Female Founders: Building a Diverse Portfolio During COVID-19

Hi everyone, welcome. I see people joining us. Thank you so much for joining us. You're here for the Female Founders Building a Diverse Portfolio During COVID event. We are here to speak with some of the— some great investors from all around the world, and we're really excited for the conversation we're gonna have today. My name is Rachel Shepherd. I'm the Director of Global Marketing at Founder Institute and the co-creator of the Female Founder Initiative. The Founder Institute is the world's largest pre-seed startup accelerator. We've launched— helped launch over 4,500 companies around the world and are present in over 185 cities in all 6 continents. If you're interested in learning more about Founder Institute, we're currently enrolling all over the globe, and you can find out where we're enrolling at fi.co/enrolling. But without further ado, you're not here to learn more about me. Award of Founder Institute. I'm just kidding. But you're here to learn more from these amazing investors we have in our network, and we're so lucky to chat with today. So first is Annie Theriault, Chief Investment Officer at Grand Challenges Canada and managing partner of Cross Border Impact Ventures. We also have Monisha Veridan, founding partner of Zephyr Ventures, and she leads product partnerships for Chrome and web at Google. And we also have Kamal Hassan with us today, founding partner at Loyal VC. So would each of you like to say a little bit about what brings you here today and why you'd like to talk about diversity in your startup ecosystem? So we'll start with Annie.

Hi, I'm happy to be here today. It's my great passion to help young entrepreneurs, young and less young entrepreneurs, get started and to support them and see them through. So very much appreciate the opportunity to say a few words. Say a word here this evening that hopefully will help some of you who are attending. Why diversity is important to me, I would say that after spending the first half of my career as a traditional capital markets participant and the last few years in the venture and lending spaces, I've noticed that there's less diversity than there should be. And so having an opportunity to work with Grand Challenges Canada and our new fund that we're launching, really has allowed me to develop a firm and an investment approach that leverage more diversity. And I think it's a personal goal, and I'm looking forward to help some wonderful entrepreneur this evening, hopefully.

Thanks so much, Annie. And then before I turn it over to Manisha to share a little bit more about what brings her here today, please do tell us where you're joining us from today in the chat. I want to make sure to mention that we have a very global audience and we have a global panel as well. So we'd love to hear where you're calling in from. I'm calling in from Northern California. Monisha, I'll turn it over to you.

I'm dialing in from Singapore this morning, so thank you for having me today. I think a little bit like Annie said, so I've worked in finance before in London. I've worked in different sectors. I think I'm very aware of the fact that it's not a level playing field and there are gender imbalances in different sectors of the world and society in general. But I think Kamala and I met a year ago in Paris at a VC event, and we were, you know, sipping on glasses of champagne and talking about the lack of diversity in the choices of portfolio when it comes to VCs making investment. And I was just absolutely horrified by the 3% number. And so Kamal, Claudia, and I decided to write a piece and draw attention to this fact. And since we've written it for Harvard Business Review, we've had a flood of responses from different people about the lack of diversity in the investment world. And I think something's got to be done about it. And I'm here to talk about it. I think that's one of the ways of drawing attention and awareness.

Fantastic, thanks Manisha. And then Kamal?

Sure, I'm— it's been funny speaking on gender issues because I'm usually the token man on the panel, and it's a good learning experience for me to see what it's like to be the only one of your gender on the panel. It's definitely a different feeling. By the way, please excuse my coworker here who's jumping in. So, look, we're unusual venture capitalists. I'm sitting in Toronto, by the way. We've invested in 32 countries around the world, 6 continents. So we've— yeah, so we're fairly diverse in what we do. And we're also diverse in entrepreneurs. And for me, investing in women is really about making money. And when you sit there and you say, well, only 3% of the money is going to women entrepreneurs, then it sounds to me like there's a big opportunity, because there's a lot of really great women not being funded. And we, I mean, we're just very rational people who want to make good money. So we start to look at it and said, why is this happening? And hopefully our experience can help others who want to do the same thing.

Awesome. And our panelists have generously provided their time today to share a little bit about how they go about building their portfolio, looking at deal flow, share some insights. And of course, there will be a larger conversation around diversity throughout throughout this whole conversation, but please do put your questions for them in the chat. We'll make sure to integrate those into our conversation, and we're here to really share some insights with you and hopefully help you get funded if that's something you're looking for. So let's kick it off with our first question. So, and this is something we were just talking about before we went live. So how do you think COVID-19 has changed how investors evaluate startups? And we'll kick it off with Monisha.

So I don't think, at least in our region, right, Southeast Asia, the deals that we've been looking at doesn't look like there's any lack of funding. So number of deals have gone up, percentage of companies raising money, value of deals have gone up. So there's still money sloshing around in the system. I think what people are— the way mindset is changing in terms of making investments, there's definitely a sense that the only way to get out of this crisis is building, like Mark Andreessen said in his blog post. To building ourselves out of this situation that we find ourselves in. And so I think people are looking for either audacious ideas that tackle, you know, a problem, or they're looking for companies that are resilient to the COVID crisis. And I think those are the two lenses that we're definitely starting to see our investors in the region using.

Awesome. And then Kamal, Annie, have you guys seen anything in Canada or, you know, specific to the region, or Kamal, I know you invest all over the world, anything you've seen that changes how investors are evaluating startups right now?

So it's always very, very interesting to try to comment on this because we, uh, we have a very unusual way of investing. And so, um, we were investing on Zoom, clearly investing in 32 countries long before COVID hits. So how we operate hasn't changed. And what we look for, I mean, so one of our major sources of deals is the Founder Institute. 60% of the companies we invest in come out of the Founder Institute. And I guess the only thing that has changed to a degree is some of the areas which were unsexy before have become very sexy because their market— COVID has been a market accelerant for some companies. So it's been a real problem for others, but for companies who are trying to get, for instance, new ways of working adopted which involve less human contact, e-learning, for instance, is a great one. Those markets have jumped ahead by 5+ years. So there's certain sectors which before were forgotten, which all of a sudden have zoomed up.

Yeah, I couldn't agree more with that factor. We focus on health in my current work, and certainly technologies where we would have expected a 5-year uptake in terms of usage, that's now been shortened to 2 to 3 years. So I don't know specifically how that will play out, but certainly the way that I see it from my vantage point, there's a few differences at this point, but certainly the process of investing has changed a lot. So for, For us, in some aspects of my work, the onsite visit is now being replaced. So thinking a little more tactically, it doesn't necessarily change what we look for in a deal, but it certainly changes our approach and our process and how we'll evaluate a deal. The other piece that I would say is another trend that I've noticed is a lot of investors, perhaps not present company included, but are really changing the types of opportunities they're looking to invest in. There was a lull in financing or smaller rounds got done early on in March, April. May, there was an awakening of the investor pool. And I would say that June, July, people a little bit tired of the whole COVID thing, they're looking at new deals just a little bit slower. Slower than normal, but they're really rethinking if they had an investment thesis they put out a year ago to their LPs, they're sort of taking a moment in the summer, I think, to think through, do they wanna do the same deals as before? Is the market going to return? Agree, some pieces are being accelerated, others might be slower. So there's certainly, I think, a pause right now, I feel, in the investor market.

Fantastic. Thank you for that. And then, so my next question is, many startup ecosystem leaders and investors believe that venture capital is broken. Do you think that venture capital needs to be fixed, or at least that it has strayed from its roots in some way? Kamal, we'll start with you on this one.

Sure. Actually, Manisha and I just wrote a paper on this as well. So it's very interesting. Look, One of the things which has happened in venture capital is venture capital has started to become much more— there are many more people coming into it with a view of making money, so it's more of the financial mathematicians, architects, who are really working on trying to say how can they get deal terms which advance them in all possible situations, as opposed to entrepreneurs who are really focusing on making money. And a good way to see that is just well, helping their companies make money. And a good way to see that is just look at who the people are in the VC you're dealing with. And certainly, the original venture capitalists were people who would roll up their sleeves and really try to help you build a business. And they typically had experience in building businesses. And I think that's something which some VCs have today and some VCs don't.

Monisha, do you have some thoughts on that as well?

Yeah, I think we felt very strongly about writing the piece because of the nature of the changes that we see in the industry. I think the Kauffman Foundation put out a paper in 2012, which we looked at and we thought actually some of these trends are very prevalent today as well. And it's partly because of what Kemal said, right? I think they've just commoditized the whole industry by investing large amounts of money in many companies and hoping that some of it pays off. And the piece was actually talking about Comparing it to the founder of the industry who basically didn't have that approach and treated each one of his investments as babies and backed them along the journey very much what Zephyr does. Zephyr is not invested, you know, the company that we founded, Zephyr does not invest LP money. We invest our own cash that comes from our own earnings and our own savings. And so we don't have the choice of taking those, you know, 100 bets and hoping that 10 pay off. And that's not really a mentality that we're seeing these days. And so, Founders often get dropped off in that journey as they progress with the VC because they're just not good enough. They don't meet the bar, you know, and then they pick the winners and the losers are left behind. And that's not to say, you know, that they may not become unicorns, but they'll still be solid, you know, $50 million, $100 million, $200 million companies. And I don't think it's fair to treat some of the entrepreneurs that way, which is why I think we were once again urged to write a piece.

I may have a slightly different angle on it. As an impact investor in life-saving, life-improving technologies, if we fail, you know, people— if we fail, if our portfolio companies fail, this is the view we really adopt them. You know, ultimately there's no outcomes, and certainly we would take the view of— meet my dog— supporting our portfolio because we really care about the outcomes as well as the returns. So we value both.

Awesome. And along those lines, I'd love to know a little bit about, from each of you, about sort of anything in your process you use to evaluate startups. So kind of getting back to, you know, I love to hear that, you know, investors are looking more to nurture startups in such a way that helps them be more successful in the long run. But any way you go about evaluating startups or sort of getting deal flow that you think is unique to your investment strategy? And then Annie, I'll send that one back to you.

I think the first step that I, you know, the first thing I always do is I wanna hear the founder's story. How did they get to do this crazy thing, which is to launch a startup? It takes a lot of guts, Courage. And I want to hear that. And that's always important to me. I want to understand their drivers, their motivations. And then it gives you a gut feeling. Do you want to go further with this person based on what you heard? And sometimes it's over a number of meetings, a number of coffees. But that is, I think, quite critical to me to understand what drives the person to do what they're doing. Also allows you to see how they think. And this is where the gut feel as an investor comes, where particularly at the early stage, you want to really just understand the person because it is so critical. The second piece for the work that I do currently at Grand Challenges Canada and for our fund is really to evaluate the impact of the work. So in other words, is it a technology that's applicable in many global markets that can actually save and improve lives from a health perspective? And we have a focus on women and children. So in some instances, it's cardiovascular health that we're looking at, and the patients are mainly male. But we look to, is there a way to use this technology with our support, with connections, with our network to actually impact women and children? So that would be, I would say, quite special about our fund. And we also work with a lot a lot of co-founders to bring in grant money for pieces that are, I would say, a little more impactful. And then I would say the rest, we're very data-driven bunch. So we look at all of the, you know, from an investment point of view, we'd look at all the normal metrics that any other investor would look at. We don't have a special tool or a special, statistic that we look at. We look at the whole picture of the business.

Awesome. And Monisha, thoughts on that as well as in terms of how you go about evaluating startups? Yeah.

So we operate a slightly different model. Like I said, we set up Zephyr 10 years ago with the intention of backing businesses but also being part of that journey, because what we believe is we may not have as much cash as a VC, but we definitely have time and experience that we can contribute. And so the way we go about picking our deal flow. First of all, we look at everything, and I'm consciously saying that because I think as we discuss women being funded, I think their source of deals— and I'm sure you'll cover this a bit later— is super important, right? So we definitely look at everything that comes through our doors and in our inboxes. And then what we try and do is, like Annie said, figure out, you know, the founder story, make sure, you know, we understand who they are, what their motivations are, talk to them, see if we can get along with them, because I think that's super important if we want to be a part of that journey operationally. And see if there's an emotional and a cultural fit between the founder and us, because, you know, like, we don't make passive investments. We can't afford to. We try and get actively involved. And so that kind of fit between the founder and us is super important for us. So I think that's one of the differences. But other than that, of course, we look at, you know, who else is investing, super important. You're around this table with a lot of other people. You want to make sure you're around the table with the right people. You want to make sure you're around the table with fewer people at the early stages and not a cap table that has like 50 investors on it necessarily. You know, product-market fit, traction, all the usual stuff. But I think for us also, it's a founder that's super important.

Fantastic. And Kemal, how does Loyal go about sort of evaluating startups, at least in the initial stages of investment?

So one of the reasons we love working with Founder Institute is we honestly don't believe that we can do a good job evaluating companies from pitches. And actually, there's the article Maneesha and I wrote in Harvard Business Review, I'll just stick it in the chat right now, is it's one of the things we found out is that pitches tend to be biased against women, and it's fundamentally because men are better at having irrationally self-positive beliefs about their potential and their present, their potential, whereas women tend to be more accurate with their self-assessment. And when you're listening to a pitch, the person who sounds most believable tends to be the one you invest in. So what we do is, one of the reasons we love working with Founder Institute is Founder Institute has a program where you've got the director of the local program spends 14 weeks getting the founders to do different tasks to build their business, and really fundamentally, who cares how they pitch? You're going to see within week 6, week 10, how the company's doing. And then for us, we can draw very, very heavily upon the demonstrated results that founder has in the program rather than just hearing a pitch and saying, "Gee, that sounds good." I mean, we honestly don't know how companies will turn out. So yeah, we like to be able to see demonstrated results. The second thing we do is we have a multi-stage investment process where our first check, which goes in about $10,000, is based on what you've done in Founder Institute, and then we work with you every month and we see what you do over the coming 6 or 9 months, and then we do a follow-on check of $200,000 based on how you have performed. But again, it's all based on performance. So I don't care if you promise a billion-dollar business, or if you very modestly say, yeah, I've got this, and this is what's working well, this is what isn't. We don't care either way. We're just going to put small amount of money in and see how the business turns out and then fund you based on success. And it's interesting, we have, um, 34% of our, um, companies have a woman CEO. We track woman CEO. Uh, 32% of the money so far has gone into companies with women CEOs. So it's basically the follow-on investment based on performance is tracking pretty well flat based on gender. Women neither overperform nor underperform. From our experience so far.

Which is really very interesting, and I'm glad you shared that, Kamal, and shared your deal flow process and sort of how that has led to more gender diversity in your portfolio, specifically as it looks, as it compares to the market, right? Which is 3%, as Monisha was talking about earlier. It's 3% of the money goes to women overall in the market, and for you to have 32%, that is a huge number above. And so it's very interesting that you kind of removed the pitch from the process, which I think is a really unique way to evaluate startups. And you kind of answered our next question a little bit already, Kamal, which is how do you measure diversity in the startup you're investing in? Or excuse me, how do you ensure that your investment firm evaluates and invests in a diverse portfolio? So you take a data perspective and remove the pitching part of your deal flow. Monisha, is there any specific way that you go about making sure your portfolio ends up being more diverse than the market?

We also have about 30% of our portfolio with women CEOs, and I want to point out the difference between having a woman CEO and having a woman on the team, which is often passed off as a, you know, a diverse team or a woman-led team, which— and I think there's a nuance there, and the numbers don't reflect that necessarily very well. But our portfolio is diverse at the moment, thank God, but it wasn't done deliberately. I am more conscious of the statistics since we wrote the piece and discovered all the data behind it. And so we definitely make an effort to, you know, like I said, look at every single deal that comes to the pipeline and give everyone a fair chance. We don't make that many investments every year, so we're not into the numbers game, like I said. But for us, it's not just diversity of sector necessarily. We've got shirt-making companies in gluten-free companies and all sorts in the portfolio, but it's not sector, it's more founder diversity that one should focus on as well. And I think that definition of diversity is worth debating in this forum, perhaps, because while VCs tend to focus on sector diversity or probably even regional diversity, there are other, you know, forms of diversity that need to be included in a portfolio which are worth considering, which bring in different types of thought and different ideas into the portfolio and definitely worth investing in.

By the way, if I could just jump in for a second, Rachel, um, Annie may have seen this also. I think there was a study out by the BDC, Business Development Bank of Canada, talking about the percentage of women tech entrepreneurs in Canada, and I think the percentage was something like 35% on a nationwide basis. Annie, did you see that study?

I didn't see that. What I can say is that we're launching an impact fund on women's and children's health, and we sourced our pipeline. It's more of a North American— it's more of a global pipeline, but heavy, heavy US-focused. And in the sectors that we invest in, we selected the top of the funnel based only based on the solutions to specific— a specific list of health problems that we're looking to resolve. And our own pipeline in that my pool runs 25 to 30%, so I don't know if it's reflective of the BDC statistic, but it's certainly in the same zone is what I would say.

Actually, I just found the BDC study. It is 39% of all women who are currently starting and 28% of all women generally, I believe. I'll just stick that in the chat also.

Yes, and I think that definitely, you know, addresses the point that a lot of people have been arguing in recent years is it's not a pipeline problem, right? It's more, is there something within the process that is causing this lack of funding to get in the hands of underrepresented founders? And as Monisha said, that expands beyond gender. But even if we have a conversation specific to gender as we are today, that that needs to be considered in terms of building your portfolio. So anything you want to add, Annie, about your process and making sure diversity is part of your investment piece?

I would say that my own— this is not backed by data, or perhaps it is, but my own view on this is that it's really about the top of the funnel. How do you source your investment ideas? You do like Manisha, everything that comes in my inbox I look at, or you only get your leads from your trusted network of people that look like you went to the same school as you. So for us, whether it's Grand Challenges Canada itself, we, in our most recent calls, were over 60% women project lead, which is very unusual because other global health organizations achieved 20% or 30%. So it's sort of interesting, and it's again, a very science-based approach to are you solving a problem we care about? And on our fund, it's really about, you know, we're sourcing deals both from investors we know and trust in our sector that we'd like to co-invest with, but also looking at broader lists and really digging into the solutions as opposed to necessarily relying on a specific network. So I would say that the reason some of the issues persist for many VCs is one, lack of awareness that there is an issue, two, too much reliance on a very specific network that is not necessarily changing a lot for your top of your funnel. If your top of the funnel has a certain demographic profile, how do you expect your deal let your deals done to look different from that. So it would be fairly unusual to say that you had 5% of your top of the funnel being women-led and that you'd end up with, you know, a 30% allocation to women.

It would be—

I don't think that's a realistic stat. So you've got to look at ways to diversify your pool.

I think Annie hit the nail on the head because in our study as well, you know, the piece that we did, we said we see right from an education and schooling perspective, the numbers look balanced, right? And even right up to the accelerator stage, it looks balanced. Like a lot of women are applying to be entrepreneurs, these accelerators and incubators. Where it kind of drops off a cliff is actually in the deal sourcing stage. And I think a lot of the VCs are still run by men. I hate to say this, but the choices that they make then are reflective of what they feel comfortable choosing, which come from their own circles. You know, people who look like them, behave like them, talk like them, go to the same school as them. And therefore, that's where we start seeing the numbers change. And as you go through the pitch process, it gets worse. And of course, finally, you end up with this 3% number. I think Annie's hit the nail on the head in terms of that deal sourcing piece has to be very deliberate, very conscious, and very inclusive.

What's very interesting, by the way, is when I talk with many male VCs, they're saying they want to fund more women. They wish they saw more qualified women. Kamal, how do you do it? How do you find such good qualified women? And how come we can't find them? And it's like, they're out there, you need to specifically think about changing what you do as a VC to find them because they're there.

Yeah, absolutely. The deal flow process is critical. And to Monisha's point, you know, we see 31% female founders across the globe of all Founder Institute programs, what we saw in 2019, and 38% female founders across the US, Canada, and Brazil, which are our three largest markets. So the deal flow is there. And, you know, to further your point, Kamal, and so, yes, I think investors really need to— we're gonna start to have some more conversations, I believe, around changing what the deal flow process looks like and how people go about accumulating that. And also intentionally diversifying your networks, which takes work, to your point, Annie, takes a lot of work, but it's very important. Fantastic. And I wanna dig in a little bit more on the measurement of diversity. So how do you measure diversity in a startup you're investing in specifically, some investors evaluate startups based on the founding team, as we talked about a little bit, and some are investing with a gender lens. Annie, do you want to share a little bit about your thoughts on that?

Yeah, so our fund is investing with a gender lens, which is actually quite different from investing only in women founder or founding teams. So, I guess one of the good references I could point out, I'll put in the chat later, is the 2X Challenge criteria of the DFIs. That's a very nice framework that explains that. And it really looks to, you know, who are the users of the product? Have they been considered in the design of the product? So for example, if you're doing a menstrual hygiene product, have women been involved in that design? If you're doing a clinical trial, are women being considered as patients as part of that trial. It looks to the employee base, the employment policies of the organization, the founding team, of course, the board, and there's different approaches. There's screen-in approaches that some investors take. At Grand Challenges Canada and at CrossBorder, we're not using that approach. We're quite happy to be changemakers, so what we do in our approaches is really to look to, you know, measure everything going into the deal, set targets for improvements that make sense, that are agreeable with our investees, and monitor progress and try to push the boundaries. But again, there's different approaches. Some gender lens investors use it as a screen-in, and that's quite fine, but we've chosen to use it more as a approach of being more of a changemaker.

Awesome. Thank you. And Kamal Manish, do you have any thoughts on, you know, sort of the layers of diversity measurement within a company you're investing in?

This is actually a bit of a pet peeve of mine. It's been really funny to see everybody promoting sort of women-led companies is what you see when you see the stats nowadays from many, many people. And this sort of women-led means there's a woman in the founding team. It's like, Microsoft's a woman-led company, uh, it's sort of the management team, but it's been because the stats are just so horribly bad. For me, it's really simple. I mean, I've been in entrepreneurship for many years, and for me, what I learned always as an entrepreneur is VCs want to deal with the CEO. The CEO is the person who the board hires or fires. The CEO is the one in charge of the company. They are fundamentally delegated by the board to run the company. So if you want to look at who's leading the company, you look at the CEO. So we count CEOs. That's what we figure matters. But the reason the industry doesn't do it is because the stats are so horrendous when you count women CEOs. So they want to say, oh, there's a woman in the leadership team in 20% of the companies we fund, rather than there's a woman CEO in 3% of the companies we fund. But it's just— to me, it's rather ridiculous. The leader is the CEO, because that's who's in charge.

And I'm going to add something which not necessarily answers your question, Rachel, but I can see some chat questions coming through about women who are trying to get in touch with VCs. I think there's a distinction between VCs led by women who represent, you know, amazing teams and amazing brains, and funds that are set up to back women. And sometimes there's a misconception that VCs that are driven by women might back women-led companies. And often that's not the case because they've got their own investment hypothesis, like Annie was saying, healthcare or women's health doesn't necessarily mean that you back women CEOs who solve that problem. And so I think for any founder who's looking, you know, female founder looking for money, I think doing that research is pretty fundamental.

Yeah. Maybe a little follow-up on that. And I'll speak a bit to what we were doing at The Big Push on that point. But what I found in that process that's sort of interesting, 'cause we were a team of women helping women, and it's maybe a tip for some VCs, but I heard time and time again from the CEOs that we were helping who happened to be women that they really appreciated having a woman sounding board in some instances. Instances. So, you know, to go back a bit to what you can do, you know, to improve your track record, hire a woman partner at your VC shop. You know, that's a pretty easy way to make your space more welcoming to women. I think we coach differently and, you know, of course the best teams are diverse. It's not about just having women necessarily, but, Diversify your partner group, I think, is a, is a good way for, for investors to, to have a better track record.

I was actually— I heard a talk recently from someone who'd done data, pulled data on thousands of different startup teams and the performance thereof, and one of very few factors which was predictive of success, um, was there was a correlation between success and a gender-diverse a team of founders. When you had all-male or all-female teams, that if they were at 100%, the performance rate of a gender-diverse team was 140% or 150%.

Absolutely. The value of diversity of opinion can go a very long way, and a lot of that comes from who you are and what your background is, right? And that creates, I think, a lot of— a lot more product— even everything from product features all the way up to strategies and different ways you'd approach things, and it can lead to a lot of success. And so my next question to you guys is going to be, if founders want to get in front of you, so there's a lot of female founders, I think, who are potentially looking for funding on the call with us today. How would they go about reaching out to a VC? And of course, you can't speak for all VCs or all investors, but for you particularly, how does a founder go about getting in your network or getting on your radar and ultimately becoming an investment? And we can start with you, Monisha.

I mean, I do make a commitment to speak to a female founder just because I'm interested in the area. And I know that's going to clog up my calendar. But, you know, I am happy to have a quick look through what you do and chat about, you know, where you could change things or do things differently, or even if we're interested in backing you. So to any female founder who's listening, feel free to reach out.

And I'd say personally, just send me a brief one or two liner on LinkedIn and I'll usually accept the connection and then follow up with a message and we'll exchange email and we'll talk in a few weeks. Or another path is talk to somebody on my team. That's probably a little faster because the call with me will take a while to schedule. But I'm one of those people that, you know, just reach out. It shouldn't be that complicated to talk to people. And I'll extend the invitation to males and female founders. I think that's really— I like to learn about companies, so it's my own detriment sometimes, but, you know, just reach out.

How about you, Kemal?

So I have both a very simple and challenging way to get looked at. One of the problems which I find with entrepreneurs, and I think a lot of VCs do, is that entrepreneurs come to the VC before the business is ready for VC funding. Now we've actually developed a process where we, we invest at very early stages, but I can tell you, um, most of the companies at the point we invest in them are not VC ready, and most VCs would not even look at the deal anyway. The way we filter, the way to get in the door with me is do the Founder Institute program. I mean, that is the simplest way in, and perform well when you're in the program, because that way I've got the unbiased evaluation of what you've done. And that is the— that for us is the number one way in. But I think for, for many of the people who are listening to this talk, really understand what a VC does. And generally speaking, most VCs are there to fund already successful companies to make them even more successful. And if you are not yet a successful company, most VCs will not take a call from you, or they will take a call from you, but they won't be able to write a check in you because they are seeing they're only doing 1 in 100 deals. And when you've got 10 successful companies coming in the door and you've got a great idea or concept, they'll say, great, good concept, but you haven't proven success yet. Come back when you have.

Yeah, absolutely. I think a lot of investors have said that not only are they approached sometimes by founders who may not be a match for their thesis, showing that maybe that it's not a good fit, but also that sometimes the follow-up is not there. So be persistent, make sure to follow up, know that there's a good match, and also be ready for that stage once you start to reach out too, I think. Fantastic. So we're going to start shifting gears a little bit and answering questions from the chat. And from the founders on the call. So if you have any questions for the panelists, please do put them in the chat. We're gathering those and we're going to be here to answer your questions. So Tamara asks, based on observation, where or what can female founders do to improve or increase the odds of creating success? And then we'll start with Kamal on that one.

Yeah, one suggestion I would make, and I hate having to make this suggestion, But it's— having seen the stats on just how imbalanced people's perceptions are of pitches by men and pitches by women, I would suggest number one thing you should always do is there are a number of funds who invest only in women-led companies, and you should always make sure you pitch to all of those because at least you'll be evaluated fairly compared to the other things. By the way, uh, one little, uh, piece of negative news for the men also: bad-looking men significantly underperform good-looking men when it comes to pitches. So if you want to make money, if you get money from VC, be a good-looking man, not a bad-looking man or a woman.

Uh, and additional thoughts, Annie or Marisha?

So I think the one thing I would say, and again, I hate giving these pieces of advice, like Kavitha said, we notice in our research there's a confidence gap. And so there's a difference between a confident male asking for money versus a female who may not be that audacious in her ask. And I would say, if you come to the table, be brave and bold enough to ask for what you want, have your questions right, and be direct. We do a training at Google called I Am Remarkable, which encourages women to to speak up about their strengths. And I think investing in something like that, at least we see the difference when we do that with our women at Google, I think makes a huge difference. So just upping up that confidence a little bit. And I don't mean that you've got to match the stuff that we see in pitch competitions. But I think it's important to be a little bit brave.

I mean, building on that, do be optimistic. The men you are pitching against, will be incredibly self-optimistic. So when you're talking about what your business is going to do and achieve, be optimistic and understand that you have to be crazy optimistic. And you can't be, you can't be not true to yourself because VCs see when you're not being true to yourself. But just logically understand that when you're asked what your business is going to do, any numbers you say, anything everything you say, take the most optimistic assumption possible.

The other piece of advice I would say, and it's— you guys had some interesting pieces, but— and this is more reflection. I don't have a ton of time, so if you're going to catch my attention, I need a great deck, because if you're going to reach out to me, let's say that you reach out on LinkedIn to me and I look to your profile and it's sounded interesting, went to your website quickly, that's assuming I had the time, most of the time I won't have it. The first thing I'm going to ask you when you email me is send me your pitch deck. It has to be good. I cannot tell you the number of decks I receive that are just not horrible and a good link to share, the one that I always find works, it's super basic, but it works, is the Mars Ontario has a nice little, the 10 slides that you should have. Don't reinvent the wheel, just follow that template, but make it look good, crisp, ambitious. Show me how you're going to make money, what's special about your business, why you guys are cool people. And, you know, if I have all that, I'll prioritize the call a little more, or if I can't take it personally, I'll have one of my team take the call. But if the deck is kind of so-so, chances are that's the first thing I look at. So you fall a little lower on our priority. So just, you know, the deck is important, I would say, for me. And I don't know about others, but certainly for me.

I've seen some questions coming in about the deck. There's a massive difference between a concept deck, and a results stack. And one mistake I see many people make is if you've got results, stick them in there early. Stick in the, hey, we've already got 7,000 people who have done this, because I see many people just trying to sell their concept, and it takes me to page 8 or 9 for me to understand, is this just a cute concept or do you actually have real people really doing it? And don't be afraid to lead with that. Very few people will be able to walk in the door and say, hey, our HR software is being used currently by Google. So if you've got that, say it.

I would even go a step further to say, I mean, we've all experienced pitch deck fatigue, right, where you flip open a deck, and I've been biased, I'll admit this, when flicking through a deck because I almost know what I'm looking at. For. Like Kamal says, you're looking for those results, you're looking for the numbers, you're looking for evidence this works, product-market fit. And so I would go a step further and say, have your deck, but your 3 main bullet points as to why I should open that deck should be in your email and call it out upfront or in your LinkedIn message so I can even afford to spend those 5 extra minutes flicking through that deck and opening it.

That's a great tip, Monisha, to call out the, the main highlights, the takeaways they're hoping looking for from you, you know, in their email. And we put our pitch deck resource from Founder Institute in the chat as well, which is a checklist and some examples in case that's helpful for any of the founders on the call. Awesome. And so kind of along those lines, Preeti has a question. She said, Kamal, you mentioned that VCs look for success while considering funding, funding a company. How do you measure or define success?

Success is typically sales and customers. Pretty simple. Do you have people who are actually— I mean, ideally, do you have people who are paying you money to solve the problem they have? Because if a few people have paid you money, more people probably will. I mean, you can then say, I don't have people paying me money, but I've got— okay, I've got a free pilot which has been ongoing for 4 months with fill in the big company of your choice, because this B2B company won't pay you. That sort of helps, but I mean, fundamentally comes down to getting people to pay you, getting people to use it. If you build something that people use and people pay you for, that's traction.

Yeah.

And the only thing I would add to that is on the medical device or therapeutic side of it, it's really much more about your trial. Does— you know, do you have proof of concept data? You know, if you're a little further along, how did your phase 1 trial go? Phase 2. So it's really, you know, does your product work is a big piece. And then the other piece I think that's quite important is you have a good sense of how your product will be used and why is it cheaper. Like what's the reason your product might be successful? Because we look at deals often, you know, a few years prior to to any sales data, unfortunately, when you're in the medical space. So I think somewhere in there we should see why it makes sense. And that's completely different in different cases. But, you know, an example of a company I looked at, they were— they had a solution to collect fluids after mastectomies. They were showing existing technology super cumbersome. Side by side with their new technology. Right away, you've got a picture as an investor, "Oh, I don't know much about this yet, but this looks like something I want to learn more about." And so that's, I think, quite critical. Show side-by-side comparison if it's complex.

That's a really good point, Annie. There are a couple of categories of innovation, and there's the category of, I call it typically, the cure for cancer. And honestly, if you've got a cure for cancer, the fact that you have customers sort of doesn't matter because it'll sort of sell itself. The question is, does your thing really cure cancer? Whereas for many of you, when it's going to be a software, a piece of software, well, anybody could write software. So I don't care that you've got software written. I care, do you actually have people using the software?

Fantastic. Hopefully that answers your question a little bit, Preeti. And we have a question that's coming from multiple people in the chat, which is regarding crowdfunding. So what are your thoughts on startups doing a crowdfunding campaign prior to VC funding? Is it a pro or con in your eyes when deciding whether or not to invest? Monisha, let's start with you. Oh, go ahead, Annie.

Yeah. I was just going to say, I work with Frontfunder, is a crowdfunding platform. And what I would say is that for some businesses, it's a good idea. I just, in my mind, in a lot of cases, it's different kinds of companies. And some of them do go the route of raising venture capital. But, you know, in the case of Frontfunder, they help organizations raise equities. It's not traditional crowdfunding where you sell your product, like Kickstarter type of thing. And what they do is they put a lot of decent protections into the deal with respect to keeping the— even though the cap table is big, it's clean. So there's tools and techniques that you can use to protect yourself. But in a lot of cases, I would say that the bulk of companies that come are not necessarily going the venture capital route. Though it's not impossible.

It's a very big—

It depends on the company is what I would say.

That's a really good distinction between product crowdfunding and equity crowdfunding. So product crowdfunding is a great way to prove traction. It's like, hey, I've got a whole bunch of people who are willing to give me money for this thing. I haven't even shipped them yet.

So that's— I can put them on my cap table.

Exactly, yes. But, um, Equity crowdfunding, look, you will need to get money. You will almost always need to get money to get the traction necessary for a venture capitalist. And if you can get that money from equity crowdfunding, more power to you. Typically, you'll get it from individual— well, look, any crowdfunding campaign, any equity crowdfunding campaign— one of our companies just did an equity crowdfunding campaign which was 250% oversubscribed. They also walked in the door with 70% of that equity already lined up ahead of time and a community who they'd already signed up into their business of something like in the thousands. They had a community of thousands of people. So when you have those two things, all of a sudden equity crowdfunding makes sense as a way to raise money. When you don't have a community of thousands of users actually already, and you're starting from scratch, equity crowdfunding is just giving away 10% of your money to someone on a platform for something you could do yourself without the platform.

Yeah, that's what I was gonna add. So the only— I would definitely agree on the distinction between product and equity funding, and I would say the only cases where I've seen that it sort of works, although I'm not a big fan of big cap tables, is when you have to rustle up interest in a community and there's a large bunch of, you know, loyal fans that you want to increase your loyalty with or build a user base that feels like they have a stake in your business, then I think equity crowdfunding works on a larger scale. Otherwise, I'm not necessarily a big fan for early-stage companies. There are different ways to find money, honestly.

Okay, awesome. And then we have another question coming in from Nikita. She said, as a female founder, when I've reached out to some mentors who are supposed to be supporting women founders, I've been completely shot down. "The supporting women founders only focus on dollars and cents or intangible support to help us grow from idea to execution." Monisha, do you want to start with this one?

I think this is a question that I was alluding to earlier, where you have VCs with very strong women and you reach out to them for help or advice and you probably get shot down because their intention or, you know, their filter for, I think, taking in requests is probably based on a hypothesis, an investment hypothesis that may not necessarily mean funding women necessarily. And so I think if you draw that distinction and you look for funds that are out to back women CEOs or women teams, I think you may get a different response. I don't know if that was the case, Nikita, for you, but I would say sometimes people get a little bit confused between the two.

One of the things I've also seen through— I ran Founder Institute programs before I stopped running them in I launched this VC because I saw the opportunity. But one of the things I saw there is that famous mentors often don't have time for you. So if you go after someone who's really famous in the landscape, they just have so many requests, they don't have time to take them all. And often you get the best advice from the people no one's ever heard of, nobody knows, and there's these sort of hidden mentors out there who are people who are happy to donate their time and sort of give you the advice. But you need to do some more work. I mean, either you do Founders Student, they bring you a whole bunch of them, but if you want to do that on your own, do some work to sort of reach out, find a successful woman who you want to chat with who isn't famous but who you find through your own research.

Annie, do you have any additional thoughts there?

Yeah, I think it's, um, look— Yeah, when you're looking to build a relationship with someone as an advisor, I think look to their time ability to help. Sometimes it's, you know, when, as Kemal was alluding to, famous advisors or, you know, certain people at certain moments in time, they would perhaps help you, but maybe don't have time. And a good question to ask is, you know, if you're really busy, do you know someone who could help me? Like I had that situation recently where I was just extremely busy. I'm advising this founder to get a really cool business. I've been on and off helping her and she needed help with a financial model. I didn't have time and I said, oh, I could look at it, but it might take 2-3 weeks. And I thought it was great of her. She says, do you know someone who might have time earlier? You know, I happen to have a great network of folks just a little bit more junior than me that were quite happy to volunteer to help her. So, so what I did was to, you know, just, just make a quick connection and she got the help she wanted. I didn't have to look at the financial model. So it was a good day for everyone.

I think that's super important to know what you want before you reach out to someone. And same advice goes if you're reaching out to me on LinkedIn, I think know what you want to ask. Because like, you know, Annie was saying, if it's a financial model, you don't necessarily need to get that advice from a woman, right? So if you are reaching out to a woman for a specific reason, then know what you want and ask for that, because it may not be that one great mentor who's the person who gives you the advice. You could probably get it from a lot of people around you.

Absolutely. And I've heard recommendations from investors as well, especially at big institutional firms, is to maybe reach out to the analysts who may want, you know, may have more time to evaluate deal flow and may be able to answer some more questions prior to reaching out to the investor themselves. Okay, next question. As we're sort of closing up, we only have a few more minutes with our panel here, so I want to make sure we get to a few more questions. The next is, can you describe the ways you're involved in startups you decide to fund? So how do you— once you fund them, how do you continue to support them over time? And then Annie, we'll start with you on this one.

Yeah, so I have a unique role right now because we are raising our funds, so I can't speak to experience there, but I'll speak to the approach that we intend to use. So currently at Grand Challenges Canada, I run a group that is specifically tasked with helping entrepreneurs find unique sources of blended finance. Again, we're in the medical space, so it is quite possible to add grants into the mix for various purposes. For us, really, our intention for our fund is to take a board position, like most folks on this panel, work with organizations to bring other CEOs of similar companies as resources to them to help them through problems. We're investment professionals, very realistic on that basis for myself, but I have a great network of exited CEOs who can help our companies solve, troubleshoot through problems and such. What we do have is also a great network of various co-founders and funders for various purposes that we bring to the table. So it's really full commitment on our ends, once we're invested with our companies.

One of the things we do actually, it's funny, Annie mentioned it a little bit earlier, it's just we do it systematically, is when we work with companies, every company has a half-hour call with one of the partners, one of the venture partners, every month. But we have 300 advisors in our network, and exactly that, when someone says, "I need help with my financial model, I want to talk about digital marketing," honestly, as a VC, I should know people who are smarter than me every one of the subjects you bring to me, whether it's an industry specialization, a country need, a functional activity. That's our job, is to find those people. So we just make sure we mobilize the best people we can to answer questions, and actually it shouldn't be the VC partner in our point of view.

We take a very different approach at Zephyr. It's like, you know, I explained in the beginning of the call, it's our money, we'd like to be operationally independent, We have taken C-level positions in the past in our portfolio companies to drive their success. So we either just make a pure investment and we're there to, you know, you can pick up the phone on a Monday morning and say you've had a shit week, or, you know, we take an operating role as management team. And then the other model we sometimes use is just expanding into Asia. So we make very conscious support choices for the company to help them open up new markets in this part of the world. So those are kind of the three ways we work.

It's also worth mentioning that Manisha and, I mean, Zephyr Ventures and Loyal VC have sort of very different scales they operate at. And because we're doing literally 60 investments a year, we cannot possibly support each of them individually. Manisha is doing a couple a year and absolutely can spend that time, which, where we couldn't.

Yeah.

Yeah, then knowing that about your investors, you're reaching out and being able to understand that expectation too is, I'm sure, very important from the founder's perspective. So my last question, and we'll start with you, Kamal, is going to be, what is your parting advice for female founders on the call today? Any advice you'd like to share with them?

So I guess the big parting advice I'd give is you don't need a VC to validate you. Just go ahead and make the business work anyway, because if you have business success, fundamentally, if you can find ways to pull it together to get those sales, to get that traction, it doesn't matter who the VC is, it doesn't matter what they've done in the past. If you can find a way to sort of scrabble and get together everything you need to show your business working, then the VCs will fundamentally fund you based on what you've already succeeded in doing. So I would say Take the power yourself by not being reliant on a VC. If you do want to talk to a VC, I mentioned the advice earlier, which is make sure you talk to every VC and angel group who fund— who specialize in funding women, because they're desperate for deals. Talk to them, get in there, and you'll be fairly evaluated against other women. By the way, the good-looking/bad-looking dichotomy, uh, which exists for men does not exist for women. Doesn't matter what your looks are, you're treated the same.

Yeah, I would say there are two choices, right? You either play the game or you don't play the game. If you choose not to play the game, then you build your business the hard way. You find your own money, you grow it slowly, you know, you do it your way, and you don't dabble with the VC world necessarily. But if you choose to play the game, ride the wave. There is an interest, there are people looking for companies, as Kemal said, there are funds. And I think we've not mentioned it as yet, but is it Beyond Billion, which is a pledge that a bunch of VCs have taken to support support more women. So ride the wave, find out more about funding for women and contact these VCs because that's what they're claiming, right? That they're going to back women. So I think use that in your advantage.

Yeah. Yeah. I think the advice I would have is talk to a lot of people to understand the kind of business you're running. And, you know, sadly going to reflect a stereotype here, but there are a lot of businesses run by women that aren't necessarily a VC-type business. There are plenty of those led by men as well. So know the right kind of capital that's appropriate for your business. And VC may be that type of capital, but it may not. So, and if you don't know for sure, try to find, you know, pitch the idea to a few people. Treat the opinion as just that. It's just an opinion of the business. So don't take it at face value for sure. But, but do have a think about what the right capital is for your business for the stage that you're at. It could be a grant. It could be venture capital. It could be mezzanine debt for some businesses. It could be revenue. Revenue is a form of financing. So don't be afraid of funding your business by revenue if that's, that's what's possible for you. For example, I've seen businesses that are a tech company, but there's a service component to it that can self-finance for a while. So I think just be creative. Don't be afraid to be creative and think about your business that way.

There's also the very general advice to give all entrepreneurs, which is get experienced people who've been around the block before to look at your business and tell you if you are VC ready or not. I mean, some of these things, it's— if you don't have that network, find any way you can to build it. Find experienced entrepreneurs, find people who can look at this and say, "Yeah, you're ready for VC," because sometimes the advice is, "Yeah, your business is ready for VC," and the advice you need to hear as a female funder is, "Guess what? You're going to have to talk to 50 or 100 different people." If 1 in 100 businesses gets funded, you're gonna have to talk to 100 VCs. So sometimes the advice you need is don't give up after 10, keep going till you get 100.

Yeah, and don't be afraid. I think someone mentioned this on the panel. Don't be afraid to talk to the analyst. You know, getting to the partner, getting to a chief investment officer of a firm is not always obvious. So, you know, if you're looking for someone to give you a gut check on whether you're VC appropriate, first of all, And two, if you are VC ready, get a, get a few junior people. They often have more time, more curiosity. They're younger, more energy than the rest of us to give you a piece of advice.

And I'm saying this with two VCs on the call, but whatever you do, please don't treat raising money from a VC as the only success metric that you need to be chasing because it's not. There are very many ways of proving the success of your model and your idea.

Fantastic. That was wonderful advice. And thank you so much, Annie, Monisha, Kamal, for your time and your insights and for helping founders today, and especially female founders. And thank you again. And so thank you to everyone who joined us on the call from all over the world. We really appreciate your time. Thanks so much, everyone. Have a wonderful evening, afternoon, and morning, depending where you are in the world. Bye-bye, everyone.