From the Ellen Pao $70 million gender discrimination lawsuit against venture capital giant Kleiner Perkins Caufield & Byers to the rise of women in tech initiatives, this is a time when the Gender Gap in technology is getting a lot of attention.
And rightly so: if you are a woman thinking about entering the startup world, some key facts can be discouraging. Only 3% of computer science grads in the US are women and the workplace is not very welcoming to both genders (according to the hip documentary Code: Debugging the Gender Gap); additionally, a recent Babson College study found that only 15 percent of VC-funded companies have a woman on their executive team and, even worse, only 2.7 percent of them have a woman CEO.
On the bright side, the same study also found that venture capital firms with women partners, are twice as likely to invest in companies with a C-level executive, and more than three times as likely to invest in companies with women CEO’s.
Armed with these statistics, I caught up with Kathy Downing, Managing Director of Golden Seeds, one of the largest early-stage venture funds with more than 275 members who have invested over $70 million in more than 65 women-led enterprises.
I wanted to learn more about this growing movement of women investing in startups led by women.
Kathy Downing is a successful former Vice President of Sales at Oracle now turned into Angel investor, with a passion for helping create more gender equality in the tech world.
Women Control the Bulk of Purchasing Decisions, Yet…
Kathy tells me that Golden Seeds was created 10 years ago by seasoned women executives in Wall Street who knew first-hand the issues facing women in male-dominated business environments.
Their mission, since inception, has been to fund promising startups with gender diverse teams. In fact, besides the social good aspect of these investments, Kathy says: “Extensive research shows that gender-diverse boards produce better returns on equity”.
It all makes sense if we take into account that women buying power in the U.S. is already massive ($7 trillion in consumer and business spending) but it will grow even more in the next decade when 2/3 of consumer spending in America will belong to women. Yet, 91 percent of women say advertisers do not understand them… So, as the modern marketplace becomes more female-driven, female leadership becomes increasingly critical to business success.
Are You a Female Founder Seeking Capital?
In this case, you might want to consider turning to women investors who make their priority to seek women led startups.
Some of the basic criteria the Golden Seeds and similar organizations use to evaluate a startup are the following:
- Your startup needs to have a woman founder, CEO or in a C-level position;
- Your addressable market needs to be in the $billion range;
- Your innovation needs to be clearly formulated and so does your go-to-market strategy;
- You need to show a good understanding of the competitive landscape;
- Your financial projections must illustrate well thought-out assumptions;
And, the most important component of all: The Management Team. This is probably the most overlooked yet the most critical element for any startup seeking funding. In fact, you can have a great idea and a wonderful strategy, but what makes an idea grow into a successful company is people. Experienced investors are well aware of it and rarely, if ever, “bet” on a company with a weak team.
Before ending my conversation with Kathy, I still need to ask her what is the one thing that seems to hinder women in tech the most?
After a short pause she answers: “Women techies are often better than they think they are, but they sometimes have more self-doubt than their male counterparts. Therefore”, she continues, “a good piece of advice to women entrepreneurs in the technology world is to get out there, network as much as possible, believe in yourself, and it is likely that you will find that you are as competent as anyone”.
As a female founder seeking capital, you will find that, when you turn to women investors you will be well received. Even if you don’t get funding you might still obtain invaluable support and mentorship from women leaders who want to see you succeed.