Let’s Change The Odds That We Can
I stand here this morning as an Indian citizen, a UK resident, a member of the EU but most of all, as a woman of the world. I say this because I feel I speak for women globally. What a year it has been for all of us! For women in the corporate world, with little children working from home, while trying to juggle both home and personal life, I am sure it has not been an easy time. For female founders, has networking during COVID been harder and therefore access to capital even harder to reach? I am personally hoping that COVID has fast-forwarded corporate culture and employer mindset, aiding in the monetization of the biggest asset class waiting to be monetized — the female workforce. In fact, some female founders as well as female GPs have told me that fundraising during COVID has been a ‘blessing in disguise’. Male investors on the other side of the zoom call couldn’t tell that these women were pregnant. While in 2020, we have made significant headway in space exploration, down on Earth, a woman’s womb occupancy status continues to remain an investment criteria.
My own journey into freelance work advising female founders started as I was passed over for a promotion in the City. Passed over since I wasn’t that ‘unencumbered mythical worker’, as described by Caroline Perez in her book Invisible Women. I had a very, supportive and hands on husband but he traveled a fair amount. I was lucky enough to have a nanny to help with the housework but at the end of the day I had two human beings depending on me and I was responsible for everything from their homework to their head lice. As a senior woman who had put in many very productive hours over the years, I thought it was a given that the company I worked for would be supportive. Surely they were supportive but at the expense of career progression — it was either the mommy track or the career track for a woman who would go with the flow — go with the male misogyny. I felt completely let down and left a job I perfectly excelled at. My boss was a white male and there were barely any senior women in the company. Unfortunately, it often takes women in leadership roles to make changes and for such problems to be fixed. For example, it was only after Sheryl Sandberg, then COO of Google herself was pregnant, did she realize that pregnant women needed reserved parking in the company’s parking lot since it was hard for her to walk across herself. And not just me but millions of women just like me leave perfectly good jobs, moving into lower paid, more flexible offerings, many of them way, below their qualifications. This is really when the gender pay gap is aggravated even more. Changes such as more senior women in leadership roles, statutory changes to paternity policy that offer fathers full or close to full reimbursement of salary along with a fixed time frame to use this parental leave is shown to have a positive impact on female employment. And we need many more changes such as these.
Moving out of the corporate world into the world that I live and breathe every day — the world of female founders in tech. How different is it in this meritocratic world? As I fight for gender equality each day, I would say I fight for diversity — diversity of thought, diversity of leadership because it is a known fact that not investing in female founders leads to missed economic output and opportunity. The return data speaks for itself that female-run startups generated 78 cents in revenue vs. male-run startups generated less than half of that. A recent Kaufmann research study found that women-led teams generate a 35% higher ROI than male led teams. In light of this data, how disappointing and shocking is it that a black female founder was recently quoted saying that she needed to add a white male CEO to her team to be able to raise money?
So why do female founders see less than 5% of venture capital dollars? I started working in the investment ecosystem 7 years ago and I feel the quality of companies being started by female founders has only improved. So while we can attribute some of this deficit due to a lack of pipeline in the past, surely it can’t be all that it is. I can also attribute some of it to women pitching perhaps a smaller (but sometimes more reasonable) vision and the impostor syndrome, more commonly found in women than in men because we all know that a woman would never apply to a job unless she was the exact dimensions of the circle but a man, even if square would somehow manage to fit inside the circle, making him the ideal applicant for it. Similar to the corporate world, there are also many well-known systemic challenges in the ecosystem with a very small percentage of women in decision making roles. As humans we are all biased and tend to stick to what we are comfortable with, tend to stick within our networks and like to recruit and invest in people most similar to us. With 80% of US partners, being white male and if you look more granularly, 50% of them from Harvard, Stanford and Wharton, no offense to these esteemed institutions, 3 out of 4 venture rounds in the US go to all white male teams and a lot of capital I would assume is recycled within these boys clubs. It is not just men, biases have also shown to exist with senior women at these funds. After all, it is all about the company you keep — over time, you begin to think, behave and act like the people you spend the most amount of time with. Adding to these systemic challenges are businesses such as those in women’s health, that are borne out of women’s own needs, in markets they are underserved in, sound even less appealing to male VC’s. And the latest report I read by LBS Professor, Dana Kanze goes beyond femtech into other sectors. Her research shows that a woman led venture in a male dominated industry receives less funding and at lower valuations while a male-led venture in a female dominated industry sees no difference in funding and valuation regardless of the industry to which they cater. Strangely coding and tech as we know it now was originally a woman’s game. ‘Women were the original computers and ENIAC, the world’s first fully functional digital computer unveiled in 1946 was programmed by six women. In 1967, the Cosmopolitan magazine published an article encouraging more women into programming. I quote it said — ‘It is just like planning a dinner. You have to plan ahead and schedule everything so it is ready when you need it’. ‘Programming requires patience and the ability to handle detail’. Women are naturals at computer programming.’
While I was in the corporate worlds, one of my first bosses was a woman, Lorraine. She was a Vice President at GE, a phenomenal lady boss, a mother of two children and an incredible mentor. She taught me a lot, didn’t believe in office face time and was strong enough to create her own workplace policies for the people that worked with her. But are we going to sit around and wait for senior women to solve all our problems for us? I hope not since we will be waiting around for generations to come. Well besides we can’t effect change by alienating 50% of the world and 95% of capital by not involving men in this change. Men and all the men in this audience very much need to be a part of this conversation, according to me and a very big part of it. A female founder building a women’s health company should not have to wait around to pitch to a female investor to get her business funded. After all, most men that we know have a mother and many of them have wives, sisters and daughters. Surely, period health should not be a taboo topic for them. I feel proud saying that, my one and only role model in life was a man — my father. A natural born entrepreneur, a scientist by training who built a successful business by commercializing what he built in the lab. I learned many things him from him about leadership, using equity at all level levels of an organization and about the benefit of diverse teams. I am who I am because of him. And it was in his memory that I kept my maiden name, even after I got married.
Involving men in the discussion is a very key part of bringing out about the change we want to see in this world. I talk to many male investors at funds each day and I know its not all doom and gloom. Many tell me that diversity is very high on their agendas. Change is happening at a much faster pace than I have seen previously. The NASDAQ announcement earlier this month pushing corporate boards with a target to improve boardroom diversity and others from LP’s that can and are using their power to demand diversity can have a huge impact in a very short amount of time. I hope to see many more announcements from funds such as Swedish fund Kinnevik which publicly announced diversity targets for their management team, portfolio companies and allocated 10% of their investment budgets to be invested in women founders. Quick wins for funds include setting up female office hours for founders such as those announced by Playfair Capital, expanding deal sourcing networks, diversifying venture partners, implementing unconscious bias training but most of all, tracking gender and diversity in our pipelines. For all we know, that we can’t change something that we don’t measure.
As my friend Beata Klein from Creandum recently tweeted — ‘New laws, more capital, or founders daring to build will not be the changing factor in VC. Instead it will be the new breed of diverse VC firms backing a much broader set of founders. These people will create the future and it will be great.” Expanding our world leads to an expanding return opportunity. These outsized returns can be obtained by making some much needed changes in the way we think and work. One of my first angel investments into a female founder was into Romi Savova, CEO of PensionBee, a fintech company in the UK. For those that have heard of Romi know what a force of nature she is. She is also mother to two kids and for those that don’t know Romi, she is looking to take her company public in 2021 on the London Stock Exchange.
As a mother of boy a boy and a girl, who sees no difference between her children, I leave you with one thought — a male partner at a VC fund who has a daughter is 25% more likely to recruit a female investor into his team. However, these odds are fixed and cannot be changed.
As we head into 2021, I leave you with one thought. Let’s think of diversity beyond social impact. Let’s use diversity to our advantage. Let’s invest in the diversity arbitrage. Let’s leave this legacy for our children.
Let’s change the odds that we can.
This is a slightly modified version of my recent keynote at Wayra Germany. It is dedicated to all those female founders that continue to inspire me everyday.
Source: Brilliant book, Invisible Women by Caroline Perez, Harvard Business Review, Kaufmann Institute, Diversity Advocate and Professor Dana Kanze, my friend Beata Klein at Creandum.
