think will have a $100M or $500M exit; They invest in billion dollar companies. Since, according to Angel Capital Association, returning entrepreneurs have a higher success rate than first-time ventures, (36.9% vs. 25.3%), this means VCs take meetings with repeat entrepreneurs. And given that the great majority of entrepreneurs are men, VCs invest in the same men. It’s a vicious cycle. To break the cycle, I’d like to see repeat startup founders partnering with new women co-founders.
Let’s empower our girls with a billion ounces of confidence that turn into billion dollar ideas. How can we do it? My aim is to continue using this blog and sharing my own experiences as, I hope, inspiration. On a larger scale, let’s focus on pushing the boundaries of girls’ dreams by investing in and supporting STEM and leadership programs to kickstart great careers. We all need to do our part and help make the process equal for all venture seekers.