May 12 2008
Anderson Entrepreneurs Conference — Is it Harder for Women to Raise Venture Capital?
On Friday, I moderated the Idea Validation panel at UCLA’s Anderson School Entrepreneurs conference. Thanks again to the four panelists – Jimmy Henricks and Patrick Dillon, co-founders of www.collarfree.com; Dr. Vladimir Ban, CEO of PD-LD, Inc.; and David Silver, author of Smart Start-Ups and President of Santa Fe Capital Group – all of whom pulled from their own experiences give helpful advice on how to think about validating a startup business idea.
One discussion item really stuck with me after the panel – whether women entrepreneurs face a tougher road when trying to raise venture capital. A panelist made the observation that women have a tougher time raising capital than do men and in a slightly tongue-in-cheek way, advised women to partner with men if they were to hope to raise funds. Several members of the audience disagreed strongly including an ex-associate from a Sand Hill Road VC and a fund-to-fund expert who made the point that “VC’s want to make money and couldn’t care less what you look like if there is a good ROI to be made.” I tend to agree with the audience but would love to hear what others with personal experience have to say on the point. I know several woman entrepreneurs who have successfully navigated the VC process and don’t recall any hearing about any specific bias against them. But I may be blind to the issue.
The panelist also cited data that supported his point. I do know there are fewer female venture funded entrepreneurs than there are male, but I’ve never seen any data that supports the claim that it’s the VC process that creates the disparity. If anyone has data, I’d love to see it.
Stu, first off, thanks for moderating a fantastic panel and conversation. Thanks to the audience also for asking such great questions.
On the point about women raising funds. I think the point was made as a generality. Making generalizations is of course a necessary evil. Necessary because it speeds conversation, evil because the points they promote support only a portion of the population, generally in relation to a standard bell curve. Such is the problem with all generalities. It’s the same reason they say a 10% return in the market is average, why they say most businesses fail in the first year, and why they say the sky is blue (sometimes it’s red, grey, or black).
Personally, I think women may have a harder time raising money. An audience member came up to me after the panel and asked me if I thought Asians have a harder time. I said that if language is a barrier, maybe, but that it all depends on the business, and as pointed out above, the expected ROI & leaders. I also think young people have a hard time raising money. Jimmy and I are 27 and 28. Angels and VC firms have as hard a time with that as I imagine they would if we were anything else
than their ideal “average” business founder - the 35-45 year old white male with 2 kids, significant personal savings, industry experience, past start-up success, and a great pitch.
Bottom line, the world is fair and unfair. Fair because there is a pretty clear rule book, unfair because if there are 100 rules, the 20 that apply to me may not be the same 20 that apply to you.
The world is changing as business flattens. In the future everyone will have the same opportunities, and most will be judged on concrete data. Today we still have some leftover thoughts from old school business. That’s a reality (perception is reality) that entrepreneurs must face. Sometimes reality sucks, but as vicious as it may seem, reality helps us prepare better.
Feel free to contact me & thanks again everyone that attended our panel!
-Pat
patrick@collarfree.com
Your take on younger people having more trouble with investors is interesting. I’ve heard others say the same thing, yet I remember Michael Moritz from Sequoia Capital saying that he greatly prefers the 20-something entrepreneur with a great idea and and excess amount of passion. His point (if I’m recalling correctly) is that the 40 year old parent has too many other things that bring satisfaction and create a balanced life. Clearly, different investors will have their own preferences.
Cool, I’ll call Michael and mention you said to give him a call. Thanks
Stu,
I attended the panel as well - great job. I sort of dismissed the “VCs don’t back women” comment at the time it was made, and didn’t hear anything in the follow-up that made me think it was (all due respect to the panelist) a bigoted stereotyping generality. If he said something like that in an Anderson classroom and not a more polite public conference he’d have a brawl on his hands.
That being said, there is no doubt that strong gender bias exists in corporate America. Professor Cockrum taught a business ethics class when I attended Anderson (’00) and the case on gender bias remains one of the single most memorable classes I took in my 2 years there. Its a complex issue that can’t be done justice by a dude in a blog comment, but I remember one classmate who came out of an Ibanking background talking about the glass ceiling that exists in banking for women who choose to be moms. Interestingly enough I ran into that classmate a few weeks ago (8 years later) and she’s now a mom working for one of LA’s leading VC funds, struggling (as all parents do) to find a good balance.
My experience with venture capitalists is that they are full of homespun wisdom and rules of thumb about what makes a good investment candidate. My uneducated guess is that this happens because there is simply such large amount of idiosyncratic risk in investing in early stage companies, and rules of thumb are one way to try codify the art (or explain away luck). I loved your “Moneyball” analogy at the panel because of the similarities to drafting 18 year-olds to play major league baseball. Making feature films is another analogy that comes to mind. For sure, many of the VC rules of thumb can be boiled down to “I want to invest in people who are going to work their asses off to be successful.” So maybe *some* VCs avoid women, just like some avoid dads and some avoid people coming from academia or the public sector. I’d wager that the best VCs are experts at sitting down to every pitch with an open mind.
You always enter a room full of biases, no matter who you are.
It’s their money, so of course they’re going to play hard ball with it.
When you come up to the plate, they expect you to strike out — whether you’re short, tall, thin, stocky, young, old, new, or a “little too seasoned.”
The trick is to hit the ball out of the park.
Then suddenly it doesn’t matter so much what you look like. They’ve just figured out what you ARE — and what you’re capable of.
I’m female, and I don’t care what that says to people before I step up to the plate. All I care about is what they think after I’ve hit the ball out of the park.