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Cindy Padnos is the founding Managing Director of Illuminate Ventures, focusing primarily on Internet, SaaS/cloud computing, digital media, technology-enabled services and mobile communications investments. Cindy currently serves as a director of privately held companies BrightEdge, CalmSea, Wild Pockets and Xactly Corporation. Prior to founding Illuminate, Cindy was a Director of Outlook Ventures where she was one of three investment professionals responsible for committing the firm’s $140M fund.Before entering the venture capital community Cindy gained almost 20 years of operational experience culminating in her role as founder and CEO of Vivant, an innovative SaaS company, where she successfully led this venture-backed company to its acquisition (EVLV). Cindy can be found at Illuminate Ventures & on Twitter @IlluminateVC .
This is Part II of the interview.
This is the transcipt & video above
- In your experience are there many women entrepreneurs that are unsuccessful in sourcing venture? We already know that the percentages of women who are successful is very low.
I wish there was really good data around women who have attempted to raise capital versus those who’ve succeeded. I know that data exists at the Angel Capital level so the interesting thing is that today the amount of women sourcing venture is around 16%. That is up dramatically over the last 5 years. Its literally tripled from 3 to 4% to today’s level. The data also shows that they are achieving at literally roughly those levels so roughly 16% of Angel Capital is now going into women led businesses. Now let’s look at that from the venture perspective. We don’t have the data, I don’t think it exists simply, about what percentage of each gender are seeking capital. I think it would be extremely difficult to gather that data. What we do know is what percentage are achieving capital. If you look at that percentage it is quite small 3 to 5% are achieving, even if you expand that to include the entire team & any of the cofounders, I believe that it is still less than 10%. So there is something happening there, some disconnect between those who are achieving Angel Capital & those who are achieving venture funding. It might be off by as much as 50% according to these numbers or maybe even higher. So it doesn’t make sense to me that the pool of women entrepreneurs who are venture ready or what I call venture backable, meaning they have the right education, they have the right skills & experience & they have the desire. But that pool is very clearly growing dramatically & yet the data shows that the percentage of dollars going into women led companies have actually declined by about 30% over the last 10 years. I can’t explain it, I know it’s real & I think that its a very interesting gap that in some way creates an interesting investment opportunity for us.
- What can women entrepreneurs/startups do to increase their chances in sourcing venture?
I think there are several things that women can do in order to have a better result in terms of gaining venture funding.
- To get the right kinds of introductions into the venture community. That means going to the professionals they work with, their service providers: their attorneys, their accountants, people they’ve worked with in corporate environments, people they know who they went to graduate school or colleges with, to get an introduction to an investor personally is the first critical step. And many times women feel uncomfortable asking for that & shouldn’t. It’s fundamental, it’s important & it makes all the difference in the world to an investor, who you’ve been introduced by. Go to the most senior people with the best relationships & ask.
- To not be shy & bashful about representing what the potential of their business is. I have seen women who are so conservative in their figures in terms of prospective revenue of these companies, because they don’t want to fail, they want to absolutely meet those numbers, that they come off as building smaller less aggressive businesses when that may not be the case.
- I think that there’s also an opportunity for women to target sectors where they are doing something that is relatively unique where they bring a perspective that adds value.
- You’ve probably seen the data that I have that shows that venture firms who have at least one woman partner that are literally 70% more likely to invest in a woman led or cofounded business than those who have none. I’m not saying not to target a firm who doesn’t have one woman in it, but make sure that is in the mix. One caveat to that is it is not necessarily the woman partner who will lead the deal.
- You have to go to the right partner in the firm who has the skills, interest & experience in the sector that you are building your product or service in. My own interpretation is that the implication is that a firm that has made the decision to bring in a woman partner, has made a really big statement. They are committing to have someone they treat as a peer every day in that organization. That they share decisions with, whose investments they’re going to back & support, who they’ve given control of a large piece of the funding of that firm. That frankly is a much bigger statement than a firm investing in one woman partner, it’s an indication of their acceptance & their ability to work successfully with women.