Tim Draper, DFJ: Disruption and Female Startups

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.


Tim Draper

Yeah thank you.

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