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34 Top Women Investors Just Wrote a Multi-Billion-Dollar Love Letter To Founders

This may be the best venture capital story you’ll hear all year.

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BY Lisa Calhoun - 10 Apr 2018

34 Top Women Investors Just Wrote a Multi-Billion-Dollar Love Letter To Founders

PHOTO CREDIT: Getty Images

Imagine the next time you got a great business idea launched, you felt confident you could raise money to scale it.

That's the world that 34 women investors, who represent several billion in investable capital, are calling into reality. Together, they just launched an organization called AllRaise. It's a nonprofit dedicated to normalizing what it looks like to raise money, especially for women.

In the last few years, the percentages of women funders and women founders has barely moved.

Research such as Morningstar's 2018 Fund Managers By Gender Report shows that women investors perform slightly better on average than male investors. Even so, the number of women investment decision makers is moving backwards. Morningstar's report reveals male fund managers captured nearly all new fund management roles in the U.S. in recent months. Meanwhile, the number of women starting tech companies is blossoming, but the number getting funded is flat.

AllRaise founder and Midas List investor Aileen Lee of Cowboy Ventures puts the problem succinctly on her blog,

"Women now receive more than half the engineering bachelor's degrees at schools like MIT and Dartmouth, and make up 49% of computer science majors at Harvey Mudd College, 48% at CMU and 39% at MIT (stick that in your 'pipeline problem' and smoke it). There is also much research quantifying how diverse teams make better decisions, and have better financial results. This data indicates where we could, and should be in the venture ecosystem."

Unfortunately, the venture capital industry is moving backwards when it comes to funding female founders and founders of color.

While some point to modest gains in the numbers of female-founded firms that get funded, the larger context is that there are also growing numbers of women and diverse founders. VC funding is sliding backwards on a percentage-of-founders-funded basis even as it celebrates "small wins" in percentages-of-capital.

At issue isn't the tech- or the talent- pipeline for female funders or founders. It's the connection to capital, as in connections to capital from institutions that back women-led funds and connections to capital to scale for diverse founders of tech firms. Harvard research shows that when men and women pitch the same ideas, men are more likely to be funded. Similarly, a team of Swedish researchers just showed VCs are often blind to their bias, making it easier to men to raise money even when business merits are equal.

While that seems unfair to women, this isn't a women's issue--it's an innovation crisis.

If only a small (and relatively shrinking) percentage of founders can capture capital, we're limiting the range of options our world has. Last year, in a world where 40% of new founders were women or minority according to Kauffman, 90% of venture capital went to white-male-led teams. What incredible cool stuff we did miss? By the numbers, a lot. If you love innovation, you love innovators--all of them. Enter AllRaise.

34 top women investors are tackling this issue directly on gender.

"For many years I thought it wasn't a big deal that peers, partners and entrepreneurs were bonding and comparing notes outside the office by going to games together, grabbing drinks, having dinners and going on fun trips without inviting any women. But what I didn't realize is this informal support network was very helpful behind the scenes," shares Lee.

AllRaise is fielding programs like #FoundersforChange and Female Female Founder Office Hours to convene action over conversation.

AllRaise has two metrics-driven goals:

  • To double the percentage of female partners from 9% to 18% at US tech venture firms with fund size >$25M by 2028
  • To increase the percentage of venture funding going to companies with a female founder from 15% to 25% by 2023

A study reported in Harvard Business Review shows both men and women investors today tend to hold stereotypes against female founders--and yet those stereotypes have no basis in fact. If AllRaise catalyzes change through its programs, the entire world would see more diverse innovation at a more rapid rate. And that's the plan.

"Success is having an industry that's diverse, collaborative and fair, when anyone with a great idea and a good work ethic can be successful," says Emily Melton, partner at DFJ and another AllRaise co-founder.

"I don't think this is a flash in the pan, no one's doing anything for optics," AllRaise cofounder Jenny Lefcourt, partner at Freestyle, commented to Forbes, "The data is too concrete that shows that diversity is correlated with positive company results--as well as on the flip side, ignoring diversity, ignoring culture, has the potential to be a downfall of an entire company."

If you're a founder, AllRaise wants you to live your diversity and inclusion values and get support in the #FoundersforChange movement. If you're a female-led firm looking for funding, take a look at Female Female Founder Office hours--the next one is this Thursday for female founders looking for their Series B.