BREAKING THROUGH

For black women founders in tech, the task of raising
money is even more difficult, according to a recent
study by digital undivided’s Project Diane. On average,
black women tech founders raise just $36,000,
the study found, and only 11 have raised $1 million
or more. Of those, five are in New York City, including
executive training firm Execonline; Sweeten, a matchmaker
for decorators and clients; Plum Perfect, a tool
for shoppers; Dibs, a pricing platform for fitness centers;
and used furniture marketplace AptDeco.
To the extent that previous employment in a tech
company is a major predictor of entrepreneurial success,
black women are at a disadvantage since they are
under-represented in such companies.
It doesn’t help that few women are partners or
members of investment teams at most venture capital
firms
Venture capital is still very much a man’s game, the
new old boys’ club, according to many women entrepreneurs.
Nationally, 6 percent of the partners in venture
capital firms are women.
In New York City, according to a CUF analysis, the
20 most active VC firms collectively have a total of
192 men on their investment teams—and 15 women
or seven percent. That means convincing investors is
harder when women pitch women-oriented businesses
where men may not relate to the product, the service,
the consumer or the market, such as fashion, beauty,
childcare or even e-commerce ventures. Women entrepreneurs
often talk about investors having to go home
to do the “wife test” before they make a decision.
Conlyn Chan has been looking for an investor for
her company Lawless Accessories, which makes high
end evening bags, but even after several years in business
she has yet to find one. Part of the problem, she
says, is that a lot of male investors don’t understand
the fashion industry: “We’re not a tech startup and
we’re not going to make [a lot] of money in just a few
years.”
When there are women on the investment team,
firms are much more likely to fund women-led startups,
according to an analysis by Babson College’s Diana
Project. They are twice as likely to invest in companies
with a woman on the management team and three
times more likely to invest in companies with women
CEOs. Women venture capitalists aren’t eager to talk
about being a woman in a largely male industry, but acknowledge
that the lack of women investors is a factor
in the number of female entrepreneurs who are funded.
“If you had more women VCs, more women would
definitely get funded,” says one female venture capitalist
who has been investing in tech companies for years
and who wished to remain anonymous.
VCs and women entrepreneurs can end up talking
past each other--women are often seen as not
thinking big enough, lacking confidence and being
overly risk averse
The venture capital model calls for big bets, fast
growth and all-or-nothing exits. That paradigm often
works for men, who, studies show, tend to take more
risks to achieve fast growth. But it can work against
women, who are more likely to opt for steady, profitable
expansion and reinvestment in the business. But that
approach doesn’t necessarily fit the venture model.
“The founder who says ‘I want to make more this
month than I spend and I want that to happen for
20 years and that’s a successful business,’—in the VC
world, that doesn’t count,” says venture capitalist Charlie
O’Donnell, founder of Brooklyn Bridge Ventures
whose portfolio has many women-founded companies.
Women entrepreneurs express their frustration at
a model that often doesn’t take into account many potentially
successful but less flashy businesses, or entrepreneurs
who are reluctant to predict big wins early in
the game—or before the game has even started.
To venture capitalists used to boldness, women’s
more measured approach can seem like a lack of confidence
or a lack of vision.
“The male founders tend to pitch their potential,”
says O’Donnell. “Female founders tend to say ‘I’m taking
your money. I feel responsible and this is what I feel
comfortable saying is most likely to happen.’ To a lot of
investors, it comes off that their aspirations are smaller.
They’re not, but it can come off that way.”
That said, even women acknowledge that female
founders need to be willing to think bigger. At the
Ernst & Young EY Entrepreneurial Winning Women
Breaking Through 39