Why is it so hard for women to get taken seriously by VCs?

Why is it so hard for women to get taken seriously by VCs?

Just before the holidays I had coffee with Anne, an ex-MBA student running a fairly large product group at a search engine company, now out trying to raise money for her own startup. She had an interesting insight: Existing content/media companies were having the same problem as hardware companies that rarely made the leap to new platforms. And she had a model for a new media company for mobile and wearables.

I thought we were going to talk about her product progress, so I was a bit taken aback by her most pressing question, “Why is it still so hard for a woman to get taken seriously by a venture capitalist?”

I had lots of answers, but none of them good enough for either of us.

I had a better answer when I came back from New York. But first, some background.

Entrepreneurship at Columbia

I was in New York last week teaching my annual 5-day version of the Lean LaunchPad class at the Columbia Business School. We had 130 students in 30 teams who got out of the classroom and did 2,154 customer interviews in 5 days — a remarkable effort for 120 hours. Their amazing Lessons Learned presentations can be seen here.

In the past year, entrepreneurship at Columbia has taken a pretty remarkable leap across the entire university. The Columbia Startup Lab is a visible symbol of how the university is making entrepreneurship an integral part of all colleges at the university.

The Columbia Startup Lab is in a building completely taken over by WeWork — a company that provides co-working spaces in 12 cities worldwide. I wandered through four full floors of SohoWest WeWork sticking my head into the random startups’ offices.

Looking at office after office of startups, a few things stood out.

This was just one of the 14 WeWork co-working spaces in New York City — and there are over 100 co-working spaces in New York.
Michael Bloomberg has yet to get his due for engineering the New York entrepreneurial ecosystem.
I was struck by something that had been slowly percolating through my head during my entire week: There is a higher percentage of women on the founding teams of New York City startups than in Silicon Valley.
Women in New York startups

This last point is definitely not a data-driven observation. However after spending a week teaching 130 entrepreneurship students, about 35 percent of them women, and then walking through 100+ WeWork and TechSpace offices in New York, I get the impression that the number of women leading startups in New York is much higher than in the San Francisco Bay area.

When I mentioned this to my friends running the NYU and Columbia entrepreneurship programs, they looked at me like I just discovered that it gets dark at night. Their answer seemed to make sense: A higher percentage of startups in New York are focused on media, communications, real estate, financial tools — all the products of industries centered in NYC — and all are attempting to disrupt them with products that run on and are delivered by 21st century platforms. (Think of what Refinery29 is doing to Conde Nast.)

These are industries where women have had a history of leadership positions — and more importantly, where young female entrepreneurs can find role models and mentors, just as their male counterparts do in Silicon Valley’s tech-centered, pay-it-forward culture.

This raises an interesting question: Is the credibility of female entrepreneurs in the eyes of New York VC’s something about the venture firms, or is it about the industries they are funding?

One can make the case that the New York venture capital industry is rooted in the 21st century, not the 20th. While some venture firms have been around for awhile, perhaps the newer partners have a different model of what a successful founder looks like than their West Coast peers.

Or perhaps it’s as simple as this: New York VCs are funding startups that play on the disruption of New York’s key strengths in media, finance, and real estate. The women founding New York startups have an existing track record in those industries, and therefore pass a gender-neutral “VC credibility” bar.

Correlation does not imply causation

Those bemoaning the dearth of women founders in Silicon Valley might want to see if there is a real disparity between the coasts or if it is just my selection bias.

If it’s real, why?

Did women founders already have leadership roles in the industries they’re about to disrupt?
Can women find existing role models?
Have women built a network of women mentors?
What role does the type of startup play?

Companies that get started and built in New York City tend to be applied technology.
Companies that get started and built in Silicon Valley have historically focused on core technology.
What role does venture capital play?

Is there any difference in funding women for old-line firms versus 21st century firms?
What role does industry segment play (i.e., lots more women founders in media companies than you find in enterprise software companies)?
On the West Coast, the history of successful startups is technology first, and perhaps VCs weigh that more in what they want to see in founders.
Is it as simple as having credibility in the industry you want to startup in?
The irony is that when venture capital scaled in the late 1970s, it wasn’t clear whether Boston or Silicon Valley was going to be the center of innovation. In 1978 to 1979, as the tax laws and pension fund rules changed, Silicon Valley VCs began to act like pirates, funding new waves of semiconductor startups and crazy ideas like Apple. Meanwhile, their brethren in Boston continued to act like bankers, funding existing markets in minicomputers. Boston never recovered.

The lesson was that VC culture mattered in building an entrepreneurial ecosystem.

I sent Anne, my student, an email when I returned: “You may want to take a trip to NY and pitch some of their VCs.”

Lessons learned

Lots of entrepreneurial activity in NY
Different industry focus than in Silicon Valley – more media, finance, real estate
Women seem to be more represented as founders
If a NY bias toward women as founders is true, why? And what lessons can be drawn for Silicon Valley?


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