Update: May 9, 2018: The opportunities for women to get venture funding are growing: Today, the Female Founders Fund announced the launch of Female Funders Fund II, a $27 million fund that will invest in early-stage companies. The impressive investor base includes Stitch Fix CEO Katrina Lake, Melinda Gates, and Whitney Wolfe Herd, as well as the CEOs of some of the most successful companies the Female Founders Fund invested in, including Zola and Maven Clinic.
In a piece announcing the news, Fund partner and founder Anu Duggal notes the positive changes that have occurred since the venture capital industry was "rocked by case after case of sexual harassment": "Almost all of the largest venture funds have brought on their first female partners, and many of these women partners have been instrumental in leading their funds into investments run by female founders."
This piece was originally published on April 26, 2018.
In the U.S., 93% of the venture capital industry — the money behind most tech companies — is male, and only 11.3% of VC partners (re: the real decision makers) are female. With numbers like that, it probably comes as no huge surprise that liquor delivery apps are thriving, while a smart breast pump can’t find serious investors. When you think about it like that, this problem isn’t just about female entrepreneurs, but female consumers as well. Thankfully, Anu Duggal and Sutian Dong, partners at the Female Founders Fund, are trying to change that.
Duggal started the Fund in 2014, after noticing a common problem in New York’s rapidly growing startup ecosystem: Increasing numbers of women with strong backgrounds in tech and scalable ideas were creating businesses, but lacked the early capital they needed (known as “seed funding”) to get that next crucial round of funding (known as “Series A”).
Dong, who met Duggal in 2015, was also acutely aware of this issue. As a senior associate at FirstMark Capital, she listened to numerous pitches from female founders who were approaching her too early in the process. “As a series A investor I’d say, ‘Let me know when I can be helpful to you because the stage at which I invest is the next round of financing you’ll want,’” Dong says. But, as she points out, “It’s really hard to get your next round of financing if you don’t get your seed round.”
That’s where the Female Founders Fund comes in. By providing early financing to companies and connecting them with an extensive network of industry experts, Dong and Duggal closing the gap in this harmful cycle. They are not only helping female-founded companies grow — they’re proving they deserve a larger share of the VC pot. Historically, male founders have had a much easier time securing funding at all stages. According to data company PitchBook, only 2% of VC transactions in 2017 went to female-founded companies. And last year was not an anomaly.
Dong and Duggal attribute this lack of funding to two oft-cited reasons. First, the majority of venture capitalists are men who don’t relate to many of the services they’re being pitched as consumers (an easy example: the aforementioned breast pump). And second, this new era of female founders “don’t look like the famous founders from the Valley,” Duggal says.
But more traditional VCs might reconsider once they see the success Dong and Duggal have found at the Female Founders’ Fund. They’ve invested in a number of fast-growing, female-led companies, from Zola to Shine. And they are just one example of the growing number of women who are starting a tech revolution of their own. Jess Lee, a partner at the illustrious Sequoia Capital, started the Female Founder Office Hours, a networking initiative that aims to make advice more accessible to women who are looking to launch startups.
Duggal believes this mentorship is critical, and so is getting more women at the table to make funding decisions at large venture firms: “You have to have enough junior analysts who are working their way to the top, but also role models they can see who are doing deals and are well respected.”
#GettingTo5050, a global movement rooted in actionable tools and resources, aims to catalyze the conversations that will inspire a more gender-balanced world. Because true equality doesn't just lift women—it lifts everyone. Learn more here. And click here to read Refinery29's profiles of eight women fighting for equality every day.