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Why Women Entrepreneurs Aren’t in Venture Capital. It’s Probably not why we think.

Does anyone else notice how the studies coming out will just say something like “only 3% of VC backed companies have female founders”?

Why don’t they ever calculate how many female founders are actually looking for VC funding, and then out of those…how many of those businesses actually are attractive to venture capital?

I do believe these ladies stories about bad experiences.  That makes sense to me because there is a supply and demand theory in play.  If there’s not a lot of women out here, the likelihood of an incident is high because supply is low.  Nothing more then statistics and common sense to come to that conclusion.  If you’ll notice in one of the articles I posted, a woman said “I was the only woman at the event…”.  Had there of been more then one woman, her odds of being targeted would of been greatly reduced.

Noticed quite a few other statements in the articles as well: “I met him at a NY angel event”, “entrepreneur & investor”, then the guy who’s emails where plastered all over Tech Crunch was posing as a “mentor” for these young ladies at accelerators and incubators.

These statements all indicate these aren’t really VCs.  These are inexperienced investors and middlemen posing as “mentors”.  Kind of like pedis haunting the playground is exactly what it reminds me of 😉

In a way, I feel very badly for these women.  When “investors” are approaching them about their “business”, it makes them believe they have fundable companies.  When in fact, they may not.  They may never realize that their companies or ideas really need to make a pivot or gain more traction in order to be “fundable”.  “Investors” approaching them acts as validation.   

For example, one of the company’s raising money was a “kids event app”.  I’ve seen women pitching pet shop apps, and the like.  In that same article, they say “VC’s often only invest in companies they can relate to.  VC’s can’t relate to these companies”.

No, they invest in companies that can make real money, with big markets.

It seems to me what needs to happen, is simply learning how to do due diligence on perspective investors.  This is something not alot of people talk about.  They need to make sure the person they’re going to meet can actually fund that company.  This problem is crucial for females to learn:

  • How large the fund is
  • When the fund was raised
  • Is the fund active
  • How many companies have been invested in out of that fund
  • What is their reserve ($2 for every $1 invested?)
  • What other companies have they invested in
  • What do those portfolio CEO’s think of that investor

These are all basics of due diligence on investors that will tell you whether or not you’re wasting your time.  Also many investors look for deal flow before they close their new funds.  If their fund is looking maxed out & they’re taking a meeting with you, they might be getting ready to close a new one.  Usually they’ll tell you, if they don’t ask what quarter they plan on closing.  If it aligns with your capital needs, then go.  If not, then move on to someone else.

As a whole, investors are pretty good about giving you signals to let you know where the gaps are.  If you can get their attention, they reward you with a Linkedin Connection.  If they like your one-liner, they reward you with a “send me your deck”.  If they like your deck, they reward you with a “you can meet me”.  If they fall off at anytime during this process, for example, they don’t like you’re deck, they won’t progress you to the next step.  This should be a clue to you that’s where your problem is.  And many of them will review your team and market before even speaking to you in the first place.

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