Women VCs interviewed say despite the low numbers, the VC industry is a great place for women. By Grace Nasri (Managing Editor, FindTheBest)
The facts: Women make up just 6% of chief executives at the leading 100 tech companies. Women are launching companies at a rate 1.5 times higher than the national average, but they receive less than 10% of venture funding. Women make up only 9% of board members of Silicon Valley companies. At the leading 25 VC firms, only 8% of the investment professionals are women.
The opinions: The rationalizations as to why this is the case range from placing the onus on women for not majoring in quantitative fields and lacking the necessary skills needed to lead or invest in successful companies, to blaming what some see as a male-dominated culture that promotes traditionally masculine-qualities at the expense of women. The reality likely falls somewhere in-between.
Despite the relative lack of women in the tech and venture capital world, there are many successful female partners thriving in this space today — many of whom say that despite the low numbers, the VC industry is a great place for women.
Deborah Farrington (StarVest Partners), Jenny Lee (GGV Capital) and Annie Lamont (Oak Investment Partners) have made Forbes’ Midas List of the leading venture capitalists over the years. They shared their personal stories about how they got their start, what inspires them about the space and what advice they would give fellow women aspiring to enter venture investing.
The venture world embraces many backgrounds
A unique thing about the venture capital industry is that it welcomes a range of backgrounds. Of the women interviewed in this article, one has a background in business, one is an engineer and one is a political scientist.
“Women need to realize that there are many ways to get involved in venture capital,” Farrington, who received her BS in Economics at Smith College and went on to get her MBA at Harvard Business School, advised. “My background in finance gave me the expertise to analyze business models. For e-commerce investing, women who have backgrounds in retail, fashion and media are well prepared because they understand the customers.”
The venture capital space is great for women
Venture capitalists tend to agree that since the industry is so performance-based and results-driven, it favors people solely on objective and quantifiable metrics — leaving little room for discrimination or favoritism.
Lee, who received her BS in Electrical Engineering at Cornell and her MBA from the Kellogg School of Business at Northwestern University, said that being a woman never hindered her; in fact, she says the advantage of working in such a metrics-driven sector means performance is judged on a very objective scale.
“I do not feel hindered [as a female VC]. The big advantage of being in the venture capital industry is that performance can be clearly measured by the work you have done, CEOs you have supported and the returns you have delivered. Staying focused, finding good companies to invest in and returning capital to our investors continue to be the number one objective and best measurement for performance in our industry,” Lee explained, adding that there are many great things women can bring to the table in the venture world.
“Women have a sixth sense that can sometimes be useful when combined with analytical skills to assess startup team dynamics and personalities. Women may also work better on male-dominated boards to help balance views and perspectives,” Lee said.
Lamont, who received her BA in political science from Stanford University, agreed, adding that being a woman in the industry has many positives. “I would say it’s an industry where you are measured on results — and that is very good for women. All accomplished entrepreneurs and VCs know that it’s the intangibles that make for a successful VC. It’s about two things: insight and judgment. If you have that, you will succeed. I don’t ever think about being a woman in the business. In fact it may be a positive as there are so few of us that people remember you,” Lamont said.
So why the low numbers?
Many VCs have a balanced view when assessing the reason for the relative lack of women in the space — seeing both a male-dominated industry and a field that women don’t tend to migrate towards.
Farrington, who co-founded StarVest Partners with Laura Sachar and Jeanne Sullivan, saw the problem as two-sided. First, fewer women have technical backgrounds in areas like technology and engineering. Second, “networks are important [in the venture capital space] and because there are mainly men in venture now, women generally have had less access to these,” she said.
Having said that, there has clearly been a lag for women in the finance and investment world, but times are changing.
“From a historical perspective, there have been waves of women becoming involved in different areas of finance: Commercial banking in the early 1970s, investment banking in the 1980s and private equity in the 1990s. Venture capital gained popularity in the late 1990s/early 2000s. Women’s participation has tended to lag compared to men’s in these fields but they become more involved as opportunities develop and fields grow and become more popular; I anticipate that the same will happen with venture.”
Lamont also saw the issue as two-sided. “It’s become evident that women have been less likely to found start ups and I think this is also reflected in the number of female VCs. But small, male-founded VC partnerships are simply more likely to hire guys that look like them. I also think fewer women seek the industry out which is a shame because it’s fabulous for women,” Lamont said, encouraging women to pursue careers in the venture capital space.
Advice for women exploring the VC world
A common perception in the VC world is that venture capital is a great industry for women to be in, even if there may be some hurdles. And as women increasingly join this space and pave the way, the easier it will be for future generations of women.
Lee’s advice to women interested in getting into the VC space is to develop a strong background about the industry, a solid knowledge about the sector of interest and finally, to not let gender influence any decision.
“Find out everything you can about the industry by reading public literature and talking to business professors and friends who are in the sector to understand the value creation cycle within VC — from deal sourcing to closing a deal to helping exit/IPO a deal,” Lee said, adding, “Be bold and pursue your dreams if this is what you want to do. Gender should not deter you from entering this sector.”
Instead of trying to blend in, Lamont advised that women should find a way to differentiate themselves.
“Distinguish yourself in a growth industry, make an impact at a franchise company, develop an expertise, knowledge base and network that will give you insights others don’t have and then never give up until you have that fabulous job in a VC firm,” Lamont suggested.
Finally, Farrington advised that despite an uphill climb, women need to realize their strengths and what they can bring to the table.
“Women often evaluate business issues with a broader, top-down perspective and are very good at drawing on external resources for input. Women also tend to lead by forging a consensus, which is important at the board level where alignment of interests is key. I find women often contribute differently at the board level. They are oriented to providing meaningful assistance by mentoring and teaching others as partners, not preachers. These traits are valuable to VC-backed companies as they and their CEOs seek advice and mentorship from their investors."
“As with any competitive field, your co-workers, co-investors and fellow board members will try to test you,” Farrington said. The solution? “Speak up early on at every meeting to help shape the conversation…. Over one’s career, sometimes you have to ask yourself, would you rather be liked or effective? It’s great if you can be both, but if there is an issue and you need to choose, I choose effectiveness because that is more important to getting the right outcome.”
This post was originally posted at Forbes.
About the guest blogger: Grace Nasri is currently the Managing Editor at FindTheBest, a comparison search engine. Prior to FindTheBest, Grace was as an Assistant Editor at an international Iranian newspaper. She is a contributing blogger for the Huffington Post. Grace holds a BA in Political Science and Global Studies from UC Santa Barbara and an MA in International Relations from New York University. Follow her on Twitter at @GraceNasri.