People 14 May 2017
It was May of 2010 when I found myself, six months pregnant, crying in the backseat of a car service, as my in-house position was on the chopping block from another round of corporate cuts. I must have cried for about a week. Not because I really missed my job, but because I felt helpless… and lost. Entering my third trimester, I couldn’t even apply for jobs. Who would hire me?
Then one day, when I literally found myself barefoot and pregnant in the kitchen watching a marathon of Real Housewives of New York, I stopped being sad. I realized this could be an opportunity to reinvent myself; and luckily, I soon secured a job with a former employer. I was to start some time after my baby’s arrival. It never even occurred to me that I may want to stay home with a baby. I always assumed I would want to work.
My first daughter arrived on Labor Day weekend. We hired a nanny, who started when my daughter turned 6-weeks-old. I went back to work at week seven, ramping up to four days of work in New York City, and one day a week from home in the New Jersey suburbs.
As most new mothers will tell you, going back to work is hard. Tears were shed. Pump parts were forgotten. Late nights were hard. Sleepless nights even harder.
But I managed. I had the support of my husband, work got busy, my baby girl was happy, and life rolled right along.
Around this time, I also read an article in USA Today about a new trend in office spaces called coworking. Hmm, I thought. How cool would it be to have a place like that here, in the suburbs, that also has childcare? I dreamed of a place where I could plug in, participate in conference calls, fulfill my job responsibilities, and still nurse my infant throughout the day. But work was busy, life was busy, and I had little time to devote to cooking dinner, let alone nurturing a business idea. So I let the concept gestate.
And then I got pregnant again.
This time, I wanted to take a longer maternity leave - four months off, my company’s max. I wanted to use the time to decide how to move forward. Did I want to continue working full-time? Did I want to stay home with my girls? Did I want to work part-time? What was the right formula for me?
Deborah Engel during her daughter's birthday party at Work and Play
I quickly realized I wasn’t cut out to be a stay-at-home mom. But I also couldn’t commit to the long hours and endless commute anymore. I tried negotiating a part-time deal with my employer; they said no. I wrestled with what to do, and after having a heart-to-heart with a senior level female executive, who reminded me that kids are only young once, I decided to call it quits and launch my own business.
I remembered the idea I had for coworking and childcare, which my husband dubbed Work and Play, and I decided to pursue it while also freelancing as a public relations specialist. I started attending networking events and met other entrepreneurs in the community. I talked about my idea for a flexible workspace, one that would also offer drop-in, customizable childcare.
In late 2013, while seven months pregnant with a third daughter, I bought a building that is now Work and Play. By offering childcare and a workspace, we are offering a solution for parents who want to balance their career and family. Our community is made up of creatives, entrepreneurs, mothers, fathers, friends and their young children.
What have I learned on this journey so far?
1. Learn something new from everyone you meet. People are interesting. They have fascinating careers. They have stories to tell. Ask questions.
2. Don’t try too hard to figure out your future. Your goals and ideals might change. Focus on today. But also allow yourself to daydream.
3. If you’re young or in transition, consider jobs that allow for flexibility - find a trade that you can use at a company or freelance, like a graphic designer, copywriter or social media marketer. Therapy of all kinds - speech, OT, PT, psychological - allow for flexible schedules through private practice.
4. Be confident in your decision and know you won’t be perfect. You may mess up. You may feel you could do better. But trust me, you’re doing great!
Beth Goldring, Director of Play, at Work and Play's childcare space
7 Min Read
Amid the mainstream conversation about inclusion and justice in the workplace, otherwise known as #MeToo, a Silicon Valley venture capital fund considered how they can be more inclusive of the women, minority, and LGBTQ entrepreneurial communities.
Their solution? Ask the CEOs they currently fund to promise to hire senior-level employees from diverse backgrounds.
Lightspeed Venture Partners, a venture capital fund that has investments with blockbuster startups such as The Honest Company, Affirm, and HQ Trivia, has asked its portfolio company CEOs to sign a “side letter" affirming their commitment to consider women and other underrepresented groups for senior jobs and new spots on their board of directors.
Can making pledges— or even hiring a C-Suite level employee to manage diversity efforts— really make an impact on the funding gap for multicultural women-led companies?
Many experts say it's going to take systemic change, not letters of intent.
It is well reported that the amount of investment going to multicultural women-led companies is incongruous to the entrepreneurial landscape and the performance of their businesses. Between 2007 and 2016, there was an increase of 2.8 million companies owned by women of color. Nearly eight out of every 10 new women-owned firms launched since 2007 has been started by a woman of color yet, these businesses receive an abysmal 0.2 percent of all funding. Amanda Johnson and KJ Miller, founders of Mented cosmetics, were just the 15th and 16th Black women in history to raise $1M in the fall of 2017.
The multicultural women who do defeat the odds to get funded receive significantly less than male founders. The average startup founded by a Black woman raises only $36,000 in venture funding, while the average failed startup founded by a White man raises $1.3M before going out of business.
The implicit and explicit bias not only impacts individual multicultural female founders, it could be stifling innovation. For example, companies with above-average diversity on their management teams reported innovation revenue as 45 percent of total revenue compared to just 26 percent of total revenue at companies with below-average management diversity. That means nearly half the revenue of companies with more diverse leadership comes from products and services launched in the past three years.
In our economy today, venture capital is responsible for funding the work of our most innovative companies. Venture capital-backed U.S. companies include some of the most innovative companies in the world. In 2013, VC-backed companies account for a 42 percent of the R&D spending by U.S. public companies.
With a wealth of multicultural women entrepreneurs and evidence to support the performance of diverse companies, why does this funding gap persist?
According to Kristin Hull, founder of Oakland-based Nia Impact Capital and Nia Community, many traditional investors consider women or minority-led businesses as a category in their portfolio, like gaming tech or consumer packaged good. Hull, who focuses on building portfolios where financial returns and social impact work hand-in-hand, argues gender and ethnicity are not a business category and investors who dedicate a specific percent of their portfolio to diverse companies are the ones missing out.
“We are doing this backwards," says Hull. “Adding diverse, women-run companies actually de-risks an investment portfolio."
Hull points to research that has found women are more likely to seek outside help when a company is headed for trouble and operate businesses with less debt on average. What's more, a study conducted by First Round Capital concluded that founding teams including a woman outperform their all-male peers by 63 percent.
Ximena Hardstock, a 43-year-old immigrant from Chile experienced this bias first hand before she raised $5.1M for her tech startup. “How do you get an investor to notice you and take you seriously?" says Hardstock. “White men from Harvard have a track record and investors are all looking for entrepreneurs that fit the Zuckerberg mold. But a woman from Chile with an accent who started a technology company? There is no track record for that and this is a problem so many women of color face."
Hardstock came to the U.S. from the suburbs of Santiago when she was just 20-years-old. Alone with no family or connections in the U.S., Hardstock worked as a cleaning lady, a bartender, and a nanny before she began teaching and working in education. “I had a lot of ideas and Chile is still a very conservative country," she says. “Most women become housewives but I wanted to do something different. So, I moved to the U.S."
Hardstock went on to earn a Ph.D. in policy studies, served as vice president of Advocacy for National StudentsFirst and worked as a member of Washington DC mayor Adrian Fenty's cabinet. Her experience working in both education and government exposed her to a need to simplify the process of connecting lawmakers with their constituents. As a result, Hardstock founded Phone2Action, a digital advocacy company that enables organizations and individual citizens to connect with policymakers via email, Twitter, Alexa and Facebook using their mobile phones.
Because venture capital and private equity are not necessarily meritocracies, Hardstock initially struggled to get in an audience with the right investors despite her company's growth potential, her experience, and her education. In fact, it wasn't until she won a competition at SXSW in 2015 that she could get an audience with a serious venture capitalist.
While it may seem like symptoms of a bygone era, both Hardstock and Hull say the path to investor relationships is forged in places where many women of diverse backgrounds are not – ivy league organizations, golf courses and late night post-board meeting cocktails attended mostly by White men of means.
The history of venture capital has never been very balanced, according to Aubrey Blanche, global head of diversity at Atlassian software development company and co-founder of Sycamore, an organization aiming to fix the VC funding gap for underrepresented founders. “White and Asian men have built the venture system and for generations have been seeking out people like themselves to invest in."
Personal and professional networks are critical for founders to connect with investors, but many multicultural women don't have access to the networks their White peers have. According to a study conducted by PRRI, the average White person has one friend who is Black, Latino, Asian, mixed race, and other races. This common situation makes getting that all important warm introduction to established VCs very challenging for multicultural women founders.
“Is the ecosystem of your network equivalent to your net worth? Absolutely," says Hardstock. “For us, we have to build our own ecosystem and recreate what happens on the golf courses and at the Harvard reunions."
To Hardstock's point, most multicultural women with entrepreneurial aspirations lack that Ivy League network. According to reporting published in The New York Times, Black students make up just nine percent of the freshmen at Ivy League schools but 15 percent of college-age Americans. This gap has been largely unchanged since 1980.
While notable female investors such as Arlan Hamilton, Joanne Wilson, and Kathryn Finney are actively working to close the funding gap for women of color, only seven percent of current senior investing partners at the top 100 venture firms are women. Less than three percent of VC funds have Black and Latinx investment partners. Without an influential network, Hardstock and entrepreneurs like her are left screaming for a seat at the table.
When Black, Latina, and Asian women founders do get in the room with the right investors, they have to work harder to get the investors to relate to their products and services. “Entrepreneurs solve problems they understand," says Blanche. “When multicultural women entrepreneurs present their businesses to a homogenous group of male investors who may not be equipped to understand the idea, they may pass on an amazing business."
Take, for example, the founders of Haute Hijab or LOLA. Founders of both successful startups would have to explain the market for their services to a table occupied mostly by men who may never have considered that Muslim women want more convenient access to fashion and have never considered women might prefer to purchase organic tampons.
This lack of familiarity typically means reduced funding for women and a host of other consequences.
As one recent study pointed out, even the way investors frame questions to women can impact funding. According to the Harvard Business Review, female founders are often asked “prevention-oriented" questions focused on safety, responsibility, security, and vigilance. Male founders, on the other hand, are often asked questions focused on hopes, achievement, advancement, and ideals.
When all of these factors are considered, a side letter may not be enough to begin to close the funding gap.
Both Blanche and Hull say real change can be made by democratizing information and education on impact investing. Both women say educating investors and MBA candidates about impact investing is the best way to overcome current bias.
Blanche's organization, Sycamore, produces a newsletter for new angel investors who want to help close the funding gap while making money in the process. Hull's firm has an internship program for multicultural girls from Oakland to expose them to the worlds of investing, entrepreneurship, business leadership, and financial literacy.
“I'm excited about the changes I see," says Blanche. “I see more firm employing the Rooney Law on an institutional level, an increase in smaller firms looking at underserved communities, and the democratization of institutional funding."
Hull adds that as long as multi-cultural women-led firms continue to show returns and outperform or perform on par with companies founded by White men, the investor community will rethink their portfolio strategies.
This piece was originally published in 2018.