The saying “It takes a village to raise a child” has been attributed to both an ancient African proverb and something Toni Morrison and others turned into a movement in the 1980s. Regardless of its origin, the saying is a powerful one in that it recognizes the importance of community in such a momentous, meaningful task.
When it comes to raising up female tech founders, that village is again important – at least to launch a venture until it has the legs to stand on its own.
The ‘village’ standing up behind female tech founders
StandUp Ventures, led by venture-capital veteran Michelle McBane, is changing the narrative on funding for women entrepreneurs. The VC firm invests in seed-stage, for-profit technology companies with at least one woman in a C-level leadership position and an equitable amount of ownership. And recently, they exceeded their original $20-million fundraising goal, stretching it to $35-million. McBane raised $21.5 million for StandUp’s first fund from 2017 to 2019.
In speaking with McBane, it’s clear that a network of support, mentors, role models and investors is an essential part of launching a venture – something that many female entrepreneurs don’t have. “VC firms tend to avoid risk, and therefore invest in familiar social networks,” explains McBane. “VC firms are overwhelmingly male – and because men tend to have social networks filled with men, they tend to fund individuals like themselves.” At the seed stage in particular, there isn’t a lot of data, and financing at this point often comes down to “betting on a founder.” Without an established network – and given the biases that exist in fundraising, especially at the early-stage – many VC firms aren’t willing to take the bet.
Women-led companies have historically performed three times better than those with male CEOs and according to a holdings review by First Round Capital, female founders’ companies out-performed their male peers by 63% in terms of creating value for investors. And when it comes to the tech sector, women-operated VC-based tech startups generate, on average, revenues that are 12% higher than male-operated start-ups.
Yet last year in the U.S, companies founded exclusively by women received only 2.2% of the total capital invested in venture-backed startups in the US. One study even found that with the same pitch, men were consistently chosen over women to receive funding.
This is where StandUp Ventures plays a big role. “Our goal is to get a company from seed stage to Series A,” says McBane. “We’re about sharing diligence and co-investors and bringing a platform approach to founders through this stage. We aim to propel them to where they need to be – where bias goes away.” McBane tells the story of a female founder who was told she would never raise venture capital because she ‘didn’t attend an ivy-league university, is married, is a mom and has an accent. Following seed-stage backing from StandUp Ventures, she is now seeking capital from large North American Tier 1 venture funds.
Beyond capital, StandUp Ventures puts key people around the table and assists with mentoring, talent discussions and key partnerships. This connection-making is a critical piece, given that 48% of women say the reason they are underrepresented in technology is due to a lack of mentors and 42% say the lack of female role models in the field has hindered equal representation in the workplace. This networking-piece can be an even greater challenge for women from marginalized groups.
Normalizing women in tech – for the good of business, employees and society
According to Statistics Canada’s job vacancies report for the first quarter of 2021, there were a “record” number of vacancies in professional, scientific and technical services, with vacancies for computer and information systems professionals up 11 per cent from the same time last year.
Yet even given this brain crunch, women are consistently dissuaded from entering or advancing in the tech field due to male-dominated cultures and unconscious biases. And, shaking it up by starting their own firms becomes difficult with limited financing potential.
But with firms like StandUp Ventures not only empowering women in tech – but demonstrating the business case for doing so – the presence of women in tech is expected to normalize. When that happens, the pipeline of female entrepreneurship can begin to fill at a quicker pace, and mentors, role models and networks can become established and thrive.
And given that female-led companies tend to be more diverse and purpose-driven with a more engaged workforce (and yes, more profitable), the future can be bright – for tech, for women and for Canada.
As Melinda Gates puts it:
“When venture capital starts to look beyond the small pool of founders, we’ll see more innovative ideas with the potential to improve the lives of more people. We’ll also see a new generation of business leaders that better reflects the market they’re trying to serve, and ultimately delivers higher financial returns for investors.”
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