It’s a rough world out there for women startup founders. Only 2% of last year’s $330 billion in venture funding in the U.S. went to companies founded solely by women, according to PitchBook. Meanwhile, only about 5.6% of VC firms in the U.S. are women-led, according to Women in VC’s 2020 report.
Anecdotally, women founders often tell tales of struggling to get buy-in for billion-dollar ideas from potential investors. At the same time, stories like the recent implosion of one-time Silicon Valley darling, Fast, a one-click checkout company led by Domm Holland, spotlight the readiness VCs seem to have to throw money at white men, even when business fundamentals are questionable.
“The saddest thing for me about @fast is that I know plenty of incredible women with healthy revenue unable to raise VC, building solutions for half the planet,” British Jamaican entrepreneur Sharmadean Reid tweeted Wednesday. “Every time I would come on Twitter and see Domm I would think maybe I’m doing something wrong.”
The plight of women founders was on the minds of participants at the Female Founders Forum, held recently by the NYU Entrepreneurial Institute. Bringing together more than a dozen seasoned entrepreneurs and investors in the startup ecosystem, the event touched on some of the special challenges women face and how they might be able to overcome them.
“The men are just better at bullshitting,” observed Melody Koh, a partner at seed stage investment firm NextView Ventures. Speaking on a panel during the virtual event, which included about 130 participants, she said if male founders are achieving 80% of a target, they’ll talk like they’re hitting 120%.
“I don’t want to make a gender-stereotyping comment,” she added. But “I’ve seen some of the women founders—very good at executing—and then not as good at packaging what they've got to position themselves in the most favorable light.”
Although female and minority founders seem to be getting no shortage of media attention these days, the interest hasn’t necessarily translated into more funding. Speakers at the female founders event noted that a lack of confidence can still be a stumbling block for women when they’re negotiating with investors.
"Women historically raised less funding for the same ideas, and we're more conservative about our financial projections,” said Alexia Akbay, the founder and CEO of Hawaii-based startup Symbrosia, which is aiming to reduce methane from cows. “So I would say just go big. If you’re going into VC, it’s probably going to be the same amount of dilution each round, regardless of really how much you’re raising anyway.”
Gauri Manglik, the co-founder and CEO of San Francisco-based startup Instrumentl, which helps nonprofits with grants, advised women to “reframe the conversation.”
“One of the things that sucks with fundraising is just like the power dynamics, especially as a woman. That can be not fun,” she said. She added that she tries to think about how “this business is going to be great,” and asks herself “Is this the kind of person that I want to get rich with me?”
Other panelists at the forum included early-stage investors Jenny Fielding, Samara Hernandez and Lisa Burton O’Toole, VP of HearstLab, a program that fosters startups led by women. The event also featured a Q-and-A with founder turned investor Rachel ten Brink, of Scentbird, who was interviewed by Y Combinator’s head of outreach Kat Mañalac
Some of the investors spoke of trying to balance a desire for fostering more growth for women and minority founders while also simply looking for the best possible projects to back.
However, often compelling startups are launched by women and other founders whose backgrounds differ from the stereotypical Ivy League-educated white male from a middle to upper class background. Fresh perspectives and lived experiences can be a hidden asset, providing insight into new markets and opportunities, some of the investors noted.
“We invest in the best founders, period,” said ten Brink, the general partner and co-founder of Red Bike Capital, which launched in November 2021, “we don't invest through a gender lens, we don't invest through a Latino lens.” Ten Brink, originally from Costa Rica, co-founded Y Combinator backed Scentbird in 2013, a monthly fragrance subscription service startup; while CMO (she left in 2019) Scentbird raised $29 million.
“Having said that,” ten Brink added of her investment lens, “if you look at my numbers, 79% of our startups have a female or diverse founder.”
Hernandez, founding partner of Chicago-based Chingona Ventures, said an investment opportunity, Suma Wealth, resonated with her in part because of her background. Hernandez immigrated to the U.S. from Mexico as a child. Suma Wealth, in which Chingona led a pre-seed round, is a financial wellness platform geared for Latinos in the U.S.
It wasn’t just that it was a Latina-founded business, however, that interested Hernandez. The company also had a strong value proposition and other compelling qualities — which just so happen to be often found in women and minority-led startups.
“‘Chingona’ means “bad-ass women” in Spanish,” she said. “That’s what I named my fund after. So we look for this, like, chip on your shoulder, an ability to go against all odds.”