Jason Mendelson, Foundry Group: Entrepreneurs and Early Stage Venture

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

What do you see as the obstacles for inclusion of more women entrepreneurs in achieving funding?  I know its very different in Boulder & in your firm.

I think the point you made is for us, I don’t think there is any obstacle, except for being able to go online & figure out what my email address is, which is online, & send me a business plan.  I do think there is still some ‘old boy’ legacy network in the vc world. You & I have spoken before about this.  On a generous day, I like 50% of the venture capitalists that I know & that other half, I think what frustrates me is some of that ‘old boy’ network.  I can see situations that I think are ugly.  We spoke about Claire Cain Miller’s article in the New York Times ‘Out of the Loop in Silicon Valley’ about some horror stories she had found.  I completely believe those happened.  The old white guy who is assuming that a woman is going to start a company, raise money & then immediately get pregnant & leave & not be engaged with the company, I think is total BS. Because there are plenty of stories out there about women who have had children whilst with company & taken a small amount of time off obviously but have come back as engaged as they ever were.  So I don’t believe that at all, but there is going to be some perception there.  The other thing that I’ve noticed is that it’s not just against women, it’s against the younger class.  I think there is a lot of the old boy network who are uncomfortable dealing with 20 something entrepreneurs or first time entrepreneurs.  It’s not just women, it could be different races, different classes.  To sit around & think you can fund 40 or 50 year old white guys, I think that’s a stupid business model & you’re doomed to fail as a venture capitalist.

Jason Mendelson

Yes & Randy Komisar just mentioned to me that he didn’t think that the VC world was arcane or mystical.  But for us entrepreneurs & particularly obviously in Europe because we’re even further outside the box, there does get that feeling that VCs are behind some sort of veil or something?  And obviously part of my mission in doing these interviews is to humanize VCs.

Good luck with that!

Jason Mendelson

And actually I’m having a ball because I’m meeting some fantastic people!  But there is that experience for entrepreneurs that there is some sort of wall & you’ve got to get through it.  And obviously for women it seems to be even more challenging.  So really what I’m hearing from you is that you don’t see any extras?

No I don’t & to address one of your points about the wall is that I think a lot of vcs are not very transparent in what they’re thinking.  An entrepreneur comes & says ‘Hey I’d like you to fund my company’ and they never really engage emotionally, they’re never really intellectually honest & they never say no quickly, they say get back to me, get back to me, get back to me & I think that just adds to this whole perception of this wall.  I think that the good vcs these days are the folks who say yes & no very quickly.  In fact the nicest thing you can do for an entrepreneur is to say no very quickly.

Jason Mendelson

Yes I agree having been on that end of it, it is so much easier. And because there is so…much time wasted, from an entrepreneur’s point of view in ‘courting’ & interacting with venture capitalists. Thank you so much for that.  Do you find that the differences for women mean that you have to hold different awareness or measures when it comes to women startups?  Do you think that the effort of being aware of women entrepreneur’s different strengths & weaknesses makes it more of a challenge for some venture capitalists to investigate women startups?  I often hear in this industry that it is helpful if an entrepreneur is similar to the venture capitalist, i.e. like attracts like, which could prove to be more challenging for women entrepreneurs who approach male venture capitalists because we just don’t have the same gender.  (You’ve probably noticed that we are somewhat different?)

I think its a really interesting question.  I think that I’m differently situated.  Not to overshare but I grew up in a single family household with a Mom only so maybe I’m more in touch.  I think all entrepreneurs are completely different.  It’s not just connecting with women versus men, it’s old versus young, it’s US born versus non US born, it’s straight versus gay.  Actually in my portfolio, I have all these types of different entrepreneurs.  It’s being self aware, being honest & transparent about what you’re doing.  If I could make any generalization, I would tell you that the women entrepreneurs that I have worked with tend to be a little more self aware than some of the men.  If you look at the typical Hollywood casting couch CEO who’s beating his chest & leading the troops into battle & all that, a lot of these folks they may be amazing leaders but they’ve got no clue on a self aware factor of the externalities that are happening due to their behavior.  One of the things we do here at Foundry Group is we work with an Executive Coach twice a year.  We get together with her, she’s a woman, we talk about all the things that are going on with our business & interpersonal stuff & so we spend a lot of time training ourselves about how to be aware & how to deal with conflict & how to deal with different personalities.  And I think the fact that we chose a woman as the person we look up to to help guide us, I think that helps us interact.  So I don’t feel that there’s any way I need to change my behavior or act differently.

Jason Mendelson

Wow that explains a lot, now that you’ve said that.  I didn’t realize that you were being coached.  You might or might not have known that I am an Executive Coach so I’m really impressed obviously. And of course that explains your integrity & some of the responses you’ve given to questions. Thank you.  What tips would you offer women entrepreneurs who are considering sourcing venture capital because obviously they’re not all going to come to you?  They mightn’t even have the sweet spot that you are interested in, so is there anything in your knowledge of the venture capital community that you would advise women entrepreneurs?

Well the first thing I would say which is complete self interest & a plug for us, is that we love women entrepreneurs, so if you’re doing something that fits with one of our themes.  Go on FoundryGroup.com & read about what we like to invest in & please send us your business plan.  But on a macro level, I think the first thing I would say is that don’t get discouraged by all the noise that is out there. There is a ton of noise, whether it’s from the New York Times, whether it’s from Techcrunch & the whole stuff that’s been going on with Arrington.  Don’t believe that everybody is bad & evil & you need a chip on your shoulder because you have less of a chance.  You’ve really got a great chance, so go out there be confident, do what you do best!  I think the second thing is that we need more wome engineers.  I think one of the advantages that some men have is that when somebody is walking into a pitch & we only invest in technology & that founder is a technical person, you are by definition going to have a little more confidence that that technical person is going to deliver on what they say they can.  It’s a little more tenuous if I’ve got 2 non technical cofounders saying ‘Hey we’re going to build this!’  Obviously it’s too late for a lot of people but if you’re watching this & you’re trying to decide what you want to do when you grow up, I think an Engineering Degree is a huge advantage.

Jason Mendelson

Yes I agree, I really regret it, I got a scholarship to learn Maths at Sydney University & I turned it down when I was young so I really regret it now that I’m involved with technology. I would love to be a technical person.  Recently I just posted an interview with Penny Herscher, CEO First Rain and she said exactly what you’re saying that its really important to have women as technical people.  But she also mentioned that its helpful for women to have gravitas when dealing with venture capitalists because she found that if she didn’t take herself seriously that it was useless trying to approach the vcs and she would have less success usually.  You’d agree with that obviously?

Yes whether it’s gravitas or moxy or quiet confidence or whatever it is!  When I’m interviewing an entrepreneur, this is for everybody, you want to imagine what the worse thing is going to happen.  Which by the way in startups, the worse thing usually does happen at some point.  How is this person going to be under fire & under pressure.  It’s a ton of pressure to come & meet with a vc & if you come off as relaxed and you’re basically riding your bike in Central Park, that’s very impressive regardless if you’re a male or a female.

Jason Mendelson

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