Business 11 July 2017
I wanted to address some of the disturbing news that broke recently about sexual harassment of women raising capital in Silicon Valley.
Sexual Harassment Again? Really?
Men treating women in professional settings in ways that violate basic rules of decent behavior that any college freshman would understand is nothing new. Unfortunately, this type of thing happens all the time in every industry. But when stories surface from women entrepreneurs about inappropriate encounters with male VCs, it's just another wake-up call that we have so much more work to do before we can reach gender parity in the entrepreneurial world.
A brief recap: In late June, The Information, a tech news site, reported that six women called out Justin Caldbeck, co-founder of Binary Capital, for “unwanted and inappropriate advances.” These experiences happened when these women were raising money or looking for guidance as they started their own businesses.
Three of the six women went public. Susan Ho, co-founder of Journy, a travel agency for Millennials, said Caldbeck texted her in the middle of the night asking to meet up while in the process of discussing investing in her startup. Leiti Hsu, another Journy co-founder said the venture capitalist grabbed her thigh under a table at a bar. And Niniane Wang, co-creator of Google Desktop, allegedly said that Caldbeck attempted to sleep with her while informally recruiting her to work for his company.
These stories involving Caldbeck sparked a huge conversation on social media. Many women shared their stories with other publications like Techcrunch and Fortune, including Wethos founder Rachel Renock (one of the winners of the pitch competition at the Million Dollar Women Summit) who was featured in the New York Times coverage of this issue in Silicon Valley.
Caldbeck’s initial response was total denial of these allegations, but as the story spread, he issued an apology to the women who spoke up. A small victory, but also a reminder that there are still many more Caldbecks who will never deliver apologies in print and have already sabotaged hundreds of companies in early stages run by women.
As a huge advocate for women raising money, it’s disheartening to see that this kind of sexism and the inappropriate advances that I’ve heard about anecdotally for years is even more rampant than I thought. And it's important that the offenders feel on notice. I think we can check that box now.
Now What Can We Do?
Let me tell you my take on this. There have always been men like Caldbeck who are part of the problem, not the solution. I have met them in every phase of my career, but I also personally know plenty of "good guy" VCs who fully support women entrepreneurs and stand for more equitable treatment of women. Some of them are on my advisory council for Million Dollar Women and many more have funded thousands of women-run companies.
While the media is heavily focused on the offending VCs right now, I want to remind you that rapid change comes from building new networks that champion women entrepreneurs.
These new networks include the VC firms (even the all male ones) that have pristine gender track records and women-owned VC firms and women's angel groups. Let's find them, work with them, build successful businesses, bring other women with us and just let the moldy cherry tomatoes fall to the bottom of the crate.
Studies show that when minorities make up over 30% of the group they are integrating, discrimination problems tend to subside. We are far from that 30% today, but we will get there.
Today just 3% of women entrepreneurs make a million in revenues and only 4% of VC money goes to women entrepreneurs. That needs to change.
I’ve made it my mission to work on getting these two statistics to be relegated to history (remember when women couldn't vote or get a credit card or loan in their own name?) by supporting women entrepreneurs with everything I’ve got and building a thriving community so that we can succeed in greater and greater numbers, no matter how many tomatoes are in the box. We will see these 3% and 4% numbers soar in our lifetimes by building powerful networks that cross gender, race, age and industries.
How to Avoid Moldy Tomatoes
If you are a woman entrepreneur and have found yourself in a situation with a male VC you know seems over the line, stop working with them immediately no matter how much money is on the table (they don’t deserve to work with you and be a part of building your dream company!) and make sure to warn other entrepreneurs to avoid them as well. Always do your research, not just online but by asking other women who have raised. It's a small world when you are raising capital and there is pretty much nowhere to hide.
By connecting with other women entrepreneurs through communities like Million Dollar Women, SheWorx, NAWBO and Dreamers and Doers, we will be able to identify who to steer clear of and who to put at the top of your pitch list.
I believe the best way to keep moving the needle on the growth of women-run businesses is to focus all of our time and energy on the VCs and investors in this space who want to see women entrepreneurs succeed. What do you think? Come find me on Twitter @juliapimsleur or Facebook.
For additional fundraising resources, check out this free list of female-friendly angels, VCs and accelerators.
20 JuneEditors picks
If you are a woman, a person of color or LGBTIA+ identified and are a part of a start-up company, this is the competition for you. The SoGal Global Pitch Competition is being hosted in over 25 cities and will culminate in a final contest in Silicon Valley as well as a "3-day immersive educational bootcamp." This could be an unprecedented opportunity for you, your business and for the future of entrepreneurial diversification.
We all know how important diversity is for the world and for any business entity. But the statistics need to catch up with these ideals, because diversity isn't just a moral imperative it can also have an impact on the success and efficiency of a business. So if the ethics isn't enough to get you interested, maybe these statistics will.
- Companies in the top quartile for ethnic and racial diversity are 35% more likely to have above-average financial returns
- Companies in the top quartile for gender diversity are 15% more likely to have above-average financial returns
- Bottom quartile companies (in both gender and racial diversity) are less likely to achieve even average returns
- In senior executive teams in the US for every 10% increase in racial and ethnic diversity EBIT (earnings before interest and tax) rose 0.8%
Despite the fact that diversity is good for business, funding as a woman or a minority is incredibly challenging, but this competition could be someone's game-changing opportunity.
SoGal is a global education and empowerment platform focused on diverse investors and entrepreneurs. Their mission is "to close the diversity gap in entrepreneurship and venture capital." A tall order, given that 2.2% of VC funding went to women in 2018. Compounding the gender gap with race shows an even poorer picture: in the past decade only 0.1% (yes, that is a decimal) of funding was allocated to black women.
It is a straight up fact that companies with higher levels of diversity perform better, so why is it so hard for diverse start-ups to get funded? Oh right, racism, sexism, homophobia, implicit biases, inequality, classism... the list goes on, but thankfully that's where SoGal comes in! According to Kelley Elizabeth Henry, director of SoGal, "We're done waiting for these statistics to change; we're taking action to point investment capital toward these diverse-led startups. [...] We will change the future of entrepreneurship."
To enter this competition all you have to do is be a part of a pre-Series A startup (raised less than $3M) and have at least one "woman or diverse" founder. After you apply to pitch, you'll have to be able to make it to one of the "regional round location," which range from the more typical options of New York and Los Angeles to global locations such as Nairobi or Bangalore. And, if you're really playing to win, you better earmark February 28 to March 1 of next year, because that's when the top teams will be in San Francisco duking it out to the very end. And by "duking it out," I mean participating in "curated educational programming," talking to press and getting "facetime in front of top-tier investors." Though not everyone can win, the experience in itself looks to be well-worth the time it takes to fill out an application form and huff it to the nearest large city for the first round.