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?
Nope.
Well, it's gotta mean something, right?
Nope.
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.