Twenty years ago, I was trying to raise venture capital for a Silicon Valley startup venture I’d launched with a female partner. We had Fortune 100 sponsors and a huge bank ready to invest a million dollars. They had just one requirement: we needed a venture capitalist (VC) to also invest. We thought we had it made. After all, it was the height of the dot com era, and investors were handing out money to internet startups like fun-size Twix bars on Halloween.
When we made our pitch to VCs—and they were always only men at the VC firms—they’d ask whether we had a man on our team (we did not). I doubt these same VCs ever asked whether an all-male team had any women on it.
We didn’t get our funding—and we weren’t alone.
Nope. Now, 21 years later, that percentage has basically stayed flat, at around a dismal 2% in 2017.
So many women have said #TimesUp for the entrenched discrimination of both the formal venture capital world and the more informal angel investor community. They’re trying to change the game of funding for women and minority entrepreneurs.
“I launched Pipeline Angels because there are enough white guy sharks investing in white guy entrepreneurs,” said Natalia Oberti Noguera, Founder & CEO of Pipeline Angels. “Pipeline Angels is in the business of creating more women and femme sharks who will in turn invest in more women and femme founders…A lot of founders, especially people of color, don’t have the friends and family for the ‘friends and family’ round (of funding). I have been remixing Rihanna by saying that if we want more of us to shine bright like a diamond, we need to invest in diamonds in the rough.”
One problem facing women and minorities trying to raise money for their startups is that traditional investors are overwhelmingly male and white. That’s resulted in disproportionately low funding for women and minority entrepreneurs. Why? Because people naturally engage in “pattern recognition.” We subconsciously see patterns that appear to indicate past success and then replicate those. If, for example, an investor has made a lot of money investing in companies started by young, white, male guys who’ve graduated from elite universities, then that’s the pattern they’ll respond to—even if those weren’t the factors actually contributing to success.
“In 2012, a well-known white guy investor was asked at a conference what he looks for when investing,” said Oberti Noguera. “He answered, nonchalantly, ‘Someone like me.’…I decided to turn these concepts around…If we invest in what’s familiar, in what looks like us, then let’s get more of us on the investing side…Our stats show it’s working. We’re building a broader and more inclusive angel community and, in turn, we’re also building a broader and more inclusive portfolio of companies.”
Pipeline Angels not only invests in women and minority owned businesses; it also looks for women and minority investors to fund these companies.
Copyright Rhonda Abrams, 2018
This article originally ran in USA Today on December 5, 2018