The Truth About Women And Funding: What It’s Really Like And Where Do We Go From Here?
Join Leadership editor Kathleen Davis with Anu Duggal, the founder of FCubed (Female Founders Fund) and Kathryn Tucker, CEO and founder of RedRover, on Friday, March 6th at 11 a.m. ET for a discussion about the state of funding women-led startups.
Photo: Oleg Golovnev via Shutterstock
The statistics paint a clear and discouraging picture. Women-owned businesses are growing faster than the national average and women-led, venture-backed companies bring in more revenue than male-led companies on average, yet women entrepreneurs still aren’t able to find funding at anywhere near the same level as men.
We’ll talk with Anu Duggal, the founder Female Founders Fund, a firm that invests exclusively in startups with women founders as well as Kathryn Tucker, CEO and founder of RedRover, who has navigated the venture capital landscape as an entrepreneur about why women-founded startups aren’t getting funded and what’s being done to fix the problem.
Join the discussion live on Friday March 6th at 11 a.m. ET by adding your questions and comments below.
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In my case, I was coming to tech from the film business where I had taken a number of projects from start to finish. So, in a way, I wasn't a first time entrepreneur. Those movies were in a sense small companies that I shepherded from idea to market.
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So when I went in to meetings, I could speak to having the spark of an idea, how I would execute it and then proof in the market.
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I was also pitching a product missing from the market -- and much needed. The investors had the need for the product personally so they were motivated and the deal was done quickly.
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I would say that more and more founders are raising angel or seed funding. In terms of the funnel, it is much much harder to raise institutional capital. At that point, the company needs to have real metrics, traction and revenue. That is the point where I see more companies struggle.
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A female founder and I were talking about how much more proof women have to have for their ideas. The rigor expected is intense, which speaks to Anu's point.
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In fact recently there was an MIT study that showed that male voices are funded over females.
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A Harvard Business School study last year showed that when presented with the same pitch, investors chose the male entrepreneur’s—even when the content of the pitch was the same. www.hbs.edu
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There is a theory that the lack of previously funded women-founded businesses ends up being a self-perpetuating cycle because venture capitalists make decisions based on similarities to previously successful businesses they funded. How do we break this cycle?
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Something I've been wondering in the whole pattern recognition debate is whether VCs haven't seen the pattern recognition of failure yet. They answer to their investors -- their investors are comfortable with 27 year old boys in hoodies failing. Is it easier to answer for a pattern of failure those LPs have already seen?
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That's such a great point! It makes me wonder--since there are so few women getting funded does it put the pressure on the ones there to be twice as good. Are women entrepreneurs not allowed to fail?
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I wouldn't put it that way so much as I'd say that it is a factor in less funding for female entrepreneurs.
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In VC meetings I've had intense scrutiny from female VCs because if they champion you, the factors reverberating in your success or failure have amplified effects for them.
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I agree that the pattern needs to be broken and I think based on the data I mentioned above, we are starting to see change in this pattern, both on the investing side as well as the entrepreneurial side. Even amongst our own portfolio - we have seen some of the top VC's on the east and west coast investing in female founders. In addition, I also see more and more women from great companies like Google, Facebook, Twitter, Gilt, and Rent-The-Runway starting companies. Having this exposure to venture-backed companies also gives them a very valuable perspective when starting their own.
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What about products that are directed towards women? Do you find the traditional venture capital landscape to be less interested in new female-oriented products?
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No, not at all. If you look at some of the largest venture-backed companies built here in NYC, they are all targeting female consumers - Diapers.com, Gilt, Rent-The-Runway, as well as Etsy amongst others. I think VC's do recognize that the female consumer base is very strong - but in order to invest in this, there needs to be a strong team to back.
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There are so many more women now with relevant backgrounds who understand what building a start-up is like and can use those learnings to start their own. Five or ten years ago, this wasn't the case.
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In our own portfolio, we have five women who are all ex-Quidsi employees. I can see how the training at Quidsi has translated into their approach on their own companies - much more data-driven and with a strong understanding of key goals and metrics.