Lost Opportunities.... PART II - IMAGINE

Your daughter is a founder who cannot get funded. Your wife is a founder who cannot get funded. You are a founder who cannot get funded. 

Why?

Your company has merit. It uniquely solves a problem with quantifiable customer demand. The product is ready. It has a few paying customers. The team is top-notch.

But, nope. No venture funding is available. Bootstrap, loans, or bust.

Imagine the ventures that could have been, the businesses that got left behind, those that didn’t make it above the fold. They represent lost opportunities, unrealized positive financial impact, and paradigm-changing solutions that died on the vine for lack of funding. 

Why?

Because the startups were founded by women.

That does not mean every VC opposes diversity. We believe that the funding process is broken and outdated.  

The Norm: Lip Service.

Despite all the conversations, time, and resources dedicated to stronger support of women in tech, female founders continue to be left behind. We can increase the numbers of women in STEM, which is economically valuable, but without access to capital, few female founders can succeed in the technology markets. To deliver a solution and gain traction at scale, one needs venture- or institutional-level funding.

Most women founders are trailblazers. They hold patents. They run companies. They draw upon decades of successful business experience. They are respected. But they cannot gain reliable access to startup venture funding. They can have conversations. They cannot close funding deals.

The stats are irrefutable. It never gets better than a few single digits. From January to October 2017, venture capitalists invested $52.6 billion in US-based startups with all-male founders; women received just $1.26 billion. That’s just over 2% to women. 3,538 male-founded startups got VC funding, compared to 164 female-founded (just over 4%).  

“The road to perdition has ever been accompanied by lip service to an ideal.”

Albert Einstein

Chicken or Egg? Both.

Is the number of female founders funded low because VCs fund women less often, or could it be there aren’t enough female founders applying for funding?  

Women are seeking venture funding. They’re just not getting it. How do we know? Let’s look at the gender divide in a single sector, tech.  

• Although 20% of tech executives are women, less than 1% of VC funding goes to tech startups with female founders
• When funded, on average, female-founded tech startups receive 1/3 of the Series A funding of male-led tech startups
• According to a Kauffman Foundation survey of nearly 350 female tech startup founders, 80% used personal savings as their top source of funding for launching their new startup. 

Nothing Changes Until the Startup Investment Model Changes.

VCs boast about their internal technology and their understanding of external technology trends, but they make investment decisions based on their instincts and habit. They go with the teams they know, they follow each other into markets, and they prefer familiar terrain. Thus, whether they know it or not, they steer clear of female founders. The result? Lost opportunities prevail. 

We must change the investment model in order to drive a change in funding patterns. 25 years ago, Fair, Isaac, and Company (FICO) changed consumer credit and lending decisions. FICO fundamentally changed how consumers were issued loans and extended credit. A FICO Score ® became the de-facto metric used to reduce lender risk and provide consumers with a method to be measured against—without bias. Today, FICO scores are a global standard for measuring risk in the banking, mortgage, credit card, auto, and retail industries. 

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

R. Buckminster Fuller

How Do We Do It?

Female Founders Faster Forward (F4) will fundamentally transform startup funding using advocacy, research, and solution development. We’re creating a new investment model that is designed to create an even investment playing field that optimizes for profit, not habit.

Our Startup Investment Measure Indicator (SiMi) assesses startup maturity, opportunity, and risk; while eliminating bias, prejudice, and ambiguity. Much like the impact of the FICO model on consumer lending, SiMi will revolutionize venture funding, creating greater access to capital for female founders, and for all founders. 

20% by 2020. We Can See It.

Our goal is to see 20% of VC funding go to female founders by 2020. It’s possible. In fact, it’s beatable. We simply need to change the starting point. With a new investment model, the conversation stands on entirely new ground. Being a woman will be immaterial, yet absolutely undeniable. That’s the way we do it. Imagine. We can see it.

Step In. Step Up. Join us. We welcome advocates, technologists, and investors to further the effort. Learn more at www.F4Capital.org.

#GivingTuesday #20%BY2020