You know the stats, and they're pretty depressing: Women get less than five percent of VC funding, despite evidence that women-led tech companies, when venture-backed, bring in 12 percent higher revenue than similar male-led companies and have a 35 percent higher return on investment.
Among VCs, Canaan Partners' John Balen is bucking the trend. He's helped finance four women-led companies: Blurb, Cardlytics, Urban Sitter, and Stayful. Overall, some 20 percent of the firm's money has gone to women founders, co-founders, or CEOs; out of the firm's 18 investing professionals, six are women. I recently spoke to Balen about the dearth of women venture capitalists, the women entrepreneurs he has backed, and his advice for women who are pitching VCs. Below is an edited and condensed version of our conversation.
Let's start with the obvious question: Why don't women get more funding from venture capitalists?
Part of it is the number of women who are asking for venture capital.
In the early days, venture capital was all about backing technology companies. You probably didn't have enough women yet in the ranks of tech companies who went out and did their own ventures. Women still earn just 19 percent of engineering degrees.
Thankfully, now, e-commerce is starting to matter. The consumerization of technology has opened the window. You don't have to be a pure technologist to start a company today. Look at Meg Whitman. She's not a technologist but she led eBay, from very early on, and was a great CEO.
How many pitches do you see from women entrepreneurs?
It's low. It's got to be less than 20 percent, if not 10 percent.
I would say it's been increasing. I think it's picked up in the last 24 months. And we may be seeing more women pitching than other venture firms do. We're receptive to talking to women entrepreneurs, and I think people do figure this out. Women co-founders will reach out to other women for advice.
What share of women do you fund?
We've never tracked the percentage of women that we've funded.
Julie Wainwright [co-founder of The RealReal, a company backed by Canaan] told me that it's harder for women to be taken seriously as entrepreneurs, and to raise money, than it used to be. She says the venture capital community has become more homogenous. There are fewer female VCs than there were during the first dot-com boom, and VCs now expect entrepreneurs to look like them--young and male.
You would think more venture firms would have more parity between men and women. We have a lot of women partners and associates here and we've just never thought twice about it. But I look at other firms, and I'm kind of stunned. How come it isn't 50/50? I don't know why that is. I would hope that we'll see a broader set of investment professionals.
And how do you benchmark it? Do you compare venture firms against hedge funds or private equity funds?
I don't think benchmarking against private equity or hedge funds would help. Being the most diverse field within finance is sort of like being the best house in a really, really, bad neighborhood.
And we're supposed to be the innovators!
Do male and female entrepreneurs pitch differently?
I would say some of the women that come through here tend to be more organized and more put together in the pitches. I think that most of the women, by the time they get in here to do the pitch, they're seasoned enough, and they've gone through more adversity than some of the males who come through. It's purely a guess.
It's amazing how many bad pitches we see. We publish a pitchbook, and it tells people what they have to say. But they still don't hit the relevant points.
Once they get venture backing, do women entrepreneurs build their companies differently than men do?
Some of the female CEOs have been better team builders. Maybe they have a different orientation than some of their male counterparts.
Some of it may be age-related. The female founders may be a little more experienced. Someone like Julie [Wainwright] is one of the more experienced and savvy, because she's done a lot of things. A younger person wouldn't even recognize some of the things Julie would take care of in a minute.
Does it matter if female founder has young kids?
Irrelvant. I don't even think twice about it.
But what if a founder's family responsibilities mean they can't work killer hours all the time?
Give me a break. There's a lot of guys who have been successful with big families. They have to manage that with their spouse. It's part of life.
I feel like if someone's coming in here to raise money, they know they have to manage their life in some way. How they do it, that's up to them. If you're walking in and painting that picture on a female exec--that she can't handle the hours--you're being very biased.
What advice do you have for women who are pitching VCs?
Bring in your team. The deals that go well are not about great leaders but about who they surround themselves with. Don't be a lone ranger.
If a woman is trying to get backing from a firm that has a female partner, should she try to get in front of that woman, even if she her investment specialty is not a great match for the company?
I would do that. It's hard if you're in software and she's in biotech, but in general, yes, get in front of the other woman.
And if you've got a male vice president of engineering or chief technology officer that's really strong, bring him along. It's like going in to see a customer. How do I get that customer to listen?
I'm reminded of the complaint that the best way to get venture capital money, as a woman, is to hire a male front man to represent your company.
I don't think that's true. You don't need to do that.
Other advice for women?
At the end of the day, you have to get the deal. So do your homework ahead of time. Has the firm had any positive experience with a female executive or entrepreneur? That may be your sort order. There may be some group knowledge or recognition or less bias in that firm, so get that in your favor.