Women’s History Month just ended. There was a lot of kumbaya and bagels at events for female founders — but not much else at most events hosted by funds and diversity groups. (A few champions of female founders who are doing it right are highlighted below so keep reading.) According to Eileen Lee, founding Partner of Cowboy Ventures and cofounder of All Raise, while a lot has changed in the past few years since she coined the term ‘unicorn,’ one thing has stayed the same: “the lack of female founders in (VC-backed) companies.”
Lee told FT that “the imbalance is reflected in investment flows. The share of funding for companies with women-only founders declined from 2.5 percent of all venture funding in 2013 to 2 percent last year, according to data provider PitchBook. There are more founders named Michael, David, and Andrew than women unicorn CEOs.”
A Higher Bar of Traction for Female Founders
There isn’t a dearth of highly qualified female and BIPOC founders who have minimized team risk, market risk, tech risk, and demonstrated a product-market fit. Some female founders are rejected by VCs who don’t even open at their decks (which are shared and tracked via DocSend), and many of these founders don’t even get rejected by VC firms because they cannot even get meetings to be considered by VCs. We aren’t given a fair shot.
Female founders are held to a much higher standard because we aren’t part of the VC social network and don’t match a pattern of founders that it previously funded. According to a Harvard Business Review case study, VCs posed different questions to male and female founders: They asked men questions about the potential for gains and women about the potential for losses. The study found evidence of this bias with both male and female VCs.
Without Measurement, There’s No Progress
Peter Drucker famously said, “If you can’t measure it, you can’t improve it.” Many VC funds and diversity groups host events but don’t bother measuring the outcomes of their efforts. Meanwhile, they expect traction, progress, and revenue from founders. It’s time we held them to the same standards. The venture capital industry still has a glaring gender and racial diversity problem. VCs aren’t utilizing tech to level the playing field despite having access to technology. Many VCs track their heart rate, stress, sleep, and calories burned with wearables to optimize their health. Why can’t they start measuring their diversity efforts? How many female founders did they talk to at their events? How many meetings do they have with female founders monthly? How many did they invest in? They should be asking themselves these questions.
Performative Activism: A Lack of Thoughtfulness and Sincerity
VC funds and diversity groups should be more intentional with their efforts. If you want to help female founders, curate an audience with female founders and investors. Create content that’s not remedial. For example, if you’re hosting an event and calling it Women in Generative AI, bring in some superstar founders or execs from top tech companies as speakers whom we can learn from. When we take time out of our day to attend an event, we don’t just want a free bagel or glass of wine and to mingle among women. We deserve more. We deserve an honest meeting, feedback, intros, and support. Sadly, performative activism — e.g., hiring diverse non-investment partners and under-tracking diversity KPIs — have resulted no improvement of funding going to underrepresented founders, according to VC Human Capital Survey.
Several female founders I interviewed after recent female founder events in NYC complained that the events are often hosted by a fund, but none of their investing partners show up. This is frustrating because that’s usually the main reason they go to the event. Meanwhile, many have said that of the female founder-focused funds can be exclusionary beyond their own network of female portfolio founders. They project that they democratize access, but they are exclusionary. If a startup isn’t a fit for a fund, VCs can still give brief feedback or make an intro.
Diversity Funds Aren’t Enough
To create a paradigm shift, VCs should lead all stakeholders in the tech ecosystem by example. They must pay attention to the role they have played and the work they must do to support social justice. It’s time that VCs show us their traction.
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To create a paradigm shift, VCs should lead all stakeholders in the tech ecosystem by example. They must pay attention to the role they have played and the work they must do to support social justice. It’s time that VCs show us their traction.
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It’s important to note that small diversity funds started by large funds such as Andreessen Horowitz’s Diversity Fund and Softbank’s Opportunity Fund are just a drop in the bucket compared to the amount of venture capital allocated per year to multibillion-dollar generalist funds. Even if there were 10 Softbank Opportunity Funds, that would only amount to 1.5 percent of the $66.9 billion raised by U.S. venture capital funds in 2023.
If VC funds really want to see a paradigm shift, they need to do more than create small diversity funds. They need to be more transparent. If they need help improving their diversity KPIs, they should partner with community leaders of Supermomos and The AI Furnace.
Champions Getting It Right: VC OpenDoor, Supermomos & AI Furnace
VC OpenDoor
Algorithmic startup/VC matching portal VC OpenDoor helps facilitate less biased deal flow pipelines. It makes the fundraising process more efficient, since it filters according to type of business, stage, and sector. The portal scales with time, volume of deals, and across VC specialists and geographies, though it’s worth keeping in mind that while some VCs are using it earnestly with intent to increase diversity, some don’t deliver on meetings once VC OpenDoor matches them with founders.
Supermomos
Edwina Yeo founded Supermomos (the name is an ode to her grandmother whom she calls Momo) to create meaningful connections among men and women in the ecosystem and to improve the skewed ratio of female business leaders and founders. Her prior experience as a former VC at Tiger Global and a startup founder equipped her with insights and access to founders, VCs, tech executives that a typical community manager at a VC fund may lack. Yeo has made a conscious effort for mixed gender founder events to have a 50/50 mix of men and women. She says, “There are many women out there doing incredible things, and we are conscious to spotlight these great business leaders and founders and inspire others in the community.” At Supermomos’ recent Women’s Leadership Summit at the NYSE, Supermomos featured an all-female speaker lineup, including the former Chairman of LVMH USA who was also former MD at The Carlyle Group, a serial entrepreneur, and the 7th woman to found and IPO a company on the NYSE, and an exited unicorn founder.
Yeo noticed that at AI & ML events female representation is even worse than general tech events, usually with a 90/10 male to female ratio. Accordingly, at Supermomos’ Super AI ML Summit, Yeo curated a crowd in which 40% of speakers and attendees were women in AI, including the Head of Data at Moet Hennessy, the Head of Design at NVIDIA, a Partner at Two Sigma Ventures, and the former Head of Sales Strategy at Scale AI. Yeo believes that “while there is room for female communities, it is also important to have truly mix-gendered communities of professionals in similar functions or industries, as both exist in the real world and bring their own unique perspectives and can be strong allies for each other.”
Supermomos tightly curates its speakers, programming, and attendees to make sure that everyone feels like they are in a room of peers. They host groups and events with the goal of facilitating knowledge exchange and intimate connections among peers, or professionals within one to two levels of each other. They use their proprietary AI platform to facilitate this curation and showcase demographic statistics to cohosts to encourage diversity among attendees. Supermomos also hosts a monthly Female Founders and Funders Series which features a female founder and/or Senior VC Partner. These events are more intimate with the goal of giving founders access and giving VCs broader exposure to female founders.
AI Furnace
The AI Furnace is one of fastest growing AI founder, builder, and researcher communities in the world. It was founded by Angela Mascarenas and Hamza Zaveri, who are AI founders themselves, to support AI founders and operators building startups locally in cities outside of San Francisco. Since starting 7 months ago, they’ve grown to over 12,000 members internationally and have chapters in NYC, London, Paris, Dubai, and Boston. They host events to showcase local AI innovations and to support AI founders including AI Demo Days, Founder/AI Talent Mixers, AI Happy Hours, Fireside Chats with AI Executives, Founder/Funder Dinners, and Coworking Days for founders.
Co-founder Angela Mascarenas, who is also the co-founder of Vokel AI, decided to launch The AI Furnace because she believes that “community is just as important as infrastructure (just as much as foundation models are infrastructure) for AI innovation. Founders and builders in this era need community and a peer network to build in such a rapidly evolving space.”
Mascarenas noticed during demo days that female founders were reluctant to showcase their products in AI Furnace Demo Days because they were worried their products weren’t perfect. Meanwhile, male founders were showcasing bare-bone demos and without worry. Accordingly, AI Furnace has made a concerted effort to feature female founders in AI to present at demo days and to speak on panels. AI Furnace recently hosted a Power Women in AI Summit, with an all-star female speaker lineup including the founder of Care.com, the former Chief AI Officer of Estee Lauder, a serial CTO/CPO, and 2 seed stage female AI founders. Mascarenas said, “The main goal of the event was to flip the script and to celebrate the successes of senior women in AI in order to show other women that it’s possible to succeed in AI, whether that’s on the startup path or the corporate track.”
The AI Furnace is making diversity and inclusion a core part of its DNA and is launching a nonprofit side of the organization to increase diversity and create windows into AI for women and diverse founders. Mascarenas says that “As AI becomes a core underlying technology driving the world, the researchers who are training the models and the founders who are innovating should be diverse. We firmly believe that women and people of color need to participate in this step change, and not just the elite, to create a safer AI-driven future.”
The Missed Opportunity
Funding diverse founders isn’t charity. White male founders with crazy ideas are often seen as visionaries while diverse founders are seen as charity cases. As a result of their exclusivity, many VCs don’t even try to comprehend some of the problems our startups are trying to solve. Ultimately, this creates blind spots.
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Funding diverse founders isn’t charity. White male founders with crazy ideas are often seen as visionaries while diverse founders are seen as charity cases.
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Dr. Pinkey Patel, founder of Myri Health, a virtual postpartum care platform, says a male investor once told her that “postpartum is niche” and opted not to invest. Since then, Patel completed Techstars and is now part of Google for Women Founders accelerator. Many male VCs have little understanding of products and services that women-founded businesses market to other women and the problems they are solving for. They don’t even want to take the time to learn, take a meeting, or look at our pitch decks. In one instance, a male VC told a female founder with an AI-enabled fashion tech SaaS company that he doesn’t understand that sector; even though his fund likes AI-enabled SaaS businesses. “This presents an arbitrage opportunity,” said Andrea Turner Moffitt, founder of Future Heights Ventures and co-founder of another VC firm, Plum Alley Investments. This is why “less than 2 percent of VC funding goes into women’s health. There is a mismatch,” says Naseem Sayani, co-founder of Emmeline Ventures.
A recent Boston Consulting Group survey of 350 start-ups found that female founded startups deliver more than twice as much revenue per dollar invested than those founded by men. Female founders also burn through cash at a slower pace and exit sooner at a higher rate than male founders, according to PitchBook. At Supermomos’ recent Private Founders Dinner for a curated group of founders that have $10-100 million in revenue or funding raised, Yeo observed that there were significantly more profitable companies run by women than men.
VC funds should consider collaborating with groups like Supermomos and AI Furnace or giving its founders Venture Partner or Advisor roles for deal flow or feedback. Companies like Perkins Coie, an international law firm, and Justworks, a payroll tech unicorn, have been sponsoring female founder initiatives. Other law firms, startup banks, and companies serving founders should also support them.
Conclusion
Many VCs overlooked Melanie Perkins when she was fundraising. She didn’t fit the pattern they are used to. She was a female founder with a non-technical background and a college dropout. Perkins said that 100 Silicon Valley investors rejected her before she finally got a bite.
A female founder may have insane drive, deep domain expertise, the perfect network in their industry to scale her business, but she may struggle to get networked in the VC community. Dear VCs, how are you going to find the next Melanie Perkins if you aren’t open to meeting more female founders, hearing about their companies or looking at their decks?
