We all know the statistics. Female founders only received 2 percent of the venture funding in 2017, and just 8 percent of partners at the top VC firms are women.
According to a report provided by Pitchbook, the majority of the top firms that put funds in female-founded companies have women in senior-level roles. In recent months, some all-male partnerships have a female partner for the first time in their history. These female partners include Rebecca Kaden at Union Square Ventures, Nimi Katragadda at BoxGroup, and Hayley Barna at First Round Capital.
When asked how female founders can get more capital, here is what two female VCs had to say
Women must make many investment decisions to get funded, according to Patricia Nakache. Making investment decisions is a part of tapping into existing networks. To Patricia, the more success stories that women will have, the more venture capitalists will invest in them.
According to Susan Lyne, the biggest shift will happen when many women-led companies exist as IPOed or unicorns. Stitch Fix is an important IPO because CEO Katrina Lake is one of the few female founders who has taken their company public.
References http://fortune.com/2018/03/08/venture-capital-female-founders/ http://fortune.com/2018/01/31/female-founders-venture-capital-2017/
The women’s role in the workplace has assumed big proportions. According to some economists, economic empowerment of women is one of the most significant revolutions of the past half-century. Women own more than 36% of all businesses and contribute over $3 trillion to the economy.
Despite women being good entrepreneurs, women founders received only 2% of the entire VC funding last year. Although no one finds it easy to get funds, women seem to have more difficulties. The bias between women and men had been very hard to measure until Harvard Business Review team analyzed conversations of venture capital behind closed doors. The team, after analyzing 125 applications, it concluded that male founders are questioned about “future possibilities” of the project they were pitching.
On the other hand, questions are asked questions that center on the associated risks and being cautious with money. These differences in use of language result in a different perception of personas, thus leading to a lower success rate for women founders.
Another challenge that faces women is that venture capital network is men’s clubs. In the VC world, much of the ecosystem is built around networks. The venture capital community is predominantly male. Communities tend to favor their own.
Venture capital can bring about additional funds that can expand your business greatly. Before looking for a venture capital investor, you should consider the costs related to this kind of funds since the investors anticipate for profits. You must offer better returns to the investors before they choose your company and also surrender part of the possession of your company.
A new venture can have profits or losses. According to the National Bureau of Economic Research, the average return is 25%. A venture capital firm will be interested in making the average return but with higher predictions, which depends on the business capabilities.
Venture capitalists anticipate having very high returns after several years. According to venture capitalist Fred Wilson, one is considered a successful investor after generating 2.5 times his money in 10 years. However, this is considered failure by some venture firms.
Majority of venture capitalists have a portfolio of investments. Since your company is one business among many they fund, that helps during the negotiation of returns. For example, you may give a lower return than other unpredictable businesses if your company is stable. This can be attractive to VCs since they need to diversify among risky and safe investments.
It is rare for women to specialize as venture capitalists. And it’s even rarer to find women who have been venture capitalists for over two decades.
Such is the case of 25-year Wende Hutton, a general partner at Canaan Partners, a firm that manages about $5 billion.
Hutton’s career in venture capital began when she joined Mayfield Fund. At Mayfield, she was not only the first women but also the only woman on the team.
Hutton’s career in venture started when she joined Mayfield Fund after working at biotech startups. At Mayfield, she was the first and only woman on the team.
Hutton came from a different background from her male colleagues. Getting them to understand why she, a wife of a CEO and a mother of two young children, wanted to work and balance her life with her job was a challenge.
In an attempt to meet her responsibilities, Hutton attended board meetings with her children on some occasions. Today, one of her sons is a CEO.
If you intend to invest in biotechnology, Hutton has to pieces of advice she learned over her 25-year career. The first: “Don’t work alone.” Especially if it comes to the development of new drugs, it is important to work with experts. The second piece: “Have a very curious nature.” Working with biotech is accompanied by a whole lot of learning.
The startup era is booming nowadays, with 40% of employed people wanting to quit their job and start businesses. One of the most interesting startups to found today is ‘Mobile app’ startup. Unfortunately, investors are not interested in startups at idea stages. It takes a lot of craftsmanship to make a ‘Great Product’ from a ‘Great Idea.’
If you have developed a mobile app, the following are strategies that can help you on the pathway to establishing a successful startup.
1. VCs see feasibility
If you approach investors without prototypes, they might dismiss you. Venture capitalists do not forecast or speculate anything. They get numerous approaches with the working models. VCs knows that many people reach the ‘Idea’ stage,’ but only a few people touch the next stage.
2. Competitive Landscape
There is a very tiny possibility that the same type of mobile app idea is already on the market or is already launched but with a difference. You have to show anything that distinguishes your startup.
3. You must have investment basics
After founding a mobile app startup, you ought to know almost all its terminology. Or else, you will be referred to as a ‘Dumb founder of a rusty startup.’
4. Get a Co-founder
Running a business alone is risky. Co-founders not only share capital and risk but also technical skills. It’s really rare to find one person who possesses all the necessary qualities: management technical, and sales.
With 75 of the fortune 100 active in corporate venture capital (CVC) and 41 of them having a dedicated team, CVC is no doubt an important source of start-up funding. Big names in the space include Google Ventures, Intel Capital, Cisco Investments and Dell Ventures. In an interview with Forbes, Christine Herron highlights top three things that will help you attract CVC to your business.
Know that Numbers Matter
CVCs want to hear about numbers before they can decide to invest in a company. It’s true that return on investment is not the only motivation for CVCs to invest in a start-up. However, without a demonstrable possibility of success, it will be difficult to convince a CVC to fund your business.
Have a Diverse Team
Some CVCs such as Intel’s Diversity Fund will not invest in your company unless you have a diverse team. CVCs believe that a diverse team can pull from a wide range experiences, backgrounds and skillsets increasing the chances of success.
Move with the Trends
Intel Capital has recently invested $60 million in 15 start-ups that are data focused, indicating a bias towards companies that are moving with the times. CVCs are alive to the quickly changing customer expectations and won’t put their money into your business unless they are satisfied that you will meet customer expectations. If you fail to meet customer expectations, you can as well prepare to leave the market before you are forced out by the competition.
Social venture capital focuses on companies that are looking to provide real social change. It is a form of investment capital that is usually offered by an impact investor or a group of social venture capitalists. Social venture capital often backs companies that want to solve social and environmental issues, such as curbing climate change. The companies can aim to solve these problems either directly through their service or product, or by implementing certain programs in this area.
Social Venture Capital is a philanthropic form of investing because it aims to find companies with a strong social conscience. Although social venture capital focuses on investing in socially responsible companies, it still emphasizes returns. It is not simply provision of donations or a form of charity work. Social venture capitalists are interested in investment opportunities that have a healthy return on investment.
Social venture capital is mainly provided by specialist social venture capital firms and impact investors. Almost all major venture capital firms have special social venture capital funds that operate alongside traditional funds. Additionally, both local and international development banks can provide social venture capital.
There are many types of social venture capital investors. The common ones are social venture accelerators, social incubators and funds, non-profit oriented funding, and business angels.