Underestimate women founders at your peril.
That’s the underlying message for venture capitalists in a recent report from Morgan Stanley, “Beyond the VC Funding Gap.”
“Women and multicultural entrepreneurs are an emerging market in the U.S. in the same way that the internet was 20 years ago or cloud-computing a decade ago,” the report states.
The authors cite a 2018 Boston Consulting Group study, which found that while women raised less than half the capital as their male counterparts, they earned 78 cents per dollar invested compared with 31 cents for men.
“Companies and products founded by women and multicultural entrepreneurs that address a market inefficiency or need, which they’ve identified based on their personal experiences, are the exact types of calculated expansion risks that VCs should be considering,” Morgan Stanley’s report states.
Women founders who’ve been behind some of the most successful startups to emerge from StarterStudio are prime examples.
A StarterStudio grad, Kristen Wiley founded influencer marketing company Statusphere based on her experience as both an influencer and a brand marketer. After noticing a disconnect between brands and micro-influencers, she set out to create a platform to connect them in a personally curated way.
Statusphere has attracted hundreds of thousands of dollars in investments—including$25,000 from StarterStudio’s evergreen seed fund—with its initial raise led by San Francisco-based angel investor Jason Calacanis, who counts Uber among the seven unicorn companies he’s helped fund.
Statusphere has created campaigns for 150 brands, including Experian, OPI and Conair, engaging 1,000 micro-influencers out of 10,000 who applied. The company, which so far has focused on women’s products and female consumers, now has 13 employees, 11 of whom are women.
Getting beyond the double standard
Wiley, 27, believes that because most venture capitalists are men, there’s a natural tendency for them to relate more readily to male CEOs because they can see themselves in them.
And what do they see in her at first glance?
When pitching Statusphere, she’s been asked the same question three times: “What are you, 14?” Once, this came immediately after a younger male founder pitched to the same investor without his age being questioned.
“I think one of the biggest benefits of being a female is that you are typically underestimated, so when you do win someone over, it’s almost better than when you started,” she said. “But you definitely do have to work a lot harder to win people over.”
Pink Lotus Technologies CEO Maryann Kilgallon has attended a number of StarterStudio’s educational programs and is in the UCF Business Incubator.
Her idea for a wearable that helps protect children from abuse and neglect turned into the POMM, or Peace of Mind Monitor, which begins manufacturing this month and will be on the market this summer.
Pink Lotus Technologies was recently selected to pitch at the Impact Pediatric Health SXSW Conference in Austin, Texas, an event highlighting the best pediatric digital health and medical device innovations. Kilgallon will have one-on-one meetings with leading children hospitals in Los Angeles and Atlanta, as well as Stanford Children’s Health.
As a Mexican-American woman, she believes investors sometimes raise more doubts about her business strategy than they might otherwise, but she’s not deterred.
“They need to realize that we’re coming, and we’re not going to stop. There are many of us who are very aggressive and determined.”
She encourages women to put themselves out there and get involved in local events such as those at StarterStudio, as well as getting involved in groups specifically for women, as she has with Women of Wearables and Women in Technology.
Strength in numbers
StarterStudio’s latest Idea Stage Accelerator cohort is half female.
One of its members, Jacqueline Dufault Schumer, drives three hours each way from Boynton Beach to participate in it.
The idea for her company, Selffy, came to her on her honeymoon. She envisions Selffy as a private antidote to social media, providing the same ability to preserve memories, feelings, images and video without the toxic effects. The concept was the first-place winner at Orlando’s Startup Weekend in 2019.
Because her company targets women primarily, she appreciates being surrounded by other women founders at StarterStudio.
“Everyone is so supportive of each other. It’s definitely really helpful. They all have experience in different areas: some in sales, some in design, some of them just experience in trying to launch a startup already. And it’s awesome working with them,” she said.
Women starters coming out of StarterStudio have also proven highly successful launching B2B companies, including Suneera Madhani, CEO and co-founder of payment processor Fattmerchant. Madhani was recently named to the Forbes Fintech 50 and was Wiley’s inspiration to turn her idea for Statusphere into a reality.
Another B2B company that has found success after going through StarterStudio is HENO, an electronic medical record and practice management software solution for physical therapy clinics.
For 11 years, Katie Hohman, HENO’s CEO and co-founder, has run two successful physical therapy clinics that have enabled her to self-fund her new company, apart from a $25,000 investment from StarterStudio.
Although she has chosen not to give up a share of HENO in exchange for capital investment, she considered it for a while and courted a few investors. When she made pitches together with her husband, Jeff, HENO’s chief technology officer, she noticed the investors tended speak directly to Jeff even though she was the CEO.
“It’s very discouraging to be in a tech space where investors are looking at the male as the leader,” Hohman said.
But she didn’t let it get in her way. HENO is starting 2020 with a run rate of $1 million, nearly 800 customers in 34 states, nine U.S.-based employees and a 15-member, India-based revenue cycle management billing team for HENO’s customers.
While women founders have been and still are a minority, that is beginning to change.
Crunchbase reports that 20 percent of global startups that raised their first funding round in 2019 had a female founder, which is double the percentage in 2009. Last year also set a record with 21 female-founded unicorns.
Also in 2019, 52 women became partners or general partners at U.S. venture capital firms with over $25 million in assets under management, according to Pam Kostla, CEO of All Raise.
Nonetheless, only 3 percent of capital went to female-founded startups and 10 percent to companies co-founded by men and women.
“If VC firms stay homogenous and keep investing in people who look like them, they’ll get left behind,” Kostla wrote, pointing out that Morgan Stanley estimates VCs risk losing out on $4 trillion by not investing inwomen and other underrepresented entrepreneurs.
Maybe they should take a cue from StarterStudio Idea Stage accelerator grad Ashley Hart,co-founder of She Plays. Hart is a woman entrepreneur innovating in a field long dominated by men: sports. She Plays, which launches this week, is the only fantasy sports site dedicated exclusively to US women’s leagues.
“In general in the sports world, I think it will take women coming in and investing in women’s sports to move the needle,” Hart said. “We’ve got to want to be in the boardrooms, want to be the decision-makers in the industry, and once we can become that in established arenas or become that in arenas we create—the fantasy sports world for example—then there won’t need to be any convincing that investing in women is worth it. We will just know it.”
StarterStudio Executive Director has been a founder or co-founder multiple times over the last 25 years.
She said this experience has given her a clear perspective on how perceptions of women as leaders and drivers of innovation continue to evolve.
“We’re still a little short of a level playing field,” Myerssaid. “As women, I think we may have some hard-wired resourcefulness and capacity for resilience, and if we call on those strengths deeply, they may give us an edge. I couldn’t be more delighted to see the women who participate in StarterStudio breaking barriers and showing that diversity in all things can change the future for us all.”