First Quarter 2012 VC Firm Funding Lags

A recent article in the LA Times said that Venture Capital Fundraising in the U.S. dropped 35% in the first quarter of 2012.

http://www.latimes.com/business/money/la-fi-mo-venture-capital-20120409,0,5597095.story

However, the article goes on to say that despite that, the amount raised was the third highest since the "end of the recession." Additionally, they found that California leads the way in landing venture capital investment.

Despite the dip, growth is expected. Hopefully, that will mean more good companies being funded.

What does that mean for me and other women founders of start ups? I don't really know. Hopefully, funding to our companies will continue to grow despite significant lags behind male counterparts. Perhaps even, VCs and other investors may begin to see how we do business differently as a positive, not a negative. Maybe then (and only then?) will not only investments begin to see an upturn, but business and the economy in general might see an upswing.

Food for thought. Here's to getting more good companies funded, either way!

You can find me at www.facebook.com/pilarstella1 and twitter @pilarstella.

Why Invest in Women in Biz, Tech and Startups?

I have recently been asked increasingly to speak to groups about my experience as a women in business and particularly in a technology startup seeking capital. While my personal story and experience is compelling, I am finding that the data is often staggering and irrefutable. In fact, it totally begs the question, not why invest in women in business, technology and startups, but rather why not? Below is some of the data for you data geeks...Happy Reading! ;) p

Women in Investing/Start Ups

· Women manage money differently, and had there been more women at the helm of investment decisions all along, the worst of the global financial meltdown might have been averted.

(http://www.worldpulse.com/magazine/columns/founders-pulse/the-new-silk-road)

Women-owned funds are more stable and consistently outperform general funds with higher returns.

· Women—in charge of just 3% of hedge funds and 10% of mutual funds—are more patient and consistent with their investments, are less apt to take overconfident risks and more likely to integrate detailed and conflicting data into their decisions.

· Average return on funds from 2000 to 2009 was 9% for women-managed funds compared to 6% index average.

(National council for research on women, 2010)

· Less than 2% of retirement assets are managed by women- & minority fund managers, yet account for >40% of the top quartile of performing funds.

(Diversity best practices, http://www.diversitybestpractices.com/publications/creating-inclusion-financial-industry)

· Only 5 VC funds in the country with over 50% women ownership.

· 1 of 25 women CEOs who had successfully taken 1 (or more) companies from startup through exit and also been on the VC side.

· Women now represent just over 15 percent of angel investors, but just 5%-7% of partner-level high-tech venture capital investors in the U.S. Firms with women investment partners are 70 percent more likely to lead an investment in a woman entrepreneur than those with only male partners.

· In 2008 woman co-founded tech businesses gained less than 10% of venture investment while representing over 30% of the workforce.

· In 2010, women gained 11% of angel financing and made up 46% of the workforce.

(Cindy Padnos, Managing Director, Illuminate Ventures and www.illuminate.com/whitepaper/)

· The percentage of women among start up capital seekers grew to about 20 percent last year, up from 12.6 percent in 2000, according to New Hampshire's Center for Venture Research. Of those women, the number who received funding grew to 13 percent in 2010, up from 9.5 percent in 2008.

· Research suggests that women's access to, and use of, capital to fund their business dreams lag in comparison to men. Of the U.S.-based companies that received a round of venture capital financing in 2010, only 6 percent had a female CEO, 7 percent had a female founder and 10 percent had a female founder or CEO at some point, according to Dow Jones VentureSource.

· There were 265,400 angel investors in 2010, and they put $20.1 billion in 61,900 entrepreneurial ventures in the U.S., the Center for Venture Research said. Women represented about 13 percent of angel investors, and female entrepreneurs accounted for 21 percent of those seeking angel capital.

· Historically, venture capital has been a much-acclaimed boys' club," says Mark G. Heesen, president of the National Venture Capital Association. "That network is something women have to permeate. It's harder for women to break into that arena."

(http://www.astia.org/content/view/2222/856/)

Women in Business

Women entrepreneurs are poised to lead the next wave of growth in global business.

· Companies most inclusive of women in top management achieve 35% higher ROE and 34% better total return to shareholders versus their peers.

· The average venture-backed company run by a woman had achieved comparable early-year revenues, using an average of 1/3 less committed capital.

· Despite often being capital-constrained, women-owned businesses are more likely to survive transition from start-up to established company than traditional companies.

(Illuminate Ventures – www.illuminate.com/whitepaper/)

· A recent report called Women Matter 2010 found that companies with a higher proportion of women in their executive committees are also the companies that have the best performance.

· Women currently hold 2.8 percent of Fortune 500 CEO roles and 3.3 percent of Fortune 1000 CEO roles

(Gillibrand, Kirsten, Women’s Economic Empowerment, 2011)

Women in Technology

The internet is an inherently feminine entity—it is based on connecting, leveraging, networking, relationship building—all female characteristics. Yet, women’s leadership in technology firms continues to lag.

· According to research from Stanford GSB Project on Emerging Businesses, fewer than 10% of high-tech start-ups have a female CEO, Founder or President. Technology driven start-ups continue to be largely male dominated.

(http://www.fastcompany.com/1730909/why-arent-women-leading-high-tech-start-ups)

· Yet, high tech companies that women build are more capital-efficient than the norm.

· In the past 10 years more than 125 companies with over 200 women co-founders or officers have achieved IPOs or >$50M M&A exits in the U.S. high-tech sector alone.

(Illuminate, 2011)

· The low number of women founders in the high-tech industry could be related the lack of access to equity capital. Women-owned startup companies tend to start with less capital than their male-owned counterparts, according to a study released by the Ewing Marion Kauffman Foundation.

· Only a small percentage of women-owned firms attract venture capital, yet technology driven companies typically need millions. Generally speaking, women aren't comfortable raising venture capital in part because of a lack of education regarding the process. Plus, the venture capital world continues to be male dominated.

(http://www.fastcompany.com/1730909/why-arent-women-leading-high-tech-start-ups

· Of the over 100 giving technology platforms, approximately 5% are women owned or led.

(Pilar Stella, 2011)

· This all while, women are the majority of users of social networking sites and spend 30% more time on these sites than men; mobile social network usage is 55% female according to Nielsen.

· Sheryl Sandberg, COO of Facebook, has talked about how women are not only the majority of its users, but drive 62% of activity in terms of messages, updates and comments, and 71% of the daily fan activity. Women have 8% more Facebook friends on average than men, and spend more time on the site.

· More women use Twitter, which has a reputation for being a techie insider’s (i.e., male) product. Women follow more people, tweet more, and have more followers on average than men, according to bloggers Dan Zarella and Darmesh Shaw’s analyses.

(http://techcrunch.com/2011/03/20/why-women-rule-the-internet/)

Faith, Trust and Connecting the Dots

I posted this in my newsletter and sharing it with on my blog. Enjoy, happy reading and happy 9-09-09! May this inspire you in your dreams, start ups and breaking through the every day blockages!

As I move forward in building my company, OneGiving™ (http://www.onegiving.com/), and I get ready to go to investors looking for start up capital, I am finding more and more every day that it is about faith and trusting that the dots will connect, even if I can’t see it from here.

I was recently reminded of this when I re-read Steve Jobs’ Stanford Commencement Address from June 2005. As he put it, “You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever…it has made all the difference in my life.”

This really helped remind me to keep moving forward and to trust the process. It made me realize that I am not the only one embarking on a journey to follow my dream, start up a company or stretch beyond my comfort level. So I pulled together some of the wisdom from my favorite recent readings that I wanted to share with you all to help inspire you to push past some of your own obstacles and beyond your self-imposed limitations.

In Steve Jobs’ commencement speech (http://news-service.stanford.edu/news/2005/june15/jobs-061505.html), his words of wisdom included:
· Find what you love and do it! The only thing that really keeps us going is to do what we love. We spend so much time working, so we might as well spend that time loving what we do. If you haven’t found what you love, then keep looking and don’t settle until you find it!
· Have the courage to follow your heart and intuition. We definitely aren’t taught to follow our heart and intuition and often get trapped in living the life that others want for us. Life is too short! Don’t let those voices drown out your own truth! Follow your heart and intuition, it won’t steer you wrong.
· Have faith and trust that the dots will connect. As per the quote above, you may not be able to see how things will work out, but as long as you keep going in the direction of your heart, having the courage and trusting, you will begin to see the magic unfold!

In a talk entitled, “How Not to Die,” Y Combinator partner, essayist and entrepreneur Paul Graham talks about some key tips for start ups on how to survive and thrive (and not die) (http://www.paulgraham.com/die.html). His wisdom included:
· Stay in regular contact with your investors and others. In other words, don’t isolate. This can apply to you whether you are a start up or just someone breaking out of your own limitations. Become part of a circle and community that helps you keep growing, moving forward and succeeding. So often when we hit our walls, limits or obstacles, we isolate and wither away. Avoid this and stay in contact with others to engage, nurture and inspire you to keep going.
· Stay committed and focused. Don’t take on other projects, distractions or “consulting gigs.” Sound familiar? I know it has been a hard one for me. Every month, when I think about the money coming in, I think ok perhaps I should get another consulting gig just to pad the budget a little. But I know I always give 150% to clients and that would be valuable time I couldn’t be giving to 100% focus on the success of OneGiving™. It is scary, but it has really helped me be fully committed to its success and my success and so I am willing to go that extra step, that extra mile, to make it all happen!
· Don’t ever give up! I love this one. One of the things Paul talks about is how if start ups just keep going, they will eventually succeed. So many of us spend so much time planting the seeds, doing the hard work, yet get scared or uncomfortable at the very end and we walk away, we quit before it is time! I have heard before there is no failure, other than quitting, then you are choosing to fail. Food for thought!

Finally, in a book called “Founders At Work,” Jessica Livingston, another partner at Y Combinator, interviewed 32 leading start up company founders that made it to share their experiences in the start up process to help others (http://www.foundersatwork.com/index.html). She wrote about the characteristics that each of these start up founders had in common, including:
· Determination, perseverance and adaptability. I kind of hit on this above, but felt it was worth reiterating. When starting something new, so many of us have a vision of what something looks like and when it doesn’t happen the way we think it should happen, we often cast it off as a failure and walk away. Rather, what she found is that when people are determined, continue to persist and adapt, they look for the nuggets of what is working and adapt their idea and vision to meet where people are at. Having this flexibility and persistence allows for the best of all creations to arise and often makes for a success bigger than we could have ever imagined.
· Put it out there! I totally had to laugh at this one and the following quote from her book, “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.” Boy if this one wasn’t the truth. So often we hold things back and are afraid to put our ideas out there because we are afraid people will steal our idea. But the reality if you get it out there, more people can be working in your favor to make it happen!
· Change the world! Finally, my favorite thing of them all, is that when interviewing everyone, she found one major thing they all had in common: they all wanted to change the world!

That is what it is all about after all! Yes, I am building OneGiving™ (http://www.onegiving.com/), a for-profit and nonprofit company, and seeking investors to make them (and us) money. But more than anything else, I am creating this company and this vision because I want to be the change that I wish to see in the world. It is that plain and simple!

That was the dot I needed to keep me going until the next dot appears and I can begin to more clearly make sense of and connect the dots! Thank you all for the inspiration! I hope this may inspire some of you to keep moving forward, step by step, dot by dot, in the direction of your dreams!

You can find me on Twitter @pilarstella and Facebook at www.facebook.com/pilarstella.