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Female Founders: What the numbers mean and what they don't

Last week, there was a Business Insider article measuring the percent of female founded companies that NYC seed funds invest in.  

Brooklyn Bridge Ventures came in first, with a whopping 61%.  

Lerer Ventures was second, with just under 20%.  

So, clearly, I'm making some kind of a portfolio-wide bet there, right?


Well, it's gotta mean something, right?  


The funny thing about stats is that you can basically come up with a stat to justify any argument or position--and the whole female founders in tech conversation has a ton of numbers that people put out there as various types of proof and justification, or blame.

You would probably be surprised on where my views are on some of those conversations.  

Take the most widely used number--that way fewer women are getting venture funding than guys.  That, statistically, is true.  It also doesn't take into consideration many important factors:

One, venture backed companies are a tiny hiccup in the grand scheme of entrepreneurship.  Most companies don't ever raise venture capital and they do just fine.  I scratch my head over why raising venture is put on such a podium.  Do we discount the billion dollar company that Sara Blakely built at Spanx because she didn't raise venture, instead opting to start the company with $5k of her own cash?  That's just silly.  If we look at the larger pool, women run around 30% of the businesses in the US, and they equally co-own just under 20% on top of that.  So women own or co-own almost 50% of all the businesses in the US.  That's a much better picture of female entrepreneurship than the 2-4% of venture capital dollars going to women.  

The main driver of the skew towards men getting venture capital, statistically, is that far more men are pitching.  Of course, you can take into consideration all sorts of things like encouragement, perception--like what would you think your chances were if you see that a firm has never funded a female--but the fact remains that once you actually pitch, your chances don't appear to be any worse than when guys pitch.  I guarantee you that if you ask any of the firms listed in the Business Insider article, and ask them if their dealflow is 15-20% women and they'll say no.  That means you actually have a *better* shot, statistically, of getting VC investment at these firms, statistically, once you actually pitch.

Once again, that's all stats and doesn't really explain anything.  I don't think these funds are actually trying to fund by gender.

What I do think is going on is that men and women start the pitch process at different stages.  I think I can count on one hand the number of times in my career where a woman has pitched me with "just an idea" that wasn't built yet.  Guys, on the other hand, do it all the time.  I believe that women seem to succeed in the funding funnel at a higher rate because they're actually pitching later in their development--when they've got a product, more research, more customer traction.  There are all sorts of socialized norms that play into why--perceptions of risk, failure, expectations, etc.  Guys, in general, feel pretty invincible most of the time and don't mind getting turned down for their idea--and they'll come back again and again showing whatever progress they made.  

In my own case, I do tend to have a bias--and that's industry insight.  I really like it when an entrepreneur has a unique perspective on the industry he or she is working on.  Wiley Cerilli of Singleplatform had been working as the head of sales at Seamless for 10 years.  Chantel Waterbury of chloe + isabel spent 15 years in the jewelry business and had been a Cutco salesperson.  Adam Sager at Canary had worked in and around the security industry for over a decade.  Ellen Johnston of Makr has a decade of senior creative experience.  I tend not to back the type of founder who thinks that code and design alone breaks down all industry barriers--which means that the average age of the founders I've seeded has been around 33.  

If you go for people with some experience and insight, you are definitively going to get more females.  That's because if you're funding 21 year olds, there tends to be less industry insight present so what makes up for it is a build.  They made something that seems to be working as opposed to knowing what will or should work.  Because software development skews so male, the younger you fund someone, and you make that builder versus expert tradeoff, the more likely it will be that you're funding guys.  Women in tech, from what I've seen, tend to become entrepreneurs when they feel like they've gathered up the experience to give them the right idea--i.e. later in their careers.  

So, if nothing else, my skew towards female founders probably has more to do with experience than gender.  

Another factor in my results has to do with my willingness to fund first time founders.  Only one of the 13 founders that I've backed in this fund, and none of the seven I backed at First Round, had previously been the CEO of a venture backed startup.  If you're only backing repeat founders, of course you're going to skew more male, because that's who founded startups in the past.

Lastly, six of the eight founders that counted as part of the BI study were part of mixed teams--where there were both male and female founders.  If it wasn't for those teams, I'd be right in the middle of the back with about 15%.  Why so many mixed teams?

I think it has a lot to do with the personality of the guys I've funded.  They seem to be much more open to sharing the spotlight, focused on building teams that come at problems from multiple perspective, and they think a lot about culture.  In other words, they have a vision not just for a product but for the company behind that product.  When you think ahead about what your company looks like, it gives me a lot more confidence that you'll actually be able to build it.  

So, before you label me (or congratulate me, which I think is the weirdest thing) as an investor that is looking or more willing to fund women, you should be applying the following labels first:


  • Experience friendly
  • First time founder friendly
  • Thoughtful team builder friendly


In truth, that's what's actually driving my investments.  I couldn't really care less what gender you are as long as you've got the ability to make my investors a big return.    

Where's the seed?

The other day, I met up with one of my favorite investors.  We talked about some deals we had done and this investor brought up how they weren't really doing true first money in anymore.  Instead, they said that entrepreneurs should raise 200-300k on their own and get something up and off the ground first with traction and that they'd rather wait to see where that goes.

That was on the heels of another conversation I had with an investor whose firm was about to raise a larger fund.  It was a big next step for them, but it also meant that putting 200k of 750k in a person and half a prototype wasn't going to be the kind of round they could do anymore.  They were effectively out of the seed game.

I've seen this happen over and over again in New York over the last few years.  Seed really doesn't scale--and like any good startup, VC firms themselves are looking for ways to leverage themselves and get to scale.  Picking out the one great entrepreneur out of the sea of way too early startups is incredibly hard, requires a lot of sifting, and you can't put that much money to work anyway.

So why bother?

It makes sense, except when I square it with my own personal experience.  Some of my best investments have been in this way too early stage.  GroupMe was done right out of a hackathon.  Canary barely had a prototype for just the hardware and hadn't done its record setting pre-sale yet.  Tinybop was just a guy and an idea.

The interesting thing out of those rounds is that many of them either struggled at the time to raise or would struggle today.  Many of the original GroupMe investors probably would see that deal as being too early if they were raising now--and the Canary and Tinybop rounds have a mishmosh of non-traditional investors and angels mixed in.  The latter two firms don't have any other traditional seed funds invested in them in their first rounds.  

The seed fund feels like a very temporary animal these days.  No one wants to stay at this level. Many of the people who say they do seed would never pull the trigger on a pre-product concept and they're looking ahead to raising a bigger next fund.  That means more staff, bigger offices and potentially bigger deals.

I think part of the reason why NYC firms don't seem to be staying at this level is our level of sophistication in building financial firms.  Finance is something we grow and scale here.  If you invest for a living and you're in that world, people will look at you askew if you say you don't want to raise a bigger fund next time around.  Investing in two people in a prototype for the love of the tech and because you like startups feels like a rarity these days.

Don't get me wrong, we do need bigger funds--but someone has to take risk early on.  That's been falling into the hands of the small startup funds--people who can't write bigger checks because they're just starting out.  It makes this super confusing and tough to keep track of for an entreprener.  "Who actually still does seed?" is a question I hear over and over.

Personally, I'd rather write that check than wait for tons of traction.  It's fun for me and particularly rewarding if you can help a company get off the ground at the way too early stage.  Does it scale?  Not at all.  Who cares?  I'm not playing that firm building game and don't care to.

That puts an extra burden on me to find like-minded coinvestors.  I'm happy to meet other folks in NYC who are willing to write checks and roll up sleeves in that way too early stage--when people will look at you like you're crazy in the moment and look at you like a genius in hindsight.  If that excites you and you're willing to put money to work next to mine, drop me a line, especially if we're doing the same thing, know each other, and haven't caught up in a while.  

Why I applied to the Union Square Ventures analyst position

They say you can't go home again.  I think "they" are wrong.

After much thought and consideration, I've decided that the best move for my career right now is a second stint as an analyst at Union Square Ventures.  By the end of the day, I will have formally completed their analyst application.

Why now?  Why go back to a job I first took nine years ago when things are going so well for me and I'm running my own fund, Brooklyn Bridge Ventures.  

Well, that's part of it.  Things *are* going *incredibly* well.  After raising sizable follow-on rounds, both Canary and Floored have built, pound for pound, two of the best technical teams in NYC--especially around some really advanced computer vision work.  Tinybop's Human Body and Makr's initial iPad version were recognized as some of the most well designed iOS apps of the past year--and both have incredible new products coming down the pipeline.  SocialSignIn, just announced as one of the Techstars NYC companies in this cohort, is growing revenues and has their in-venue marketing solution operating across multi-unit chains, theaters and lots of other places where venue owners want a better relationship with their on location customers.  Ringly, the most design savvy wearables company focused on fashionable women, recently graduated from the Highway1 Accelerator and I'm thrilled to see how beautiful their soon to be launched first product is.  Versa has become the premier content marketing solution for real time responses to breaking news and trending headlines.  Orchard is helping more and more institutions everyday build and gain insight into portfolios of peer to peer loans with cutting edge tools.     

Given all that, I feel like I might as well quit while I'm ahead.  Why bother making any new investments at that point?  

I mean, sure, there are probably other interesting early stage investments to be made in NYC, across lots of different industries--and yes, I definitely could have raised another fund in the second half of 2015 be selectively adding a one or two more institutions and family offices, but there's always been this one nagging loose end in my career that I feel the need to address.

You see, the USV analyst position has always been subject to much competition.  Hundreds of applicants apply every time a slot opens up and those who take the position can say that they were the first choice out of a very dynamic crowd of people.

Except me.

I applied for the job before there was even an opening--even before Union Square Ventures was really on the map.  It was pre-Twitter, Tumblr, Foursquare, Indeed, etc.  

They weren't even considering anyone else...  so I beat out exactly zero people for the job.  I'd like to go back and win the job fair and square--to be able to hang my head high and say that I finished first out of a crowd of highly qualified applicants.  It feels lame to say, "Well, since I was the only one who asked about it and they kinda knew me a little, they took a flyer."

I'm very confident about my chances, especially since I'm undoubtedly the applicant with the most experience actually being an analyst at Union Square Ventures.  I mean, who's more qualified than me?  Plus, I already know lots of things about being at USV.  We share the same fund administrator doing backoffice financial support, and I know Brad's actual first name.  How much could have possibly changed in the last nine years?

Plus, it's a pretty cushy gig these days.  I mean, current analysts get a real desk.  Back in my day, our office was so small, I had to sit in the reception area and I had trouble convincing people I was a real analyst.  Oh, the deals I could find if I was working there with a real desk.  

Plus, the NYC ecosystem is so much more vibrant.  Back then, it was a big deal if you had ten people who could write code at your company.  The NY Tech Meetup was held in the back conference room of Meetup and 25 was a good turnout.  

I can't wait to have the pressure of being decisive lifted from me.  These days, I usually tell companies whether I'm in or out in the first or second meeting--and I won't even take a meeting if I know it's not a deal I can get excited about.  Being in a one-vote fund where you don't need to huddle up in a partners meeting to do a deal--totally overrated.  

Simpler times await, and I couldn't be more excited.  

And if you believe all this, I've got a bridge to sell ya.  Happy 4/1!

Seriously, though... it was a great job and you should totally apply for it.  Thanks to Brad, Fred and Kerry for providing me with a great experience oh so long ago.

How to Choose Your First VC

You've never run a company or raised money before.  Sure, you've built little projects and there was that lemonade stand when you were little, but this is for real.  Real money is showing up at your door and you're in the enviable position of getting to choose who you work with.

Even if you haven't gotten offers yet, your time is valuable and you can't pitch everyone.  You feel like you have a decent shot of successfully raising, so you want to prioritize who to pitch to first.

Here are five things you should consider when selecting which VCs to take on, and who to pitch in the first place:

1) Work with people who focus on early rounds.  Some bigger funds write lots of small checks and are great at it, others do it just as an exception.  My belief is that the more you do something, you get better at it, and you want to get known to be good at what you do the most.  If you slack on a seed deal and you rarely do seed, it's not a big deal, but to a pure seed investor, it's going to be of great importance.  The early stage comes with its own unique set of challenges, so you'll want someone who specializes on them.

2) The earlier you are, the closer you want your investors.  It's fine to have a few investors in your round who aren't local, but you should have some anchors in your own city.  In my career, I've done 19 investments in NYC and 1 in Boston, and I'll admit that I felt like I couldn't help the Boston company nearly as much.  Phone calls were no substitute for in person and when it came to hiring, my network simply wasn't as big up there as it was here.  

3) Talk to entrepreneurs they've backed before to see who really adds value.  There's a big difference in terms of impact between two investors in the same round.  Some investors really roll up their sleeves and others disappear after writing the check.  A lot of people market their value-add, but if you talk to multiple people that the investor is back, you'll get the real story.

4) Talk to investors who are decisive.  The best answer is a yes, and the second best answer is a quick no.  Your time is money, literally, and you can't afford to be messing around with someone who can't commit after tons of back and forth and meeting after meeting.  Sometimes, it's a function of process.  Single GP funds like mine or Highline run by Shana Fisher don't need to wait for a team meeting to say yes.  You're totally within your right to ask about process even in the first meeting.

5) Who helps you before a yes.  When you pitch, tell a firm how they can be helpful.  Maybe it's an intro to a customer or maybe it's helping you work through a particular issue.  Either way, I'm a big fan of givers--people who offer something before they get something back in return.  VC is a service industry and the best investors are always looking for ways to help.

6) Find someone who is willing to tell you what you need to hear or ask the tough questions.  Your first year is filled with lots of pitfalls and rabbitholes.  A great early investor shouldn't tell you want to do, but they should be willing to ask tough questions.  Sometimes, a timely, "Should we really be doing this?" can make all the difference, especially when you don't have a lot of money to waste.

7) Who can help you recruit?  Hiring great people is the most important thing you'll do early on--and you'll need all the help with that you can get.  Ask investors about how they've helped companies with their recruiting.  It's not something all investors do, but I think it should be a core skill given its importance to a company.

8) Find a lead.  Getting a round going requires someone willing to say yes before everyone else does, and risk social capital by telling others they're in.  "This could be a stupid idea, but I'm in and you should be, too!"  Lots of investors are willing to pile on, but you should start off by pitching true leads.  Ask investors for situations where they were the first yes and helped make a round happen with their intros.

9) Pick someone you can get along with.  Life's too short for assholes, and unfortunately, there are a lot of them who write checks.  

How did you pick who to pitch?  Who did you decide to take?  Did you make any mistakes?  I'd love to hear other criteria for your first round.


Creating Better VCs: An Accelerator for the Dark Side

These days, there are a ton of options for you if you're a startup seeking guidence.  Every single topic about running a company has been written about ad nauseum, there are incubators, accelorators, mentoring programs, events, talks, etc.  We've done a lot to make sure startups get all the help we can get--and it's leading to higher companies getting off the ground.

But what about investors?  How are we supposed to get better?

Not every potentially good VC previously worked for Fred Wilson and Josh Kopelman.  Not every VC used to get pitched by VC funds for a living and has seen hundreds and hundreds of VC pitch decks.  Yet, even I wished I had more guidance when I was first starting out.

Venture capitalists play an important role in burgeoning ecosystems.  They cross pollinate ideas--meeting with lots of different types of stakeholders.  They're the only ones whose job it is to meet with the founders, lawyers, technologists, corp dev folks, media, professors, and talent all at the some time, not just to look for deal flow but to improve the quality of the ecosystem these companies are going into.  Their guidance and network can also make these companies better.  So if you want to make better ecosystems, and better startups, doesn't it stand to reason that you could help the situation by making better VCs?

So what about a Techstars-like program for new VCs?  I'd love to be able to have Jim Breyer as my accelorator mentor now that has stepped away from the Accel day to day.  In fact, there are lots of VC partners that are winding down their roles that have had very successful careers--where is their knowledge going?  How can we leverage them to help create the next generation of VCs?

I'd love to be part of a program where the best VCs come in and share their knowledge on how they did their jobs and lessons learned.  In particular, I'm always trying to improve as a board member, but their aren't any programs or classes for that.

Just like a startup accelorator, a VC program would also really help on the fundraising side.  There are lots of people who like working with VCs when they're small and still hungry to build up a name for themselves.  Aggregating these types of fund investors would make fundraising a lot easier.  Maybe the program could even have a funding basket--they'll get you your first million bucks in your first $7mm fund.  In all liklihood, if you doled out a few million to first time funds that were being mentored by the best in the business, I'd venture to say your return might be pretty darn good.  You certainly wouldn't lose too much of your money, since these are diversified pools.

A program like these could help you work on your strategy and help get you up and running quickly on shared backend tools as well.   

I certainly would have signed up for it.  I still would.  There are a few programs out there like Kaufmann and InSite that get you exposure to the VC world through mentorship, but you join those programs and go work for other people.  What I'm talking about is how to get mentorship to launch and run my own fund.

All of these people in my inbox who want to get into VC need to go raise $10mm of institutional capital to fund 10 VCs over the next two years in a VC accelorator program.  It would be a great platform to get to know everyone in the business and learn the trade.