Out of the top 100 ranked venture capital firms in the world in 2016, 7 percent of the partners were women. Turn the microscope to Austin firms, and that number doesn’t look much better. Just as the tech industry as a whole has work to do on (gender) diversity, so do those funding the innovation.
But that’s not to say the women angel investors and VC partners from Austin tech aren’t kicking ass. In part one of our two-part series, we caught up with four women to learn about the unique perspectives they bring to the table and what they look for in potential investments.
Check in for next week’s part two, when the women reflect on misconceptions of the industry and share their advice for women interested in entering the field.
Claire England
Claire England serves as executive director for Central Texas Angel Network (CTAN), which recently announced a record-setting number of investments in Texas and abroad for the first half of 2017. To decide on what to invest in and what not to, England evaluates the startup’s leaders.
How did your career path lead you to CTAN?
I started my career building communities for social purpose, helping nonprofits create grassroots awareness for causes. With the advent of social media, I started work with a digital marketing startup.
That led to exploring the larger startup community. I was recruited as executive director of RISE, a large startup ecosystem conference for entrepreneurs, business leaders and investors. Here I built a community around another social purpose — expanding entrepreneurship. I discovered I was really passionate about that purpose. After working with RISE and other startup community projects, a mentor suggested I extend that purpose as Executive Director of CTAN, and here I am.
What do you consistently look for in potential investments?
Team, Team, Team. Other factors such as market opportunity and business model are certainly important, but I believe team is ultimately the make-or-break factor for startups. The founders have to be passionate, driven, coachable, and self-aware enough to know when they don’t know it all. The CEO has to be flexible enough to grow and expand his/her skill set as the company grows, or know when he/she needs to get out of the way if another CEO should step in and take it to the next level. I also want to see high integrity and solid emotional intelligence.
What do you bring to the table that other investors don't?
I bring my unique background to the table; I haven’t met a career investor with a nonprofit community building background. I love that I can offer a distinct perspective for fellow investors and for entrepreneurs.
CTAN is also unusual compared to many traditional VC firms in that we are sector agnostic and almost exclusively seed stage. That means I’ve worked on deals ranging from life sciences and consumer products to enterprise software. So, my lens for sharing knowledge with both investors and entrepreneurs is unique in that way.
Dr. Sara Brand & Kerry Rupp
Founding partner Dr. Sara Brand and general partner Kerry Rupp launched True Wealth Ventures in 2015 specifically to invest in early-stage, women-led startups. Brand said that markets are lacking innovation because of men-dominated perspectives. By more women getting involved and investing, Brand said it helps clear those blind spots that have slowed progress.
How did your career path lead you to venture capital?
Brand: My career in venture capital has been the result of a balance between my technical and business backgrounds. I hold a bachelor’s degree, master’s degree and Ph.D. in engineering and have spent time in technical roles at Intel and Applied Materials while also gaining valuable business and management consulting experience at McKinsey & Company. Because of these experiences, I have always enjoyed meeting with entrepreneurs and thinking about solutions to the world’s biggest challenges — especially areas like environmental sustainability, health and wellness — while also helping portfolio companies overcome the obstacles in their business.
Rupp: I spent most of my career working in executive roles in early-stage technology companies. With that experience, I then helped grow one of the first startup accelerators, DreamIt Ventures, to a top-10 U.S. ranking with a presence in five cities. We were helping launch some great companies and realized there was an opportunity to raise a venture fund around the accelerator to facilitate the companies’ growth and leverage our role in their success.
What do you consistently look for in potential investments?
Brand: I look for entrepreneurs who are transparent with the challenges they are facing in their business and interested in working with us, as their investors, to solve those challenges. It’s important that the individuals we’re investing in have a certain level of grit and perseverance so that when new challenges arise, they are able to overcome them each time. And while a team of entrepreneurs may be a great fit for us, we always need to ensure their business is offering solutions to critical problems in large or unaddressed markets and that they are the right ones for that job.
Rupp: It may sound cliche, but I’d say it's definitely ultimately about the team. It’s not just “is this a critical problem in a big market with sustainable competitive differentiation,” but also is this the right team to pull off the solution. And then there are other factors we have to consider given the structure of our fund, like how much capital will the company need over time, when can the company exit, at what expected valuation, etc. It can mean that a company is a perfectly interesting business with a great team, but that it’s just not a fit for us as investors, given our own business model.
What do you bring to the table that other investors don't?
Brand: Bringing a woman's perspective is unfortunately quite unique in the venture capital world and I think it's an advantage. There are a lot of markets that have lacked innovation because of the homophilic nature of the people making decisions in venture capital. There are many blind spots that women investors frankly have greater insight into. There is also a dynamic that occurs when women investors invest in women entrepreneurs, which is that the investment is over 30 percent more likely to lead to a successful exit. In other words, magic happens when women invest in women.
Rupp: During my tenure at DreamIt, I reviewed thousands of applications every year, which gave me a really broad look across startups and teams in multiple industries. That experience gave me some useful perspective in assessing new opportunities and understanding how to properly screen companies. We were also able to track the results of those companies over time, evaluate what criteria might be predictive of future success and then feed that into our screening process. When it comes to supporting our investments, I bring my own operating experience across multiple departments in fast-growing startups to help advise our portfolio companies.
Kelsey August, founder of direct marketing company Lone Star Direct, has been an active angel investor since 1998. She joins England at CTAN as a board member, and has served as president of the American Marketing Association and The Entrepreneurs Organization. As a serial entrepreneur investing mostly in Austin startups, August said she hasn’t faced any gender prejudices for being a female investor. “Money is green no matter who they raise it from,” August said.
How did your career path lead you to an investor in startups?
I started Lone Star Direct, a marketing company, at 24 years old. I continued to start and grow companies in different sectors for the next two decades. Hence when investing my earnings, it made perfect sense to invest in what I knew.
What do you consistently look for in potential investments?
Likeable and coachable founders. I believe folks who get along with others know how to succeed. People do business with people they like. Most of the companies I have invested in needed to pivot. Hence coachability is essential for success.
What do you bring to the table that other investors don’t?
The ability to empathize with the founders. I have walked in their shoes as a serial entrepreneur. I know how they feel about decisions that are good, bad and necessary. It feels incredibly lonely when tough decisions need to be made. Being able to be constructive and help the entrepreneur resolve the issue of the day is my forte.
Images provided by participants and social media.
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