Support the news
Companies founded by women received less than three percent of venture capital funds last year, according to an analysis by Fortune. A Boston-based venture capital firm wants to make it easier for women to get funding. Flybridge Capital Investments announced a new fund Wednesday called XFactor Ventures that will invest a total of $3 million in 30 new companies with at least one female founder (essentially $100k per company).
Only seven percent of partners in leading venture capital firms are women, according to an analysis by TechCrunch. The new fund aims to tackle this hurdle on the other side of the pitch table too. It's worth noting though that FlyBridge is led mostly by men, so it's relying on a team of nine women entrepreneurs to advise the firm on its investment choices. One of those women is Anna Palmer. She founded Fashion Project, an online marketplace for selling used clothing, and WonderMile, an online platform to browse retail stores.
We caught up with Palmer and Rudina Seseri, the founder and managing partner of a separate VC firm -- GlassWing Ventures, to talk about women in tech. Here are some highlights from our conversation (edited):
Why A Fund For Women
Palmer: With Fashion Project, we raised about $13 million in venture capital. Through that process, I talked to about 120 investors, and I got very acquainted with how those conversations went. I just felt it was so important to start changing those statistics. Last year venture capital invested about 60 billion dollars in male-led teams, women-led teams only got about 1.5 billion of that, and so, after going through that 120 meeting circuit, I just felt like there was a big opportunity there to create something that changed the game for women founders.
The Impact Of Not Having Women At The Table
Seseri: It's the homogeneity of thinking, which is the last thing we need. Just on the pure business drivers, money in, return out: do you really benefit from leaving out 50 percent of the population out of your business thinking, decision-making and strategizing at all various levels of the startup and entrepreneur ecosystem?
"What Are You, Just Pretty To Look At?"
Palmer: So the story that I tell as kind of my founder moment was my very first meeting I had with an angel investor. I was sitting across the table from him, and I think it was a joke now that I know who it is and got to know him a little bit better in the community. He got to my resume and I was graduating from Harvard Law at the time, and he looked at it and said, "so you don't have a finance background, you don't have an MBA. What are you, just pretty to look at?" He said it very flippantly and I think he meant it as a joke now that I know him, but that moment was pretty defining. It just shifted my perspective a little bit going into future meetings.
How to Increase Funding For Women
Palmer: Part of why I was really attracted to the format of XFactor was this idea that there's nine women now who are empowered to write checks. The pipeline where investors are pulled from [are generally] the ranks of active angel investors. Those are usually entrepreneurs who had [a] large exit. If the majority of capital is still going to male entrepreneurs, then obviously that pipeline is going to be very skewed. We need more women in that pipeline, more women investing and really moving that needle not just on a one off basis but as an entire group.
Seseri: At GlassWing, we've taken a different approach. At GlassWing, it happens to be a women-majority firm, in that of the three partners two happen to be women. If you look at our portfolio companies and look at the statistics of their composition, in every single company I've ever invested in there is at least one other board director that's a woman. And I've never raised the topic of "what about the women?" It starts from where the capital is coming in because I don't think we have a shortage of talented and qualified female founders and entrepreneurs.
Are Things Getting Better For Women?
Seseri: I do think that over time, as there are specialized funds like what Anna is doing, I hope the real tectonic shift will occur when a lot more firms are doing what I believe GlassWing is doing correctly, which is we integrate women entrepreneurs as the main part of the pipeline, much like we do male entrepreneurs. They get access to the big funds and the real dollars and the real capital and they are pitching on the other side of the table. That's when I think we'll really be able to capture the real potential of the diversity of thought and backgrounds.
It's Not Just About Money. It's Also About Harassment. Are Attitudes Changing?
Palmer: I think there has been positive change even in just the six years that I've been in the industry I've seen a big shift in the conversations that people have been having, just around the table in general.
Seseri: The cases of sexual harassment are much more the symptom than the cause. I think the underlying cause is the homogeneity topic. I think because while there may be bad apples, like in any other market and industry that misbehave, I think starting with awareness, which we're seeing take place in the market, and then with consequence for one's actions, which to the best of my recollection is the first time we're seeing take place. If there are venture capitalists that misbehave, there are consequences for their actions and those consequences are dire as we have seen from a business perspective. I think that's an important milestone.
Here's more from Radio Boston:
Support the news