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


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


A Modern Day Witch Hunt: How Caster Semenya's Gender Became A Hot Topic In The Media

Gender divisions in sports have primarily served to keep women out of what has always been believed to be a male domain. The idea of women participating alongside men has been regarded with contempt under the belief that women were made physically inferior.

Within their own division, women have reached new heights, received accolades for outstanding physical performance and endurance, and have proven themselves to be as capable of athletic excellence as men. In spite of women's collective fight to be recognized as equals to their male counterparts, female athletes must now prove their womanhood in order to compete alongside their own gender.

That has been the reality for Caster Semenya, a South African Olympic champion, who has been at the center of the latest gender discrimination debate across the world. After crushing her competition in the women's 800-meter dash in 2016, Semenya was subjected to scrutiny from her peers based upon her physical appearance, calling her gender into question. Despite setting a new national record for South Africa and attaining the title of fifth fastest woman in Olympic history, Semenya's success was quickly brushed aside as she became a spectacle for all the wrong reasons.

Semenya's gender became a hot topic among reporters as the Olympic champion was subjected to sex testing by the International Association of Athletics Federations (IAAF). According to Ruth Padawer from the New York Times, Semenya was forced to undergo relentless examination by gender experts to determine whether or not she was woman enough to compete as one. While the IAAF has never released the results of their testing, that did not stop the media from making irreverent speculations about the athlete's gender.

Moments after winning the Berlin World Athletics Championship in 2009, Semenya was faced with immediate backlash from fellow runners. Elisa Cusma who suffered a whopping defeat after finishing in sixth place, felt as though Semenya was too masculine to compete in a women's race. Cusma stated, "These kind of people should not run with us. For me, she is not a woman. She's a man." While her statement proved insensitive enough, her perspective was acknowledged and appeared to be a mutually belief among the other white female competitors.

Fast forward to 2018, the IAAF issued new Eligibility Regulations for Female Classification (Athlete with Differences of Sexual Development) that apply to events from 400m to the mile, including 400m hurdles races, 800m, and 1500m. The regulations created by the IAAF state that an athlete must be recognized at law as either female or intersex, she must reduce her testosterone level to below 5 nmol/L continuously for the duration of six months, and she must maintain her testosterone levels to remain below 5 nmol/L during and after competing so long as she wishes to be eligible to compete in any future events. It is believed that these new rules have been put into effect to specifically target Semenya given her history of being the most recent athlete to face this sort of discrimination.

With these regulations put into effect, in combination with the lack of information about whether or not Semenya is biologically a female of male, society has seemed to come to the conclusion that Semenya is intersex, meaning she was born with any variation of characteristics, chromosomes, gonads, sex hormones, or genitals. After her initial testing, there had been alleged leaks to media outlets such as Australia's Daily Telegraph newspaper which stated that Semenya's results proved that her testosterone levels were too high. This information, while not credible, has been widely accepted as fact. Whether or not Semenya is intersex, society appears to be missing the point that no one is entitled to this information. Running off their newfound acceptance that the Olympic champion is intersex, it calls into question whether her elevated levels of testosterone makes her a man.

The IAAF published a study concluding that higher levels of testosterone do, in fact, contribute to the level of performance in track and field. However, higher testosterone levels have never been the sole determining factor for sex or gender. There are conditions that affect women, such as PCOS, in which the ovaries produce extra amounts of testosterone. However, those women never have their womanhood called into question, nor should they—and neither should Semenya.

Every aspect of the issue surrounding Semenya's body has been deplorable, to say the least. However, there has not been enough recognition as to how invasive and degrading sex testing actually is. For any woman, at any age, to have her body forcibly examined and studied like a science project by "experts" is humiliating and unethical. Under no circumstances have Semenya's health or well-being been considered upon discovering that her body allegedly produces an excessive amount of testosterone. For the sake of an organization, for the comfort of white female athletes who felt as though Semenya's gender was an unfair advantage against them, Semenya and other women like her, must undergo hormone treatment to reduce their performance to that of which women are expected to perform at. Yet some women within the athletic community are unphased by this direct attempt to further prove women as inferior athletes.

As difficult as this global invasion of privacy has been for the athlete, the humiliation and sense of violation is felt by her people in South Africa. Writer and activist, Kari, reported that Semenya has had the country's undying support since her first global appearance in 2009. Even after the IAAF released their new regulations, South Africans have refuted their accusations. Kari stated, "The Minister of Sports and Recreation and the Africa National Congress, South Africa's ruling party labeled the decision as anti-sport, racist, and homophobic." It is no secret that the build and appearance of Black women have always been met with racist and sexist commentary. Because Black women have never managed to fit into the European standard of beauty catered to and in favor of white women, the accusations of Semenya appearing too masculine were unsurprising.

Despite the countless injustices Semenya has faced over the years, she remains as determined as ever to return to track and field and compete amongst women as the woman she is. Her fight against the IAAF's regulations continues as the Olympic champion has been receiving and outpour of support in wake of the Association's decision. Semenya is determined to run again, win again, and set new and inclusive standards for women's sports.