Stop Complaining about the Pipeline, You Lazy Fuck of an Investor

Do you genuinely want to see more diversity in the startup landscape? Because I can show you how to do it.

If you’ve ever heard a woman take a deep breath and say “I’ll do it,” you know she’s gonna get it done with a vengeance.

That’s how I feel about seeing more women succeed at building companies.

At The Next Web Conference in 2019, I attended a panel hosted by The Next Women about women in the investing landscape. And what I learned changed my life.

The hard truth is that female founders won’t receive capital if women aren’t part of the investing process. Over the past five years, other women have come to this realization, too, and started their own investment firms. Female VC partners are twice as likely to invest in a female founder, and three times as likely to invest in a woman CEO.

But even as more women join the table, female founders continue to struggle to raise. In 2020, all-women founder teams received 2.1 percent of all capital deployed (in 2019 it was 2.8 percent). Yet 2020 set the record for amount of capital deployed into startups at $156.2 billion.

Progress takes time, but there are a couple things VCs can do now (like, today) to expedite investment into female-founded companies.

It’s Not a Pipeline Issue

VCs use the term “pipeline” to describe the process of acquiring leads. It may include things like warm introductions, cold emails, online form applications, and scouting.

And it’s the most common excuse I’ve heard for why investors don’t invest in more women: “There aren’t any female founders.”

Oh, really? Stitchfix wasn’t started by a female founder? Or PopCom, which was founded by the first woman to ever raise $1 million via equity crowdfunding? Or Glossier, Emily Weiss’s makeup company valued at $1.2 billion? Or Honest Company, which was founded by Jessica Alba, whom you may know from movies like Sin City and Fantastic 4?

Because according to American Express, 42 percent of businesses are women-owned, and Black women make up 21 percent of the small business owner population in the US. Or, as the US Census Bureau puts it, an estimated 1.1 million “employer firms” are owned by women, 16.9 percent of which “were in the health care and social assistance industry” and 16.4 percent in “professional, scientific and technical services.”

But there aren’t any female founders?

Let’s start with the first issue: the definition of a founder.

Expand your definition of “Founder”

For a long time, I thought a startup and a founder had to be tech-oriented. But that’s just not true.

The VC world is essentially headquartered in the San Francisco Bay Area, where tech companies go to “make it.”

And as a result, the language around funding and becoming a multi-million dollar company is strongly associated with the tech industry.

While there are women in tech building incredible solutions, there are a lot of women-owned businesses that aren’t in tech, but could still use the funding.

For example, Yelitsa Jean-Charles designed Zoe, her flagship doll of her company Healthy Roots Dolls. It may not be a new social network or SaaS, but it certainly disrupted the toy industry.

Or even Stitch Fix founder Katrina Lake, who disrupted the landscape of shopping by making personal styling accessible. She arguably paved the way for a company like Fit Analytics to not just exist, but to be acquired by Snap.

When female founders bring their solutions to the table, investors need to trust that they’ve done the research into the total addressable market (TAM) - and it doesn’t have to include people who look or think like them.

Which brings me to my second point: investors are looking in all the wrong places.

Look harder and farther

Many VCs rely on just one or two “pipelines” for all their deal flow (potential investment opportunities). For a long time, that gate has been kept by warm introductions, pre-existing professional networks, and alma mater die-hards (i.e. people who only invest in graduates from certain universities).

So when these VCs put out a call to those same sources for female founders, and then don’t see any women come down the pipeline…do they genuinely believe that means there are no female founders?

Clearly, they’ve failed to make an effort. Investors need to change their outreach methods and direct their messaging to the right marketing channels.

It’s basic customer acquisition 101, folks: go to where your customers are.

For example, when I interviewed Guap Coin founder Tavonia Evans, I asked how she raises awareness about her cryptocurrency. Does she attend conferences? Speak on podcasts? Reach out to publishers like Forbes, TechCrunch, or even Crypto Potato?

She reaches her audience through channels like her Instagram following, hip-hop artists, and other trusted public figures that the Black community follows and trusts. She also engages regularly with her Guap Telegram group and sponsors crypto events in Nigeria, the second largest crypto market in the world.

And here I am, thinking that there are only a handful of ways to reach an audience that’s interested in crypto.

I have since learned that I have a huge blind spot when it comes to reaching the Black community. Just because I publish online and interact in spaces that I’m familiar with, that doesn’t mean that everyone will see what I’m saying - and that includes the VCs that need to see this.

Female founders across any and all industries don’t necessarily hang out in the same spaces as middle-aged, white male investors.

To close that gap, VCs need to add more women to their teams so that they can expand their deal flow. Because as VCs well understand, it’s hard to enter a network without some type of trustworthy introduction.

Things I Found Interesting and Noteworthy

• A knockout interview with Sallie Krawcheck, founder of Ellevest (another female-led startup!): “We speak in these gender terms around money, where for him it's, power, strength, abundance. And for her, it's isolation, uncertainty. And it's to the point where there is no amount of money she makes that she doesn't feel ashamed of.”

• In the wake of violence against Asian Americans throughout the US, Amanda Natividad’s account of her experience as a Filipino American growing up in California really resonated with me.

• The SEC’s new rule that increased the equity crowdfunding limit to $5 million came into effect on 15 March, and two big names took advantage of it right away: Gumroad and Backstage Capital. I hope you got a piece!

Final Thoughts: Make an Effort

Here are my suggestions on how you can stop being a lazy fuck and broaden your pipeline:

• If you’re a limited partner, you can connect with female founders like Lolita Taub, who has graciously assembled a collective of female, people of color, and LGBTQIA+ emerging fund managers.

• You can also connect with funds like Female Founders Fund, Women VC, and Backstage Capital.

• If you make less than $200,000 per year, you can back female founders on crowdfunding platforms like Republic.

• If you’re an investor based in the Netherlands, you can connect with companies like Fund Right and The Next Women.

• If you’re an investor based in the Nordics, you can join Unconventional Venture’s syndicate.

• If you’re a VC, you can connect with the community at FLIK or at Women 2.0 to meet female founders and their apprentices.

I want to see more women take their future into their own hands and build a legacy of wealth on their own terms. I want to see more men make a sincere effort to create space at the table so that women can be part of the decision-making process.

And I want to see everyone earn incredible returns - investors and founders alike - by “taking risks” on female founders.

I am here to make change with a vengeance.

Thanks, once again, to all the good folks at Compound Writing for helping me work through this edition, especially Soma, Steven, Ryan, and Ayomide 🙏