Penny Herscher, FirstRain: Successfully Sourcing Venture for Women

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

Could you tell me briefly about your past history in sourcing venture capital?

Sure I raised $23million from Mayfield & Worldview between 1996 & 1998 for a company called Simplex Solutions.  And then with my current company First Rain I raised just over $40million between 2006 & 2010 from Oak Investment Partners.

Penny Herscher

Wow you’ve got lots of experience then! What personal lessons being a woman have you taken out of your successes &/or failures in that regard?

So personal lessons would be to say you really have to have 3 things when you’re selling your ideas or selling yourself to a venture capitalist.  1) You have to have a really good idea 2) You have to have operational experience so P&L experience, running a business, running a division of a business something like that. 3) You have to take yourself seriously.  There is a level of gravitas & seriousness that you need to have or other people don’t take you seriously.  My experience is that when I don’t do that, I am consistently underestimated. So I’ve learned to manage myself to a point where I don’t get underestimated through the process.

Penny Herscher

Wow great point thank you for that!  What attitudes & biases towards you being female have you noted from venture capitalists when you have been sourcing venture (if any)?

I think there are 2 kinds of VCs:  1) There are VCs who really don’t care what gender or color you are.  They care about who you are as a person.  They care about your experience & your ability to build a team.  So if you have strong ideas & you’re very sure of yourself & as I said, you have operating experience so you know how to build a team, you know how to build a product, you know how to go to market.  whatever your experience is?  You’ve come from Sales & Marketing or you’ve come from Engineering.  By the way you’ve a much higher probability if you are Technical than if you are not, just statistically much higher chance. There’s a set of VC’s who just don’t care.  2) There’s a set of VCs who politely listen to you & are slightly patronizing through the whole thing & say ‘I’ll get back to you!’ And I’ve learnt how to sort those out very early on in the process & make sure I only spend my time with the guys who actually looking for ‘Are you a spark, are you a leader? Are you going to change the world with your ideas?’  And focus your time on them.  The ones who patronize you, just shake their hand & thank them.

Penny Herscher

Very good, you’ve got a good filtering system then.  What qualities do you think women entrepreneurs need specifically to successfully source venture?

As I said before, I think it makes a huge difference if you’re Technical.  One of the problems we have is that we don’t have very many technical women coming up through the ranks. So women statistically have a lower probability of getting finance just for the sheer numbers.  There aren’t that many that are technical, women are leaving technology.  There are programs like Anita Borg Institute to try & keep women in technology but they are leaving. And so if you don’t have enough women coming up through the ranks then you don’t have as many women even trying to do ventures.  So that is the beginning of the problem.  The 2nd thing is that I have met a lot of women entrepreneurs who don’t play the game like men.  They don’t take themselves seriously enough, they’re emotional, they don’t have the gravitas to build a team & lead a team.  Although I have seen a lot of male entrepreneurs like that too, so it’s not a uniquely female thing.  But to get funded as a woman, I think you have to have Executive Presence.  Until we have a lot more successful women entrepreneurs, the vcs are looking for Executive Presence.  It’s just one of the aspects they need to see.

Penny Herscher

In your opinion what percentage of women would qualify then as regards having these qualities?  Can they be developed or are they innate?  If so what are your ideas about how this could happen?

They can absolutely be developed in companies.  One of the things I believe very strongly is that companies need to develop their female employees. If you don’t have programs that help you recruit & retain & really develop your female employees as a company, its been proven now, it is less likely to be successful now.  Diversity definitely increases your probability of success. But also you’ll loose your talented women if you don’t have enough of them.  I feel very strongly that companies need to develop operating talented women.  And that’s not just HR, Finance & Marketing & Communications.  That’s P&L responsibility, Sales, Leadership etc so you get more women with operating experience.  Because you need more women with operating experience not only to successfully raise money but once you’ve raised money to run a company.  So if you want to run your own company, you need to get operating experience in a company first.

Penny Herscher

And I gather that would also entail some sort of support for mentoring women too?

Yes very much so, I was very, very blessed to have a couple of really good mentors – white men of course, but I had them!

Penny Herscher

White, geek men?

Yes white technical men exactly.

Penny Herscher

Do you think that the challenges that women entrepreneurs/startups have historically faced, mean that we will always be under represented sourcing venture?

Always is a really long time, so no.  It’s only a matter of time, it changes with every generation.  I’m of a generation now that when I started there were no women in management in the firms that I joined & I was the first woman executive in the company I worked for.  And then in Semi Conductor I was the first woman to be a CEO of a company in the space.  And now I see more women running companies, more women with technology degrees, more women studying Computer Science.  So I think its more a generational thing & I think its only a matter of time now.  But we have to help each other, those of us that do it, need to help the other women at least get trained so they have a fair shot at it!

Penny Herscher

And I guess what we’ve got going for us, is that women are generally very open to supporting other women, mainly due to our struggles that we’ve all gone through at some point?

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