Funding Females

A look into what it’s like raising venture capital as a female.

I need to start by telling you that in writing this piece about the female funding gap, I feel very much like these ladies:

It’s a tough and tricky land mine of a story. And I’m terrified to write it. Because while I am a female, I’ve never tried to raise funds. And I’ve certainly never been tasked with deciding who should receive funds nor tried to navigate the complications that entails. Pretty much the only qualifications I have to write this story is owning a computer and having access to the Silicon Slopes Medium account.

So, instead of opining, I’m going to stick with the facts and the experiences others have graciously shared with me to address this problem.

So. The Facts. With Linked Citations.

What Those Facts Mean

Even though few female-founded companies are backed by venture, those that are backed generally perform better than venture-backed companies founded by men. So why doesn’t more investor money go to females? Because all investors are sexist pigs. I’M JUST KIDDING, CALM DOWN. If only it were that simple.

But it’s not. It’s a multi-pronged problem with a number of issues contributing to both a lack of females founding companies — even relative to the small number of female founders — and a lack of female-founded companies receiving capital dollars.

The Issues

To learn what’s contributing to the funding gap, I talked to a lot of people. A LOT of people. Founders, investors, and observers of the scene. These people helped me identify some of the major issues that make fundraising feel like a nearly impossible task for any female founder. Those issues are:

Unconscious bias. I heard this term in nearly every conversation I had, and investors’ unconscious bias was offered as one of the top explanations for why women aren’t funded more often. Please. Don’t misunderstand. And don’t send me any angry emails. No one is saying all investors are intentionally biased. Only that they may have unconscious biases, like we all do, and those unconscious biases may affect their investment decisions. We like people who are like us, and in the world of venture, often investors invest in founders who are like them. Most venture partners are male with SAAS backgrounds, therefore, most founders that receive investment dollars are males building SAAS startups.

“People tend to resonate with people like themselves,” says Kickstart Seed Fund founder and managing partner Gavin Christensen. Kristy Sevy, founder of Fuzeplay, has felt the effects of unconscious bias in a number of meetings. “It seems that if you’re not a certain type of person (white male) with a certain type of business (SAAS) and background (BYU), investors [in Utah] have already made up their minds. There have been a lot of meetings where I have taken lead, but the investor will look to my brother for validation after every comment or answer to a question,” she says. “It’s hard to change a bias that people don’t think is there.”

Kristy Sevy, founder of Fuzeplay

It’s a bias that hurts not only women, but the investors who miss out on potentially lucrative investment opportunities. Sara Jones, cofounder of Women Tech Council, explains that while there aren’t a lot of women founding enterprise startups, “there are a lot of women building scalable businesses in other verticals with high growth rates, or who just need the right mentorship nudge to grow in that direction and it doesn’t seem that Utah VCs are playing much in those spaces.” As Sunny Washington, founder of Ardusat explains, “Unless you recognize your unconscious bias, you might be missing out on some opportunities.”

Cultural Norms. These contribute to unconscious bias. And heck, just straight up bias too. Not all cultural norms are bad, obviously. I’m pretty okay with the expectation that every member of society wear clothing in public. But some cultural norms are destructive. Like the cultural belief that women cannot give their all to both being a mom, or future mom, and running a company. “There may be perceptions, fair or unfair, toward a female relative to their whole-hearted risk,” says Sid Krommenhoek, managing partner at Peak Ventures. He explains, “Traditional roles could lead people to ask, ‘Are there other obligations competing for this person’s time?’” In other words, can a woman be a mom and the head of a company? “It’s not right that a woman or any human step onto the stage and be given a higher bar,” Krommenhoek says. Not right as it may be, some women are feeling that higher bar. “I don’t feel like I’m being compared the same way. I have to prove myself in order to get capital,” says Washington.

Sunny Washington, founder of Ardusat

“Social norms change frustratingly slowly,” Christensen says. “When your society has been male dominated for generations, it takes a while for things to change.”

Few women are founding startups.

“Our numbers show that a little over 5% of deals coming in the door are from women,” says Krommenhoek. “We have a pipeline problem. We don’t have many women starting companies,” Washington adds. It’s difficult to determine exactly why this number is so small.

But it could be because women don’t even know, or believe founding a startup is possible. Partly because not a lot of women have done it. “You need to see people like you be successful to believe it,” Christensen says. Minna Wang, analyst at Kickstart Seed Fund, adds, “As women rise through the ranks, other women can see that and it becomes more comfortable for them.”

As of now, it’s not very comfortable for women because they are a major minority in a male dominated industry.“The traditional fields that feed into venture capital are dominated by men and taught predominantly by men,” says Krommenhoek.

The women who are founding startups don’t always feel welcome.

“Some of the ecosystem is not welcoming to women,” says Washington.”I think that until we adjust some of the issues of diversity, making it possible for the underserved to be successful, we’re not facilitating a great ecosystem.”

“I think startup culture can be very bro-y,” says Christensen. Again, this is (hopefully) not intentional on the part of investors. But because they are male, the events and networking opportunities these investors put on tend to be male-centric.

Few women are making investment decisions.

“I think there’s an access problem for women both here (in Utah) and nationally,” says Alison Wistner, managing director at Mercato Partners. “More than 90% of senior investment professionals at venture capital firms nationally are men and there’s a natural tendency for networking circles to contain similar demographics.”

Alison Wistner, managing director of Mercato Partners

“It can be really hard for a male investor to connect with a female founder, especially if her company is female-centric,” says Wang. Washington adds, “Men tend to build SaaS companies. Women are coming from a different perspective.”

My husband once told me about an idea for a company he had heard and thought would never work. However I thought it was one of the best ideas I’d ever heard. It was a service that I, as a woman, would use all the time, but one that he, as a man, would never use.

Jones tells of another such anecdote, which she heard from Matt Cohler of Benchmark at the Silicon Slopes Summit 2017. “[He] told a great story how he regrets not investing in Pinterest. He said ‘I wanted to put a sign on my bathroom mirror so that every day I could remind myself, and the sign would say: ‘I am not a 38-year-old woman.’ Basically he was saying, ‘I didn’t get what the platform was all about.’ What’s interesting is, did it even matter that the platform was used mostly by women? While the growth and traction metrics alone don’t tell the entire story, seems like the investment case would have been pretty clear.”

Perspectives that aren’t known can’t be considered. Having more women making investment decisions makes more perspectives known and considered.

Why investing in women is good for everyone.

Sure, investing in women is good for the earth and karma and will get you into heaven and blah blah blah, but let’s talk cold, hard capitalism: Investing in women can often mean getting a better return on investment.

“I think we should be conscientious about understanding how diversity of all kinds drives returns. Expanding our networks and looking at different business plans is good investing. And it helps if we are constantly trying to add diversity across our portfolio companies’ management teams and boards of directors,” says Wistner.

“When some females are overlooked, for me as an investor it creates an opportunity,” says Christensen. “We take advantage of this market failure.” Christensen adds that part of the reason women tend to succeed is their collaborative nature and high emotional IQ. “It’s rare that you get the big ego-ed woman,” he says.

What women should know before they try and raise money.

Know what to expect. It’s not easy for anyone to raise money for their company. And as a woman, at one point or another, you feel very alone. “You will have to stand alone sometimes. Keep standing,” says Krommenhoek.

There are, however, women who have been through the process and are willing and able to both empathize and help. Finding a mentor or a group of mentors can make the fundraising process far less painful.“I have been blown away by the female mentorship in Utah,” Sevy says. “I’ve found that the more successful a woman is, the more willing she is to give her time. The women really rally together.”

Women can also help change the venture scene by helping investors recognize biases. “I think [the funding gap] can change, just by speaking up,” says Freshly Picked CEO Susan Peterson. “I find more often than not it’s the institution, not the people.”

As for more practical advice, Alison Wistner says, “Women should make a conscious effort to attend the various entrepreneurial events in our state and reach out to local investors and venture capitalists to create awareness for their companies early. It’s not difficult to start developing relationships with investors before you need capital and it makes a significant difference in success rates after you are officially raising a round of financing.”

And Christensen says, “Do everything you can without money. Choose something very fundamental to who you are. Women who start from that end up starting incredible businesses.”

What investors can and should do to fund more women.

Unless investors are interested in losing out on making money, they need to start finding and funding more women.

“It takes awareness,” Wang says. “Everyone needs to be educated that they are missing out and be informed of their biases.” She adds, “It takes recognition and then it takes effort.”

Minna Wang, analyst at Kickstart Seed Fund

Once that awareness is in place, investors need to do what they can to overcome their biases. “I think the only way to overcome bias is the same way we would approach investing in any new region,” says Krommenhoek. “You do it by cutting checks and bringing people to the table.”

Investors also need to practice empathy. Jones says, “The women founders I know are incredibly passionate, strategic, and savvy. When they have to work so much harder to get funding (not anecdotal, the data bears this out), this puts them at a clear distinct disadvantage. Maybe instead of assuming, ‘I wonder if this woman has what it takes to build a successful company,’ say to yourself , ‘This person is so determined to build her company, let me find ways to help her.’”

Investors also need to invest in educating women — and all entrepreneurs — about the advantages of venture capital. “I didn’t know about raising money until well after I could have. I didn’t realize it was a resource,” says Freshly Picked CEO Susan Peterson. “Education needs to start in high school and colleges,” Peterson says. “Time you put into students will pay you back.”

Which is precisely why investors are taking measures to educate women sooner, like Kickstart Seed Fund’s Campus Founders’ Fund. “We want to have more women in the mix, so we have to grow the pool,” says Christensen. “We want to sow the seeds for the next generation to be way more diverse than this generation.”

Finally, investors need to meet women in the middle. They need to be just as willing to reach out to women, as women are to reach out to investors. “Women show up,” Peterson says. “The VCs need to show up for women.”

How MityLite Built A Business From Tables And Chairs

When people think of Mitylite, they don’t think of us as a product so much as a vendor. When you transcend the product, that’s where real value is created.

MityLite has always been an innovative company. It was founded 28 years ago to solve an inherent problem in the portable furniture industry. Hotels, convention centers and churches needed high-quality tables and chairs that were easy to setup and durable. So MityLite created a product that was easy to work with, saved labor cost and set-up time, and performed for years. MityLite products became an industry staple, and the company acquired Broda Seating, a provider of long-term care seating. Both companies were eventually purchased by Sorenson Capital and Peterson Partners (then Prospect Capital Corporation) and became Mity Inc.

CEO John Dudash successfully led Mity Inc. through the acquisition by Prospect Capital Corporation and lent a broader view of the company’s mission as well as a clear path to achieving the organization’s goals. “The company never had a clear path,” Dudash says. “They didn’t see themselves as a vertical integration one-stop shop. We are now that.” Since John Dudash became CEO of Mity Inc. five years ago, the company has grown 250%.

“It’s a combination of forward and visionary thinking,” Dudash says, explaining how he’s led the company to success. Dudash used that forward and visionary thinking to refocus the company’s structure. “Inside sales made us successful, but not nearly as successful as we could be,” Dudash says, “So we moved to outside sales and focused on larger, more dramatic orders.” The company also improved sourcing capabilities in order to better serve their customers. “We took a customer experience first attitude to the market place,” Dudash says.“When people think of Mitylite, they don’t think of us as a product so much as a vendor. When you transcend the product, that’s where real value is created.”

Dudash also cites philanthropy as part of Mity Inc.’s success. “We are very committed to giving back,” Dudash says. The company supports Habitat for Humanity, Bridging the Gap Africa, Cause for Hope, and local charities. “Our contributions are part of our success quotient,” Dudash says.

Dudash is a finalist for Entrepreneur of the Year. Finalists will be recognized at the EY Entrepreneur Of The Year Awards Gala Saturday, June 4, at the Grand America Hotel. If you’re interested in attending, you can purchase tickets here.

Published 5/4/2016

Getting Operational Results

When you bring people together and align processes, a lot can happen.

When you run a company that sells products, there is quite a bit of planning that goes into determining how much of your inventory should go where at what time. If you get your planning wrong, your costs rise dramatically. Luckily, Operational Results guarantees they can help you get it right.

“We’re a management consulting firm that does consulting and we also have technology for really large companies that have planning concerns,” says Operational Results CEO Brant Slade. The company offers a package deal for their clients. Not only does it educate corporations on the processes appropriate for planning, but it also provides them with technology that will help keep those processes in place. “We built an application to be able to tie people to their goals more specifically,” Slade says.

That application has proven to make all the difference in sales and operations planning. “Our time to results is about one-third of the industry average,” says COO Steve Bench. Bench explains that often in large companies there are many systems and solutions in place, but none for demand and supply. With the Operational Results system and solution, companies can avoid waste and get products to the right people at the right time. “We feel like we’re really making a difference,” Slade says. “When you bring people together and align processes, a lot can happen.”

Operational Results has over 2 billion in documented savings across their clients so far. On average, clients experience a 39% increase in profit, 21% increase in revenue, 29% increase in unit sales, and a 14% decrease in costs. Operational Results guarantees a 7% growth in profit, which equates to, as Slade describes it, “Huge dollars to the bottom line.”

Operational Results originated as a consulting firm. Before starting the company, Slade was a partner in a large consulting firm. He witnessed the struggle of many large companies that were trying to navigate complex changes and keep personnel aligned. He felt he could help these companies in a better way, so he started his own firm. He then added the technology component 3 years ago. Now, after Operational Results sends a consulting expert to help companies implement systems for innovation, demand, supply, analysis and management, it also provides technology that keeps all those systems in check. “We have experience with a lot of large companies. We can approach these large organizations and understand their challenges,” says Managing Principal Siri Osthed.

Operational Results has been self-funded until recently, when they took an investment from Kickstart Seed Fund. “Kickstart has been really great to us. We engaged them for their advice as much as for the money. They have given us a lot of this and help to take this and expand it and make it a larger company,” Slade says.

In addition to continuing to serve their current clients, Slade and his team hope to start assisting local Utah companies with their sales and operations planning. “Some companies are trying to run a large company without really knowing what best practices are and are spending a lot of money and time trying to figure things out,” Slade says, explaining that the Operational Results solution can bring sales, production, and inventory plans together in one common plan. “Now is the time for these companies to do that,” Slade says, advising growing companies to put plans in place now and position themselves for growth. “We’re focused on results and have the ability to get people there very fast.”

Published 4/4/2016

Grow: The Everyman’s Business Intelligence Dashboard

Provo-based startup Grow is bringing company scores to TV screens around the office.

“What’s the score? Hey, man, do you know the score? SOMEBODY TELL ME THE SCORE!” It seems to be a common refrain among the sports following crowd, as any fan devoted to any one team waits impatiently to learn how their beloved group is faring in the latest athletic competition (that’s what the real sports aficionados call them, right?).

But soon, “What’s the score?” may very well be a question asked often around the office, and the answer will be as simple as “Check the dashboard.”

Provo-based startup Grow is bringing company scores to TV screens around the office. “But what’s a company score?” you probably just asked out-loud, and now the guy one cubicle over is giving you that look — AGAIN. A company score is a display board, but unlike other business intelligence displays, Grow’s is simple. It may be as simple as a single number if the score is for a specific “player” (employee), or it may be an entire dashboard for a “coach” (manager). Regardless of the amount of data on screen, the display is easy to interpret and quick to motivate.

Founder and CEO of Grow Rob Nelson says, “When people see the score, performance improves. Essentially we’re helping small and medium businesses measure the right things and hold team members accountable…One number can be enough to motivate the team to increase performance.”

Built specifically for entrepreneurs, Grow’s business intelligence is not only easy to understand, but easy to create as well. A dashboard takes minutes, not months, to build. Grow connects with pre-configured data sources like Quickbooks, Salesforce, and Instagram, and allows KPI’s and metrics to be dropped into the dashboard. Users can then connect data from spreadsheets and databases to customize their dashboard.

“We focus on being dead simple to use. In other words, you don’t need to be a data scientist to run [the BI]. We built Grow for entrepreneurs and managers to quickly build and measure what matters most to them,” Nelson says.

Grow is also extremely affordable — at $39 to $1,000 per month, compared to the $30,000 to $50,000 other BI companies charge.

“I started Grow because at my last company we desperately needed this solution. We tracked all of our business stats in several spreadsheets. It was such a pain to update. I keep getting similar feedback from other business owners. The demand is there — just not a simple and affordable solution. After I sold my last company, I decided to start Grow,” Nelson says.

Cool idea, right? Yeah, well, investors agree, which is why Grow recently raised $1.5 million dollars. That’s million with an M. The investors include Kickstart Seed Fund, Pelion Ventures, Peterson Ventures, Cougar Capital, and Pluralsight CEO Aaron Skonnard.

“I think they invested in Grow because of the huge need small and medium businesses have to measure the right things in their business. They also saw the difficulty these companies have in finding an easy and affordable solution”, Nelson says.

Perhaps what will impress you more than the actual figure raised, which is certainly impressive, is learning that this is Nelson’s first time fundraising. His previous company, a shipping analytics solution named Logica, was bootstrapped, so raising money from investors was a completely new experience. An experience that he approached rather wisely.

“I started the process by talking to people who raised money for their startups. They provided introductions and I started by going to lunch with those introductions. I sought advice first, not money,” Nelson says.

Once he was ready to start gathering money, Nelson had options and was able to choose those venture capitalist partners he felt would add the most value beyond capital.

Nelson expects to go 15 months with the recent funding to break even and start the next round of fundraising. In those 15 months, Grow plans to service hundreds of small and medium businesses with their simple and affordable BI solution.

What’s the score? Grow is winning.

Published 12/16/2014