Investor Panel #startupconf

Investor panel @The Startup Conference, Mountain View with Joyce Chung, Garage Technology & Heidi Roizen, DFJ & Stephanie Palmeri, SoftTechVC & Manu Kumar, K9 Ventures & Christine Herron, Intel Capital with Pemo Theodore, Moderator.

I was so excited & honored to moderate a panel with so many brilliant female venture capitalists.  It was a really interesting & fun conversation! Thanks to all who participated.

 

Crowdfunding Panel & Advice to Entrepreneurs #startupconf

Crowdfunding panel @The Startup Conference, Mountain View with Danae Ringelmann, IndieGoGo; Chance Barnett, Crowdfunder; Sherwood Neiss, The Startup Exemption; Eric Jackson, CapLinked with moderator Anthony Ha, TechCrunch

Tim Draper, DFJ gives advice to entrepreneurs @The Startup Conference. He even does a little song & dance number.

Why are Women Funded Less than Men? a crowdsourced conversation

I spent 5 years in London trying to raise funding for my online matchmaking business & in the end had to admit failure.  Very early on in that journey I had committed to help women source venture when I was successful.  As it turned out I have been doing just that for the last almost year, not because I was successful but because I failed.  I have been video interviewing venture capitalists, angel investors & women founders on the shortfall in funding for women.  My goal has been to listen to as many people as I could from both sides of the table, so I could hopefully determine where all these conversations intersected.

Tim Draper, DFJ: Disruption & Female Startups Part II

Video interview with Tim Draper, Managing Director, Draper Fisher Jurvetson.  His original suggestion to use “viral marketing” in web-based e-mail to geometrically spread an Internet product to its market was instrumental to the successes of Hotmail and YahooMail, and has been adopted as a standard marketing technique by hundreds of businesses. On behalf of Draper Fisher Jurvetson, Tim serves on the boards of Glam, Kyte.tv, Meebo, ShareThis, SocialText, Wigix and DFJ Plug ‘N Play companies. Previous successes include: Skype (EBAY), Overture.com (YHOO), Baidu (BIDU), Parametric Technology (PMTC), Hotmail (MSFT), PLX Technologies (PLXT), Preview Travel (TVLY), Digidesign (AVID), and others. You can find Tim @ his blog The Riskmaster & Twitter @TimDraper

Transcript follows & video below.  This is Part II of the interview. You can view Part I here

What tips would you offer women entrepreneurs who are considering sourcing venture capital?

I would think long & hard before jumping into any venture. It’s a very difficult thing to do. You take a big social risk which I think is a more difficult thing for the women entrepreneurs than for the men entrepreneurs for some reason. Maybe that’s one of the things we can get rid of is that women are more sensitive to what their peers think of them? And an entrepreneur has to be completely insensitive to that. They have to have this vision & it has to drive them. And that’s all that matters! So I think that will be a really strong & helpful piece to solve somehow in our social structure.
An entrepreneur has to look at people as we are all different, not we are all the same. There has to be that kind of a feeling. And if you’re an entrepreneur, it’s a long struggle so it has to be a strong hearted woman who just says this is what I’m going to do & nothing is going to stop me. And I’m going to be broke & eating peanut butter for 5 or 10 years & at the end of all that I will have shown the world something new that they wouldn’t have seen before. So I think that would be a good thing!
Once they’ve decided to do it, you know what’s really interesting, women are really good managers. People love working for women. That is very exciting for people to work for women. Women somehow are able to attract teams that are very driven. And I think that’s because they are willing to subvert their ego & allow other egos to shine. I think that that’s a really promising thing. So we do have a lot of good successful management women. That is definitely the case. There are very few women that have the entrepreneurial bug that is ‘I have to do this & I will break down every wall to do it. If there’s a law there I’ll get it changed. If people believe it’s wrong, I’ll make them believe its right. So that kind of thing does not come easy for a lot of women. For some women its terrific and they go after it. But they have to be willing to say ‘these walls are not the walls!’

Tim Draper

And do you think that that’s something that could be learnt. If what you’re saying is that very few women have that ability?

I think it can change & it is changing very quickly. And I think a big part of it is women’s sports because women now are in the sporting world a lot more than they were a generation ago. I think that’s a real positive because women’s sports allow people to understand what it’s like to lose, understand what it’s like to win, understand what it’s like to lose BIG and what it’s like to win BIG! It will really help women understand what entrepreneurship is. Entrepreneurship is you’re on the losing team & you’re taking on the champions & you beat them!

Tim Draper

Yes against all odds! I think you are spot on there, because I’ve had a woman venture capitalist & a woman entrepreneur say exactly the same thing, that they used the metaphor of sports but they were both sports women in different areas.

It helps people feel OK about failure.

Tim Draper

Also it must break the psyche into that territory so that it’s comfortable. Because I remember the woman founder saying she was comfortable in this skin as an entrepreneur because of sports.

That’s interesting, so team sports I think! More important than individual sports for that kind of thing because you need to know how to work as a team. And you need to know how to take failure & realize that there’s another game next Saturday.

Tim Draper

Fascinating, thanks so much. I noted in a recent article in Mercury News ‘Grim numbers point to the end of the venture capital era’ ‘In the game of venture capital, the 10-year return on investments is one of the most closely watched benchmarks of performance. Everyone can have a bad year here or there. And in the short run, there’s always going to be sluggishness from an economic downturn or two. But none of those excuses can explain away a whole decade of failure. No, there’s something bigger going on. The venture industry is in free fall. And that has big implications for the Silicon Valley economy, especially when it comes to job creation.’ With all the negativities out there in the global economic environments, obviously in Europe it’s even worse, possibly starting to affect investment, and the focus changing to become more risk averse, will we see even more women startups sidelined for male startups? (Obviously not in your firm) This fear has been expressed to me a few times by various people?

Well there’s a bigger problem & that is the regulators. Our government has made it more & more difficult for venture capitalists because all the regulations they put on big companies, they also put on companies that are just getting going, if they’re going to be public. So what we’ve had is a whole decade, well it’s really been since 2003, where we aren’t really able to get our companies public. And if you can’t get companies public then you can’t get your money back to your investor. Then the investor doesn’t want to put more money into you. So there isn’t an opportunity to keep that virtuous cycle going. And it’s only getting worse, the regulations are going to increase with this new administration. At least that’s the talk! So we’re very concerned & we think the venture capital business is in some hot water. Now it is somewhat cyclical but they’re 10 or 15 year cycles so it may be a while before we have another good run. It is true that when things are tighter, people take fewer risks & they may say there’s a larger risk with a woman entrepreneur than a man entrepreneur. I’m not sure that’s true & I’m not sure if anybody believes that anymore. So I think that your question is not relevant. I think it’s the industry as a whole is in trouble because of the heavy regulation that’s been put on us in the US. It’s interesting that in the rest of the world the entrepreneurship is thriving, both women & men. Interesting China has a lot of female entrepreneurs.

Tim Draper

Wow incredible & so just as an add on to that. A few superangels or angels have been blogging recently that the venture industry has to change. I’m wondering, with the perspective that you’ve just shared with me, do you think that all the creativity that you guys deal with both for yourselves & with the entrepreneurs that you’re dealing with, that you could rethink the venture industry & make it work better?

I’ve been constantly reinventing the venture industry. Every time I try I realize my investors, the limited partners, do not want it to change much. They are very cautious, particularly now. They are very cautious about putting money out & putting money out in any new way with any new setup is very scary for them. So it’s much less likely for us to raise money with another construct. Now that said, yes I think it is time & there are some companies that are starting to change the nature of venture capital so that shareholders don’t have to hold on for 12 years before they get any liquidity. They’ll be able to pass the baton to other shareholders as they go.

Tim Draper

Often advice for sourcing venture is equated with dating, implying that there is a matching that needs to happen with entrepreneur & investor. Have you noticed a general psychological profile of venture capitalists and also of entrepreneurs that promotes the attraction & synergy between them to develop a great startup?

I don’t think so! Because I think venture capitalists & entrepreneurs everywhere are so different from one another. Entrepreneurs have one thing in common, the need to make a big change in the world. And venture capitalists are of all ilks. Some of them want what the entrepreneurs want. Some are more interested in money or resources or industries or technology or markets whatever. It’s a wide variety of people in this industry.

Tim Draper

So you’ve never noticed a pattern there?

No

Tim Draper

Fair enough! In the dance with an entrepreneur both in the decision making process of funding a startup & then in working with those startups what are the necessary qualities that make a good venture capitalist. Some of the talents mentioned: Would you trust your gut instincts & feelings that happen within the relationship with the entrepreneur as signs about what’s happening in the business, in the startup? Or would you ‘manage by influence or persuasion’?

Well actually the two I’ve seen are more both of those in one category. Using persuasion & looking with faith in the entrepreneur & relationship with the entrepreneur. I think the other venture capitalists are focused really on performance. Have you performed? Are your numbers proper? Are you doing these things the right way? Have you hit your milestones? So that’s one type of venture capitalist! And another type is that really the relationship venture capitalist, the connector who connects entrepreneurs to a lot of different areas. The creative piece that a venture capitalist brings to the table because they’ve seen so many things. There’s a little more interesting creativity to that. So I think that there are kind of those 2 types.

Tim Draper

Thank you for that and as a pathfinder yourself, what would your main modus operandus be in working with an entrepreneur?

I tend to really look for really good management & if I have really good management in place then I can sleep at night. Then I also want to build a good relationship so that I can help those entrepreneurs when they need it. If they need a particular introduction or they need a little judgment on how they’re going to market their service or whatever.

Tim Draper

So a connector. Thank you so.. much I appreciate it!

Thank you very much

Tim Draper

Tim Draper, DFJ: Disruption & Female Startups

Video interview with Tim Draper, Managing Director, Draper Fisher Jurvetson.  Tim is the Founder and a Managing Director of Draper Fisher Jurvetson. His original suggestion to use “viral marketing” in web-based e-mail to geometrically spread an Internet product to its market was instrumental to the successes of Hotmail and YahooMail, and has been adopted as a standard marketing technique by hundreds of businesses. On behalf of Draper Fisher Jurvetson, Tim serves on the boards of Glam, Kyte.tv, Meebo, ShareThis, SocialText, Wigix and DFJ Plug ‘N Play companies. Previous successes include: Skype (EBAY), Overture.com (YHOO), Baidu (BIDU), Parametric Technology (PMTC), Hotmail (MSFT), PLX Technologies (PLXT), Preview Travel (TVLY), Digidesign (AVID), and others. You can find Tim @ his blog The Riskmaster & Twitter @TimDraper

Transcript follows & video below.  This is Part I of the interview. You can view Part II here

What is your sweet spot, in what kinds of businesses do you like to invest?

Well I’m always looking for somebody who is willing to break the standards, break the mores. If an entrepreneur comes to me with something that looks a lot like another business that I’ve seen before, its a lot less interesting than if it’s something that’s an enormous leap from where the old standard is. I’m looking for really unique individuals. They have to be willing to have ideas that are unpopular & to stand up for those ideas & drive them. When an entrepreneur’s ideas are too popular we might fund them by mistake because we think “Oh we want to get caught up in this!” but we usually lose our money in these.

Tim Draper

Interesting, I was interviewing a male entrepreneur the other day who said a lot of VCs go for the hot table in the gambling stakes rather than trying something new. I guess what I’m hearing from you is that you’re really interested in disruptive businesses.

Yeah I’ve always been more successful in trying something where others fear to tread.

Tim Draper

Isn’t that great, you’re a real adventurer. What percentage of women startups do you get pitches for? And what percentage have you funded? I know you have been extremely supportive of Astia.

Sure, well we’ve funded a lot of women entrepreneurs, a disproportionate share because the ones that start businesses are somewhat unique on their own. We’ve had mixed results but we have had good success where a woman is part of the entrepreneurial team. And that has often worked out quite well. So it’s a mix, it’s a mixed bag! What percent, I’d say about a third to a half of all entrepreneurs have a woman on the team somewhere and one of the first 5 people. Then I’d say we fund the ones who are just women, like one woman entrepreneur, those are rare those are 1 out of 20 that come in our door. We did fund a disproportionate share of women because I was aggressively trying to push it & promote it. Now I feel like it’s starting to catch & so we probably fund a proportionate share.

Fantastic, and I’m hearing too in the background that diversity on teams is obviously a winner that you’ve noticed?

Yes I think that makes a big difference.

Tim Draper

Have you noted differences with women entrepreneurs in how they pitch & build businesses?

Yes there’s quite a difference in how they pitch & build businesses. I’ll go into how they build businesses (how they pitch there are some obvious differences). How they build businesses: women are very tight with money & they’re good with money. And that has been a real positive with some of the women entrepreneurs that we’ve funded. The negatives are that some women entrepreneurs might not be thinking big enough. I would encourage women who are entrepreneurs to think very big. And also women entrepreneurs who become successful often are happy to sell their businesses. If they wanted to leave their businesses, rather than hiring somebody in to run it from there & continue to grow it. That is very much a generality & probably completely very fair in either case. But I have noticed that they are very good with money.

Tim Draper

I recently interviewed Cindy Gallop, IfWeRanTheWorld, where she said: ‘So many, many people are realizing that as Paco Underhill said recently to Ad Age ‘If you want business success then you have to find mass acceptance with women.’ More & more people are realizing what a powerful economic force women are as purchasers. Also the things that women bring to the table in terms of business & different approaches & perspectives on business are increasingly valuable & increasingly valued.’ Do you think that within the vc community that the awareness of these opportunities through women both as purchasers & founders is there? How can we enlighten the vc community about this opportunity because obviously you are in the vanguard of that?

Well we had 2 women partners, now we have one, one left us. So we do believe that women & women partners have a really good perspective on business. And particularly in venture capital where intuition is very important, it turns out that our woman partner, Jennifer Fonstad, is quite intuitive. And she can spot things that 6 men around the table can’t spot. So that’s a great thing! We’re all aware that women drive most of the shopping out there & that they know what they like, they know what might be good businesses. That’s a terrific help to a venture capitalist for judging businesses. But it’s also a good perspective for an entrepreneur trying to sell to that market.

Tim Draper

And do you think on a wider level outside your firm that this awareness exists?

Sure we’re interested, we keep tracking it. There are more & more women in the venture capital business. What’s interesting is that there are a lot of women who are in the fund to fund. A lot women fund our venture fund & then we put that to work with entrepreneurs. A disproportionate share of women run fund to funds, that kind of thing. It’s kind of interesting. Yes they’ve moved up one more layer of abstraction. More of them percentage than there are venture capital women. And more venture capital women than there are women entrepreneurs.

Tim Draper

Would you know why that is? Do you think there are more barriers?

I don’t know exactly. I could project. Those are safer jobs, the ones higher up on the food chain are safer jobs. But what we are all trying to do here is to encourage more entrepreneurial women. So the goal there then is to move down to the risk part of the food chain.

Tim Draper

Yes and I’ve been told by a lot of vcs that women entrepreneurs have to get funding, then sell their businesses & then often they become venture capitalists. I’m wondering if there are too many obstacles to have high numbers just yet. Obviously that’s changing.

Well we’ve been funding women for a long time. The first woman we funded was probably in 1986. So we’ve been funding women for a long time. So we do have a pretty good sample, a good flavor. Probably 20 to 40 female leader entrepreneurs, where they were the leader. But there were probably hundreds where there was a woman part of the founding team.

Tim Draper

That’s incredible! What do you see as the obstacles for inclusion of more women entrepreneurs in achieving funding because you’ve had incredible experience, more than anyone else I’ve spoken to?

Well I think success breeds success. So women entrepreneurs who become very successful can be models that venture capitalists will follow. I’ve noticed that when I try something new, the other venture capitalists don’t follow until they’ve seen success on the other end. And maybe its not just one success but 2 or 3 & then they’ll all come in. So like we were way early in China & a few in Europe whilst most of the rest of the venture capital community was still here in Silicon Valley. When the one in Europe, Skype took off they took notice but it didn’t make them want to go to Europe. But then when Baidu went public in China, they all started to expand out. So they needed not just one but 2 really interesting models for success. So with women I think it’s just a matter of if there’s enough models for success, if women drive big billion dollar companies that are started by the entrepreneurial process then the venture capitalists will take notice, whether the venture capitalist is a man or a woman.

Tim Draper

So it’s all about breaking this ground & you guys have obviously been doing that with your companies that you’ve funded. So the more that that ground gets broken the more level the playing field gets.

Yep

Tim Draper

Yeah thank you.