The Fight for Funding: Why Now is a Good Time to be a Female Founder
From Susan Lyne, President and Founding Partner of BBG Ventures
I've read all the same stories you have—about companies led by women getting just 2.2% of total venture investment last year, about female founders being sexually harassed by VCs while seeking financing. In fact, I frequently share those stories at conferences, on panels, in tweets. Maybe too frequently. Because the real story of the last few years is that, despite all the bad news, women are building companies at a record pace.
They are leaving great jobs where they make enviable salaries. They are turning down impressive offers when they graduate from business school. They are stepping out of successful startups where they have valuable equity left to vest. They do it because they believe they can build a platform, product, or service that will make some aspect of daily life better. AngelList just published a list of 1,300+ companies founded by women that are currently hiring—and we've seen or been contacted by 2,500 since we started BBG Ventures 3.5 years ago.
Their conviction and optimism are infectious. They are not waiting for more women to become partners at VC firms or for the statistics on VC funding to get better. They are joyfully and tenaciously stepping into the breach, fully cognizant of the odds but confident nonetheless.
They include women like Shanna Tellerman, who left Google Ventures to build Modsy, a home design platform that uses 3D rendering and computer vision technology to let you see your living room or your bedroom fully redesigned. Like many of the women entrepreneurs we've met, Shanna's idea for Modsy was born out of frustration. She and her husband moved into a new apartment, and a year later she still hadn't pulled the trigger on purchasing furniture because she couldn't picture it in her space. She set out to build something that would allow her to "try on" furniture before buying, and she ultimately created a platform that transforms the whole experience of designing your home.
And women like Shan Lyn Ma, who founded Zola, a wedding company that reinvented the wedding planning and registry experience. Like Shanna, her inspiration came from personal experience. The year when it seemed all of her friends were getting married, Shan spent endless hours tracking down their multiple registries, often leaving those sites in frustration because she didn't see anything she was excited to gift. Many of those couples were already living together, with their everyday items taken care of. What they needed, what they wanted, didn't align with popular registry items of the past. So Shan and her co-founder, Nobu Nakaguchi, built a universal registry that allows couples to register for services and experiences as well as products, and to delay receiving them until they're ready to actually use them. More recently, Shan and Nobu expanded Zola's offerings to include a full set of wedding planning tools. Every step of their development has been done hand-in-hand with users, making it both the most successful and highest-rated company in the space.
Like the others, Amy Chang built Accompany because she needed it. While running Google Analytics, she often found herself in enterprise sales meetings without enough information about the decision makers in the room. Why couldn't she get an instant cheat sheet on any person or company she was meeting that day? When she couldn't find such a product she decided to build it. Accompany is an intelligent, virtual chief of staff—with a real-time database of over 300M people and 20M companies—that integrates with your calendar to make sure you are never, ever unprepared for a meeting.
Audrey Gelman instinctively believed that women needed a third place – a protected, inspiring, physical location that would function as both a co-working space and a social club, where you could create a cross-sector network, hang out between meetings, or meet a new best friend. And she was right. In October of 2016, The Wing opened its first space on Ladies Mile in New York, the site of many of the early 20th century women's clubs that emerged during the suffrage movement. Their 250 launch members have grown to several thousand, with 5X that number on the waitlist. They recently opened a third location in Brooklyn and DC opens in the spring, with three more city launches on the boards before the end of the year.
These are just a few examples of the broad range of companies launched by women in the last few years despite a sometimes-distant, sometimes-hostile VC environment. Crunchbase, which has been tracking the startup gender mix for several years now, counts 6,791 companies with a female founder that raised capital since 2009. While it's only 17% of the total number of companies that have raised money, it's a big base from which a few game-changing leaders may emerge.
There's no question that venture capital has a disproportionate impact on the economy, and more specifically, on the companies driving economic growth. According to a University of Florida study (pdf) that looked at tech IPOs, 58% of companies that went public from 1980 to 2015 were VC-backed. The fact that women-led companies get so little venture capital puts them at a serious disadvantage, so it's important to maintain a healthy outrage about the gender gap in funding. But the biggest driver of change will come as a result of the entrepreneurs who've ignored the statistics—women who trusted their instincts about what people needed, who tested and iterated until they got it right, and built companies that are resonating with consumers.
On November 17, 2017, Katrina Lake followed a long tradition and rang the NASDAQ Opening Bell in celebration of her company's IPO. StitchFix, the company she founded and leads, is a personalized styling service that is reinventing shopping through a combination of data science and human oversight. Launched in 2010, Katrina raised only $42M on the way to building a billion-dollar company, a fraction of what most venture-backed companies pull in as they grow. Stitchfix was the only tech company led by a woman to IPO in 2017, but we are tracking at least a dozen women-led consumer startups that could follow StitchFix in the next few years. That will have a bigger impact on funding women than all the studies and conferences and hashtags combined, because the biggest driver of change is FOMO: fear of missing out on the next unicorn.
So yes, let's keep up the pressure on VC firms to add female partners to their investment teams. Let's keep reminding the world that women will be at a disadvantage as long as their access to capital is limited. But let's put the lion's share of our energy into making sure those very promising companies exit big, and into encouraging all the smart, ambitious young women with big ideas to go for it.