Last year $84 billion of VC investment went to startups. Guess how much went to women-led ventures?
A measly 2.7% was invested in women-led companies, according to Fortune. And for women of color, the stats are far more dismal. Only .0006% of the $424.7 billion in total tech venture funding raised since 2009 went to black women founders, according to ProjectDiane.
For years, the tech sector has shouted from the rooftops that code is power. On every panel they insisted “it’s a meritocracy! If you’re a good programmer or if you launch a kickass startup, you will succeed.” They said they were blind to gender, race, disability, sexual orientation, etc. But the data shows that even if you have the coding and entrepreneurial chops, the tech sector is overwhelmingly benefitting white, cis, straight men.
And that’s why we launched the Women Startup Challenge in partnership with Craig Newmark, founder of craigslist and Craig Newmark Philanthropies — to shakeup a culture and economy that’s made it exceedingly difficult for women entrepreneurs to access capital. We’ve also partnered with Mozilla who is working with us in their commitment to an internet that catalyzes collaboration among diverse communities working together for the common good and innovation.
Over the last 12 years we’ve worked with thousands of women in tech and startup founders through our Women Who Tech TeleSummits and Women Startup Challenges. We’ve learned that while some investors point to a pipeline problem as to the reason why so few women and, in particular, women of color receive little funding, that just isn’t true. We have yet to see a pipeline issue. In fact, we’ve had more than 2,000 women-led startups come through our Women Startup Challenges, with 40% being women of color.
According to a study by First Round Capital, founding teams that include a woman outperform their all-male peers by 63%. This is not about altruism. This is business, and generating trillions of dollars in returns.
In our mission to fix the funding gap and address unconscious biases, here are three key things we learned along the way:
Invest in Startups that Respect User and Data Privacy
If there is one lesson that the 2016 US elections taught the tech world, it’s that user data and privacy is sacred and should be built into the roots of every single tech product. We can’t have funding equity if people don’t feel secure using the products being created. In turn, we’ve heard from several diverse investors, that they aren’t as likely to invest in products that don’t have privacy built in. Diversity and inclusion are interconnected, and to invest in startups who don’t have privacy built into their products isn’t true inclusion when we’re thinking about safety and human rights, and, subsequently, the communities that are deeply impacted.
The startup sector has a huge opportunity to unlock innovation that gives users control over their data, and builds consumer trust confidence, therefore generating more business and increasing profits. This is one of the primary reasons that for our next Women Startup Challenge Europe, cohosted by the Office of the Mayor of Paris, we’ve partnered with Mozilla to provide a $25,000 cash grant to go to the startup that has best built transparency, privacy, and accountability into their product. Mitchell Baker, Executive Chairwoman of Mozilla, will be one of the in-person judges evaluating the startup finalist pitches, and will award the grant. We’re excited to show the startup sector, especially the investors who fund them, that there is not only a business case for investing in startups with diverse founders, but there’s also a business case for putting people first and baking privacy and transparency into products from the start.
Diversify your Network
Many people in tech live in a filter bubble. People get stuck in a rut, primarily networking with others who share similar interests to them, and who look like them. This turns into a co-dependency on warm leads for intros to other like-minded people, particularly when it comes to making investments. So it’s not surprising to see that most investment funding goes to white men. We can’t continue to foster innovation with the same perspectives at the table getting the same funding over and over again. We need fresh perspectives and new ideas by people of all genders, identities, races, socioeconomic backgrounds, ages, etc. if we are truly going to solve the world’s toughest problems.
Here’s a few places to begin expanding your network:
- Backstage Capital invests in women, people of color, and LGBTQ-led startups.
- Our organization, Women Who Tech, showcases and helps fund women-led startups. We use an inclusive definition of “woman” and “female”, and we welcome transwomen, genderqueer women, and non-binary people who identify, have identified, or have been identified as female or woman.
- StartHer in France supports women in technology and entrepreneurship in France.
- Blooming Founders is a business social network for early stage women-led ventures in London.
- digitalundivided is a pipeline for women of color focused on innovation and entrepreneurship.
- Change Catalyst builds tech inclusion programs.
- Project Include uses data and advocacy to accelerate diversity and inclusion solutions in the tech industry.
- Plum Alley is a network of investors who fund women-led ventures.
This is just a sampling of where to start. All of these companies and organizations are deeply connected to diverse networks. Introduce yourself to them, work with them, and invest with them.
#ChangeTheRatio of Your Portfolio
Commit to hiring more inclusive investors, and develop a plan to designate a percentage of your fund to support inclusive startups. I know that some people in the tech sector are resistant to quotas but this will help you get into the practice of being intentional and seeking out diverse startups who have the potential to generate huge returns. Eventually you won’t need a quota because diversity will become a natural part of your investment strategy as you expand your networks.
To gain a better understanding of how this intention is put into action, we would love to invite you to attend the Women Startup Challenge Europe on 25 October 2018 at Paris City Hall. There will be diverse investors such as with various backgrounds and experiences, and this is the perfect opportunity to have more in-depth conversations about how to help fix the funding gap. The Startup Challenge is also an inspiring illustration of what inclusive funding looks like, which will be awarding $60,000 in cash grants. In addition to the funding, all finalists will also receive: pitch coaching, one on one meetings with investors the day after the Women Startup Challenge, and other crucial startup friendly services. Our jury includes Fatou Diagne, Partner and cofounder at Bootstrap Europe, Mitchell Baker, Executive Chairwoman at Mozilla, Julien Quintard, Managing Director at Techstars Paris, and Alejandro Tauber, Editor-In-Chief at TNW (The Next Web).
If you’re a woman founder or cofounder reading this, apply for funding. We want to fund as many women-led tech startups as we’re able. Help us do that!