There’s been a flurry of good and bad news in the world of women and startups lately. There’s Glossier upping the ranks of female-founded unicorns (14 out of 130 in case you are keeping score) and Backstage Capital struggling to raise it’s $36 million “ABOUT DAMN TIME” fund. Recently, Fortune’s The Broadsheet lumped these and a few other stories together talking about the need for women to “go big” and celebrating that that’s what Backstage Capital was trying to do and shouldn’t be maligned for that.
I agree completely. And I think it’s important to think about why Backstage has struggled to raise a modest sized fund in an industry that pretends it wants more diversity but it just simply never has the chance to back it. (Spoiler: Bias!)
But what I’m absolutely sick and tired of hearing is people saying the “problem” with female founders is they don’t “go big.” And it’s dicey for me to write this, because a lot of people who keep saying this are friends of mine. A lot of them are…female VCs. Some have even invested in my companies. I was recently somewhere where an intense fight erupted on this topic.
I see both sides of this: Female VCs are sick of backing female founders who don’t raise enough money when they can because it gets harder and harder to raise the father along you go. Seed investors are mostly looking for reasons to say yes, Series A investors are looking for reasons to say no. Series A investors may do one to two deals a year and they see thousands and thousands. And because it’s all about “pattern recognition” and the vast majority are men who resonate only with things they are passionate about—it is an absolutely breeding ground for bias. Only 5% of women who will ever raise any venture capital will raise a B round.
Female VCs are sick of writing early checks to female founders who don’t raise enough and their promising business gets killed when it can’t get more funding down the line. It is in their rational self interest to fund men. Because men will raise more money down the line, and have a leg up on success. But they want to fund women. If only those women would think bigger!
I get it.
But the problem is not that women aren’t thinking big or pitching big or trying to go big. I have also seen this first hand. Chairman Mom, for one, has an incredibly big vision backed up by a lot of data, growth and results. Many of my friends raising capital do.
Most of the women who don’t raise bigger rounds don’t do so because we can’t. In fundraising, you have to always project strength, whether you are male or female. You set out to raise slightly less than you really want, because everyone wants to be oversubscribed. There’s this magical thing that happens once you get over 50% allocated—suddenly people pile in and you get oversubscribed. It doesn’t matter if it took you a year and 70 pitches to get 50% allocated.
So how does a woman approach that game? She sets a target she knows she can clear, just like a male founder does. But because she’s a woman, she has to set a lower target to play that game.
THAT IS HOW IT WORKS.
If you think that’s a tactical error, than change the psychology of how VCs think.
As for the criticism that men pitch billion dollar visions and women pitch real businesses, once again, we don’t have a choice. We get push back on every number, every projection, every statement in a slide deck that men do not. We have to back up our “big vision” with reality in ways men simply do not.
Part of my frustration here is that many of the people I’ve gotten in this debate with have never been a female founder. They have never actually experienced it. And it is far, far worse than other types of bias professional women face.
Think about it: If you are a white woman (which most of those able to raise venture capital are, let’s face it) you make 15% less than a man. That sucks. And you grow up getting used to a certain gender tax on your life. Maybe it’s 15%. Maybe it’s 40%. In my experience, it’s somewhere in that range. (This is all far worse for women of color.)
Only 2% of venture capital goes to female founders. It is a 98% gender tax. And again, that’s the rosy case for white women. Women of color barely register a percentage point. If you haven’t faced it, you don’t get it. I didn’t get it as someone who wrote about this industry for decades before being a founder and faced all kinds of crazy sexism and bias in my career.
Telling women to “go big” is like telling them to “lean in.” I get why you say it, but stop it. Because you are pissing all of us who are fighting that vertical battle off. And we really don’t need another thing to be pissed about.
Today’s new questions on Chairman Mom:
- Explaining money and value to kids
- Hardest part of your pregnancy at work and/or parental leave?
- My company is suddenly crushing it and I don’t know if I can keep up
- I need advice on how to make amends for a shameful thing I did in high school