SAN FRANCISCO: Lauren Foundos has excelled in just about everything she has in mind, from college sports and Wall Street trading to the online workout startup Forte.
Being a woman in the overwhelming majority of men’s world of venture capital remains a handicap – But, like many other women entrepreneurs, she has worked hard to achieve success.
“In some cases, before I spoke, they’d ask me if I would quit the CEO position,” Foundos said of interviews with venture capitalists.
“That was a whole new level.”
The men would talk in front of her in meetings, discussing whether she could handle the job emotionally as if it wasn’t there, or loudly asking who would be interested in the books.
“When that happens, I tell them I am here,” said Phaundus. “I am a money man. I worked in big banks for over 10 years. I was the best in everything I have ever gone.”
Startups can only count for so long on friends, family, or savings before they finally need to find investors willing to put money into startups in exchange for a stake in the company.
The money invested in startups in their early days, perhaps when they are nothing more than ideas or prototypes, is called “seed” financing.
When it comes to getting support for a startup, it’s all about trust, and that doesn’t seem to exist when it comes to businesswomen, according to Foundos and others interviewed by AFP.
“I don’t think women need to have things,” Foundos said of venture capital support. “But I don’t think they see the same amount of bargains.”
Forte has grown rapidly as the pandemic features gyms and fitness centers scrambling to provide online sessions to members.
Foundos brought in the “right man”, a male partner with a British accent, to provide a more traditional face to potential investors and increase their chances of obtaining financing.
You have resorted to asking venture capitalists you meet if they have invested in women-led companies before, and the answer has always been no.
Sex for financing?
A tiny fraction of the venture capital funds goes to women-led startups in the United States, according to Alison Cabin, general partner at the W Fund and founder of Women Who Tech (WWT).
Being sexually suggested in exchange for funding, or even an introduction to venture capitalists, is common for startups, according to a recent survey by WWT.
About 44% of organizations surveyed reported experiencing harassment such as sexual insults or unwanted physical contact while seeking funding.
Although last year hit a record in venture capital financing, support for women-led startups has decreased despite data that these companies are already achieving a better return on investment, according to Cabin.
“It’s not about altruism or philanthropy, it’s about making (a load) of money,” Cabin said of supporting women-led startups.
Set the bar higher
Funding prospects become even bleaker for women of color.
Black entrepreneur Fonta Gilliam worked overseas with U.S. State Department financial institutions before creating Invest Sou Sou, a start-up social banking service.
Gilliam took the idea of the Village Savings Circles that it had seen thriving in places like Africa, put it into a free mobile app, and added AI and partnered with financial institutions.
She created a prototype for Sou Sou and started generating revenue to show that she can make money, but found it more difficult to obtain financing than her male peers.
“We always have to overcompensate and overcompensate,” Gilliam said. “Where male-led startups are certified, we have to prove it 10 times.”
Gilliam received insultingly low ratings for her startup, some of which were so predatory that she pulled away.
“We’re still skinny and mean, but I think it will pay off in the end,” said Gilliam.
“There is one thing about female-owned and black-owned startups: Because there is such a high barrier to getting support, our businesses tend to be more volatile, stronger and more resilient.”
Women-led startups tend to be outside the “pipeline” that informally directs entrepreneurs to venture capitalists, according to Cabin and others.
In Silicon Valley, this channel is open to white male tech entrepreneurs from select universities like Stanford.
The pipeline became full of people from the same universities; Cabin said.
“It doesn’t represent the world, and that is a problem because you are trying to solve the world’s problems through the lens of very few people – Most of them are white men. “
Investors who compete for gems in the scrum startup tech lose a wealth of returns and stability, which can be gained by investing in waste founders, according to Caroline Lewis, managing partner at Rogue Women’s Fund, who does just that.
“Ultimately, it’s the right thing to do and it’s good to do,” Lewis said.