Transcript follow & video below
What is your firm’s sweet spot, the type of startup in which you like to invest?
My company PointJudithCapital invests in early stage companies, usually not seed stage.we like to be first institutional capital into the company. We are post friends & family & we like to invest in the series A, anywhere between $1m and $3m in that first round of capital.
Gina Raimondo
Is there a particular type of startup that you focus upon?
Well my expertise is health care. I spent my career in the health care industry which is medical device and health care IT. The firm however also has an IT practice which is growing & media & internet.
Gina Raimondo
Do you see many women entrepreneurs/startups sourcing venture capital coming to you?
No, it is interesting, I don’t know why & I haven’t taken the time to do a full analysis of what percent of the entrepreneurs that I’ve interacted with are female. However I’ve been in the business now for over 10 years & looked at thousands of companies. Certainly fewer than 10%, I would say probably 5% are female run & owned. I think that there is a receptivity to female entrepreneurs. We as venture capitalists are focused on great technology & demonstrated ability to make a company successful. So whether that team includes women or men, I don’t want to say its irrelevant, but we are open to whoever is running the company. Now having said that, the complexities are, there are 2 things we need to keep in mind. 1) The venture capital business is still a very small cottage industry dominated by relationships & networks & a lot of informal interactions between fellow venture capitalists & also as among entrepreneurs. 2) By its nature venture capital early stage is inefficient & that’s a good thing right that’s why we are able to make outsize returns because its an inefficient market. Having said that, that inefficiency I think sometimes makes it a little harder for first time entrepreneurs & women entrepreneurs to network. Because the fact is, particularly on the East Coast in the Boston area, venture capital partnerships are dominated by men. And when so much of what we do & so much of our deal sourcing & recruiting happens through networking & informal discussion & informal networking. And the venture capital world is so male dominated, so it kind of feeds on itself & perpetuates more & more funding of companies run by men. There have been efforts such as Springboard which is an organization to promote & mentor female entrepreneurs which have increased awareness of the issue & I think that’s been great. But you can look at the numbers and there are very, very few female general partners in the venture capital community, particularly in the Boston area. I think its a little different in Silicon Valley.
Gina Raimondo
What are the challenges that you have faced in your career as a women venture capitalist that men would not find?
That’s an interesting question, you know I’ve been fortunate & successful. I started Point Judith Capital & that firm has flourished so I can’t claim that I’ve been particularly disadvantaged. But having said that the venture capital industry in Boston epitomizes ‘the old boy network’. To the extent that you look different from the guys in that network its just a little bit harder and so I’ve had to develop my own style & my own networking techniques to be able to succeed in that environment. There are a handful of golf tournaments every summer & I’ve never been to them. My partners go & I happen to know at most of them there aren’t any women, or maybe a single female. That’s not anyone’s fault & its not intentionally discriminatory, the fact is the old boys network, it’s a hugely male dominated world. So you need to figure out how you’re going to network on your own to get access to the best entrepreneurs & the best talent.
Gina Raimondo
You said that it was harder just by the nature of being different, could you clarify what harder was to you? What was it that you came up against?
It’s hard for me to say because I never felt as though I couldn’t get a meeting or was overtly treated differently or discriminated against. But you know yourself, what it’s like to be in a room full of guys. I’m almost always around a board table with all men. So harder just means having a different look, a different style & a different orientation than everybody else in the room. And I think that just makes it a little bit more difficult.
Gina Raimondo
What do you see as the difference between men & women entrepreneurs when they’re sourcing venture & running a business?
It’s a good question & I always hesitate to generalize. Let me give that some thought. I’m not sure that I have any particular differences as it relates to people’s gender. I would say if I were to make a general comment it relates to confidence. So I think what you will see often in any startup is there’s a lot of unanswered questions. Startup companies are by their nature filled with risk & unknowns. How will the product sell? How will the market receive it? How will the product perform? And I would say that female entrepreneurs on average would be more open about the potential risks & deficiencies. And also less inclined to portray that everything is known & that everything is confident & everything is going to work. When in fact in won’t. When in fact sometimes you see male entrepreneurs come in overconfident or oversell. Again I would say if I generalized a little, I think male entrepreneurs are a little bit inclined to oversell & diminish the risk & be overly confident whereas female entrepreneurs are less likely to do that.
Gina Raimondo
Possibly a little more pragmatic?
Yeah
Gina Raimondo
What have you perceived (another generalization) to be the obstacles for women sourcing venture?
I just keep coming back to the fact that so much of what happens here is informal networks & if you’re outside of the club it’s just doubly harder. I’ll tell you most venture capitalists won’t look at a deal if it comes to them over the transom. Most venture capitalists have a transom website where it says ‘Click here to submit a business plan’ and almost none of them pay attention to the plans that come like that where there is no existing relationship. Same with cold calls. Venture capitalists get a ton of phone calls every week: ‘Hi I’m John Smith, I’ve got a company I’d like to come meet with you?’ Those tend not to be given a lot of credibility. What is given a lot of credibility is ‘Hey Gina my friend has a new company, he’s a successful guy, I think you ought to look at it.’ We don’t deal with brokers or investment bankers, these are startup companies, it’s all word of mouth. So any time you have that situation where its a friend of a friend thinks you should look at it. The other thing is people like to work with people they’ve already worked with. So when an entrepreneur who has made us money in the past, comes back to me with a new company, we’re much more likely to look at & invest in that company. It makes sense because we know the guy, we trust the guy & he’s made us money before. Having said that it creates pretty significant barriers to new comers & frequently women are new comers. The number of serial entrepreneurs who are women is much smaller so they’re structural systemic… The cards are stacked against folks who are new, folks who are outside the traditional networks. To the extent that thats women, that’s a pretty significant hurdle. In my practice I go out of my way to find & mentor female entrepreneurs, I just think that’s important. I don’t think a lot of my male counterparts in the business are doing that so therefore its something that I spend time doing. I think that over time once there’s more women venture capitalists & more female entrepreneurs & more serial female entrepreneurs then over time it’s going to get better.
Gina Raimondo
Years ago, a friend a professor at La Trobe University in Melbourne, suggested to me that women seemed to find it difficult to see their success as a result of their own talents, experience & work. They often felt it was a combination of good luck & other people offering them opportunities. In other words they may find it harder to build their confidence & ego in business because they are so… aware of the other people around them & their environment. In your experience do you see this piece to be a contributing factor in the challenge for women sourcing venture? If not what are your thoughts about what holds women back from sourcing venture capital?
I do see that. When you are a CEO of a startup you need to portray confidence even though you don’t have all the answers. Every startup there is a lot which is unknown. But you need to portray that you are going to figure out the answers, that you are not going to let anything stop you. You are going to climb over mountains, break through walls to get that done. And you have to exude that confidence and whether you want to call that egotistical or not? I think women are reluctant to do that & therefore I think it hurts them. I think you need to sit down with a venture capitalist & say this is my team, this is my product and we’re going to get it done & nothing is going to stop us. That extreme confidence can be very helpful in securing venture capital. Again I don’t want to over generalize but women may be inclined to say ‘This is our plan & we think its going to work.’ Or ‘This is our plan & these are all the things wrong with it’, kind of leading with their chin. I think some of the bravado that guys bring to the table helps them to secure venture capital particularly because 9 times out of 10 the person on the other side with the check book is a man & will relate to that.
Gina Raimondo
Thank you so much Gina for your time today and for participating in this project. And as I’ve found this incredibly valuable I’m sure other women will too.
I was happy to be part of it & I think its an important cause & I’m glad you’re doing the work on it.
Gina Raimondo
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