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We have a long way to go to close the venture capital gender gap.
In 2017, only 2.2% of all venture capital in the United States went to companies founded solely by women, only 4.4% of transactions went to female-founded companies and only 11.3% of partners at venture capitalist firms were women, according to PitchBook data. If the number of female venture capitalists increases, it's likely that the number of female-founded companies receiving funding – and the dollar amount they receive – would increase.
But how do we encourage more women to become the decision makers and change the statistic? That was the topic of conversation at the Funding the Funders panel on the first day of the 2018 Forbes Under 30 Summit in Boston. Moira Forbes, the executive vice president of Forbes Media, moderated the conversation with Anu Duggal, a founding partner at Female Founders Fund, Ita Ekpoudom, a partner at Gingerbread Capital, Heather Hartnett, CEO and general partner at Human Ventures and Samantha Katz, cofounder and CEO of Left Tackle Capital.
Here are some of the key takeaways and pieces of actionable advice from the conversation:
Show the value of investing in female-founded companies:
The best incentive for investors will be the proven financial returns, according to Duggal. She believes that as more women raise capital, scale their businesses and go public, more investors will focus on female-founded companies. "These are the events that I hope will cause the venture capital industry to really take pause and realize that by ignoring these opportunities or not taking them seriously or thinking about the size of the total addressable market [they] are missing out on returns,” she says.
Katz also emphasized the economic benefit of investing in female-founded businesses. She cited the 2018 State of Women-Owned Businesses Report, commissioned by American Express, which found that an average of 1,821 new businesses a day are founded by women. She also noted that the fastest growing subset is women of color, and in particular African American women, only 34 of whom have raised more than $1 million in capital, as Forbes previously reported. "It is the biggest arbitrage opportunity of our lifetime. And the reason you see four women sitting on this panel to talk about it is that when we see an opportunity we hustle and we do something about it,” says Katz.
Start investing in companies early:
Human Ventures' strategy is to make investments early in a company's trajectory. They start working with founders pre-concept because they believe in them and their skills and expertise and want to help the founders build their teams and the company. "We incubate the company and we are the first check in," she says, "If you co-build the company you can be the first check in as well,” says Hartnett.
It's also beneficial on a personal finance level. Ekpoudom shared an anecdote from her early career as one of five women, and the only woman of color, on the trading desk at Goldman Sachs. Her male colleagues started making investments in companies then, but the women she worked with didn't. Ekpoudom's advice to the women and men in the audience was to start making investments of any size into companies they value. "The ability to have money is the ability to give you the opportunity to then choose what you want to do. You don't want to be stuck in the same place because you are tied to a paycheck. I’d say to everyone in the audience, think about where you want to be in five, 10, [or] 20 years from now," says Ekpoudom, "You have the opportunity right now from right in your seats to write the checks that will change the landscape."
Many people choose to become an investor after selling their first company, says Katz. "When should you become an investor? The day you got your first paycheck," she says.
"That’s a great point and it totally shifts people’s perception in terms of the landscape and experience they can have, and also on the personal side, it helps women close the investment gap with their own finances," says Forbes, "You can have some meaningful returns and opportunities to grow financially.”
Advocate for yourself and your business:
When Forbes asked the panel for their advice for entrepreneurs interested in raising capital outside of the traditional venture capital ecosystem, Ekpoudom stressed the importance of promoting yourself and your business. Be able to talk about three milestones about what you’ve done with your business and have three concrete asks when you meet someone who can help you move your business forward.
