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Investing In Change: Inside X-Factor's Female-Forward Strategy

Business

The investment and startup worlds are dominated by men. A whopping 80 percent of companies that receive VC have male-only founding teams. Of all VC funding last year, women received only 2 percent. Inevitably, these statistics have kickstarted a movement in order to eradicate these barriers to entry for female founders.


Enter XFactor Ventures, a unique fund that makes it their goal to focus on female entrepreneurs. Last year venture capitalists invested $58.2B in companies with all-male founders, while women received just $1.46B, and only seven percent of partners at most VC firms are women. Inspired by the percentages and the desire to change the stats, the business runs on the belief that, “we as an industry can do better than this."

What's perhaps most unique about the fund is that its investment team comprises of successful female founders. They manage the fund, providing capital, connections, guidance and mentorship to the companies in which the it invests. The company is based on twin beliefs that female founders are an underserved community and that diverse founding teams will outperform their peers in the market. Unlike other scout programs, where investors have the ability to make an investment without input from anyone, when an XFactor investment team member sources a deal, she will share with the full team and to get input. To date they have invested $800K into eight companies.

We spoke with seven of the XFactor investment partners about their experience in VC culture and they shared with us some nuggets of advice for future founders pitching their businesses.

Jessica Mah, InDinero
Tell us briefly about your company, what inspired it and point of difference?

InDinero does accounting and back-office operations for small and mid-sized businesses. We want to transform the accounting industry by providing more automation in a field that has seen little innovation over the past decade! I was inspired because my last business needed accounting help and I wished there was a software+service company that could take the problem off my hands and also grow with my business as we grew. I hated the idea of having to use clunky software like QuickBooks and hire a traditional accountant. With inDinero, customers get modern and entrepreneur-friendly software to see how their business is doing in real-time, and they also get a finance team to run their accounting for them.

What frustrates you about VC culture as it is today?

They're slow to make any decisions on who to fund and like to wait for other people to come in first. Once there's competition, they're all over you! And until then, they can't make an investment decision!

What is one piece of advice you would give to female founders who are pitching investors?

Run diligence on them just as much as they are diligencing you. Ask them how they provide value to entrepreneurs, what's their advice on how you should think through the business, and who else can they introduce you to?

Jessica Mah. Photo courtesy of Forbes

Liz Whitman, Manicube
Tell us briefly about your company, what inspired it and point of difference?

I started Manicube to make working women's lives easier-- to bring confidence and color into their workdays at the office.

What is one piece of advice you would give to female founders who are pitching investors?

Not being direct with entrepreneurs. Honest feedback is the best way to learn!

What is one piece of advice you would give to female founders who are pitching investors?

Run at what scares you most about your own business and do it early; people who go to work because they are passionate about what they're doing will stay with you forever; identify the crystal balls and don't drop them.

Nicole Sanchez

Nicole Sanchez, Credit Hero
Tell us briefly about your company, what inspired it and point of difference?

Credit Hero is the first system designed to help consumers improve their credit scores. We started it because we're familiar with the problem and saw a massive gap in the market. There are many tools to help you get your credit score but nothing to solve that pain point, so we created it.

What frustrates you about VC culture as it is today?

My biggest frustration about VC culture today is groupthink. On one hand, tech is highly collaborative and VCs share deals. That's the fantastic nature of this industry. The more backers the companies you fund have, the higher the likelihood of success for your investments, so it behooves the ecosystem to collaborate. Unfortunately, though, I still see limited original thinking and risk-taking. VC's ask founders to paint a bold vision and yet when it comes to funding often filter for problems that they themselves face. When VC's are not representative of the majority of consumers, this habit of groupthink is expensive ($118M in funding for $400 juicers comes to mind) and limits the breadth of what gets funded missing large opportunities. At X Factor I love that we're willing to make bold, big bets.

What is one piece of advice you would give to female founders who are pitching investors?

Be bold, big, and courageous.

Create and articulate a bold and big vision. The best founders see a world that does not yet exist, so own and advocate for your vision.

Surround yourself with the best possible people, build a community of other founders who will have your back and get help when you need it. Be self-aware and build in opportunities to take stock.

Fearlessness is a myth, but courage is where you'll win.

You got this.

Erica Brescia, Bitnami
Tell us briefly about your company, what inspired it and point of difference?

Bitnami is the leading provider of packaged applications for any platform. The Bitnami application automation platform delivers and maintains a catalog of ready-to-run server applications and development environments in partnership with the world's leading cloud providers such as Amazon, Google, Microsoft, Oracle and more . That same application automation platform that drives over 1 million deployments per month is also available to Enterprise developers looking to streamline their software development processes. Based in San Francisco CA, and with offices around the world, Bitnami is proud to be a rapidly growing self-funded company.

What inspired Bitnami was seeing first-hand how "software is eating the world." Packaging and configuration of server software may not sound exciting to many, but it is a crucial piece of getting the applications that we all interact with on a daily basis up and running, and in keeping them secured. Bitnami enables millions of users around the world to deploy their software on virtually any platform they're running in an efficient, consistent way that also makes it easier to migrate between platforms as their needs evolve.

What frustrates you about VC culture as it is today?

A lack of alignment. There are so many mega-funds that have so much capital that they need to put to work that companies sometimes end up taking too much cash at sky-high valuations. This puts them in a tough spot if they don't exceed all of their milestones, potentially resulting in down-rounds that are extremely dilutive to founders and employees. I like the trend I'm seeing of smaller funds, making fewer bets, that are focused on capital efficiency and sound business models

What is one piece of advice you would give to female founders who are pitching investors?

Startups require more tenacity and perseverance than anyone who hasn't founded one would know. Be prepared for it to take longer than you think to do just about everything - from fundraising to launch to scaling.

Aubrie Pagano, Bow & Drape
What is one piece of advice you would give to female founders who are pitching investors?

Plan for everything to cost 1.5x and take 1.5x as long. Focus your efforts on building the absolute best team (including investors) possible because they will make the difference in execution -- you can't do it alone.

Aubrie Pagano

Anna Palmer, Wondermile
What is one piece of advice you would give to female founders who are pitching investors?

Be confident and pitch your big vision. Don't be scared to be bold. If you think your company can be a billion dollar company go in and convince people why.

Ooshma Garg, Gobble
What is one piece of advice you would give to female founders who are pitching investors?

I believe breakout founders have a GEM DNA made of grit, experimentation, and mission. The most important advice is to have a grit at your core and never give up.

Contrary to popular belief, breakout companies take years to build and almost die numerous times. It's important to weather the storms and maintain your composure in the ups and the downs of your journey. Constant experimentation is a must! Netflix evolved its service time and time again to both find and keep product/market fit. As the world changes, your stellar product may need to change with it. In my experience, founders who continue to visit and listen to their customers regularly, no matter how big their company grows, are the most successful. Lastly, when people are coming and going, the product is changing, and the world around you is changing, a core mission will be your north star. To build a long-term company, not just a current product, is rooted in a mission that unifies your team.

If you can keep going, always be adaptable and listen to your customers, and develop a culture and approach around a singular mission, I believe you'll be successful.

Ooshma Garg. Photo courtesy of Startup Festival

3 Min Read
Health

7 Must-have Tips to Keep You Healthy and Fit for the Unpredictable COVID Future

With a lack of certainty surrounding the future, being and feeling healthy may help bring the security that you need during these unpredictable times.

When it comes to your health, there is a direct relationship between nutrition and physical activity that play an enormous part in physical, mental, and social well-being. As COVID-19 continues to impact almost every aspect of our lives, the uncertainty of the future may seem looming. Sometimes improvisation is necessary, and understanding how to stay healthy and fit can significantly help you manage your well-being during these times.

Tip 1: Communicate with your current wellness providers and set a plan

Gyms, group fitness studios, trainers, and professionals can help you to lay out a plan that will either keep you on track through all of the changes and restrictions or help you to get back on the ball so that all of your health objectives are met.

Most facilities and providers are setting plans to provide for their clients and customers to accommodate the unpredictable future. The key to remaining consistent is to have solid plans in place. This means setting a plan A, plan B, and perhaps even a plan C. An enormous amount is on the table for this coming fall and winter; if your gym closes again, what is your plan? If outdoor exercising is not an option due to the weather, what is your plan? Leaving things to chance will significantly increase your chances of falling off of your regimen and will make consistency a big problem.

The key to remaining consistent is to have solid plans in place. This means setting a plan A, plan B, and perhaps even a plan C.

Tip 2: Stay active for both mental and physical health benefits

The rise of stress and anxiety as a result of the uncertainty around COVID-19 has affected everyone in some way. Staying active by exercising helps alleviate stress by releasing chemicals like serotonin and endorphins in your brain. In turn, these released chemicals can help improve your mood and even reduce risk of depression and cognitive decline. Additionally, physical activity can help boost your immune system and provide long term health benefits.

With the new work-from-home norm, it can be easy to bypass how much time you are spending sedentary. Be aware of your sitting time and balance it with activity. Struggling to find ways to stay active? Start simple with activities like going for a walk outside, doing a few reps in exchange for extra Netflix time, or even setting an alarm to move during your workday.

Tip 3: Start slow and strong

If you, like many others during the pandemic shift, have taken some time off of your normal fitness routine, don't push yourself to dive in head first, as this may lead to burnout, injury, and soreness. Plan to start at 50 percent of the volume and intensity of prior workouts when you return to the gym. Inactivity eats away at muscle mass, so rather than focusing on cardio, head to the weights or resistance bands and work on rebuilding your strength.

Be aware of your sitting time and balance it with activity.

Tip 4: If your gym is open, prepare to sanitize

In a study published earlier this year, researchers found drug-resistant bacteria, the flu virus, and other pathogens on about 25 percent of the surfaces they tested in multiple athletic training facilities. Even with heightened gym cleaning procedures in place for many facilities, if you are returning to the gym, ensuring that you disinfect any surfaces before and after using them is key.

When spraying disinfectant, wait a few minutes to kill the germs before wiping down the equipment. Also, don't forget to wash your hands frequently. In an enclosed space where many people are breathing heavier than usual, this can allow for a possible increase in virus droplets, so make sure to wear a mask and practice social distancing. Staying in the know and preparing for new gym policies will make it easy to return to these types of facilities as protocols and mutual respect can be agreed upon.

Tip 5: Have a good routine that extends outside of just your fitness

From work to working out, many routines have faltered during the COVID pandemic. If getting back into the routine seems daunting, investing in a new exercise machine, trainer, or small gadget can help to motivate you. Whether it's a larger investment such as a Peloton, a smaller device such as a Fitbit, or simply a great trainer, something new and fresh is always a great stimulus and motivator.

Make sure that when you do wake up well-rested, you are getting out of your pajamas and starting your day with a morning routine.

Just because you are working from home with a computer available 24/7 doesn't mean you have to sacrifice your entire day to work. Setting work hours, just as you would in the office, can help you to stay focused and productive.

A good night's sleep is also integral to obtaining and maintaining a healthy and effective routine. Adults need seven or more hours of sleep per night for their best health and wellbeing, so prioritizing your sleep schedule can drastically improve your day and is an important factor to staying healthy. Make sure that when you do wake up well-rested, you are getting out of your pajamas and starting your day with a morning routine. This can help the rest of your day feel normal while the uncertainty of working from home continues.

Tip 6: Focus on food and nutrition

In addition to having a well-rounded daily routine, eating at scheduled times throughout the day can help decrease poor food choices and unhealthy cravings. Understanding the nutrients that your body needs to stay healthy can help you stay more alert, but they do vary from person to person. If you are unsure of your suggested nutritional intake, check out a nutrition calculator.

If you are someone that prefers smaller meals and more snacks throughout the day, make sure you have plenty of healthy options, like fruits, vegetables and lean proteins available (an apple a day keeps the hospital away). While you may spend most of your time from home, meal prepping and planning can make your day flow easier without having to take a break to make an entire meal in the middle of your work day. Most importantly, stay hydrated by drinking plenty of water.

Tip 7: Don't forget about your mental health

While focusing on daily habits and routines to improve your physical health is important, it is also a great time to turn inward and check in with yourself. Perhaps your anxiety has increased and it's impacting your work or day-to-day life. Determining the cause and taking proactive steps toward mitigating these occurrences are important.

For example, with the increase in handwashing, this can also be a great time to practice mini meditation sessions by focusing on taking deep breaths. This can reduce anxiety and even lower your blood pressure. Keeping a journal and writing out your daily thoughts or worries can also help manage stress during unpredictable times, too.

While the future of COVI9-19 and our lives may be unpredictable, you can manage your personal uncertainties by focusing on improving the lifestyle factors you can control—from staying active to having a routine and focusing on your mental health—to make sure that you emerge from this pandemic as your same old self or maybe even better.