It's not pie. Except when it's pie.

Focus on getting your slice and changing systems, not competing with fellow superstars.

Nov 28, 2023

When is pie not pie?

Last month I wrote a newsletter about the infamous “women get 2% of VC dollars” stat (and how that stat hasn't budged since 2007, when BlogHer raised its first round).

In the newsletter I wanted to try out a new messaging approach to explore how we might move this needle, since data hasn't been doing the trick (and I'd still appreciate people weighing in on that idea). I also included, more as a side note, this bit of wonky clarification about the infamous 2%:

Because I’m a data nerd I always make sure to point out: It is NOT that only 2% of women get funded. And it is NOT that only 2% of venture capital goes to companies with any women amongst its founders. We’re talking about companies founded SOLELY by women. Like BlogHer was (three of us). Like Cheryl Contee's start-up Attentively was (two women), and like my most recent gig The Cru was (solo founder Tiffany Dufu).

I saw someone quote the stat wrong again over the weekend. They said that only 2% of women get VC-funded.

Isn’t 2% bad any way you slice it? Well, yes. But I think it matters that we understand this stat properly because it focuses our attention properly and because the true stat, though endlessly frustrating in its stagnation, still represents quite a brass ring to grab. It tells us what needs to change, but it also tells us that it’s still worth striving (if we have the kind of company that is well-aligned with the VC business model…hardly a given).

To the “brass ring” point first: In 2021, in the US alone, $345 Billion dollars were invested by VCs. 2% of that number is just under $7 Billion. That is still a big pot of money to pursue. Don't let anyone tell you there's no money for solely women-founded start-ups. Even in this systemically biased environment, there is $7B...in just one year. That means a $7MM raise represents a mere tenth of a percent of the money going to solely women founded companies in a year. Do you believe you can grab .1%. You certainly say you believe that when it comes to market share, so I hope you believe it in this context too. IOW: Go get that money.

You might be wondering if we know what percentage of capital goes to start-ups that have a mixed-gender founding team. I’ve seen stats ranging from 17% to 29%, so yes about 10x the rate of solely women teams. And yes, that means about 2/3 of VC funding goes to solely male teams.

Bearing that in mind and going to the “focus on what needs to change” point: My experience in male-dominated corporate spaces constantly made me think about the trope about running away from a tiger. The trope tells you that you don't have to be the fastest runner, you need only be faster than the slowest runner.

In some of the spaces in which I’ve worked, that could apply to women and other people from under-represented groups. Sometimes it’s glaringly obvious that an organization’s entire diversity goal can be summed up as “identify a superstar and hold them up as your example (and shield).” You see that there is one woman in leadership, perhaps one male person of color, and so on. Only one. The one and only.

Do I think white men sit in a room and say, “OK, we gotta pick our woman”? Probably not most of the time…never say never, right?…but when a team made up mostly of one identity tackles the uncomfortable topic of representation, I think the presence of the one and only helps them feel more comfortable.

We can all see it. Those of us who are not in the dominant group for whatever reason. We can see the pattern. And whether consciously or unconsciously, we internalize the message: You don’t have to be better than everyone. You have to be better than everyone like you. I think this internalization of how systemic bias manifests is at the root of when I hear women bemoaning working with other women. (Well, that, and the fact that people in the minority in leadership no longer seem individual, rather becoming representative of their entire group in a way that members of the dominant group do not.)

And I think the mis-read of the 2% stat cements that same message: If only 2% of women get funded, you need to be in that 2%. Your competition for those funds is the other 98% of women. It’s not that VC funding is the pie; the pie is women founders, and you want to be in the very thin slice. It’s not that it’s utterly untrue, but I don’t think it’s helpful.

In fact, no matter how big that $345 Billion figure sounds, the vast majority of start-ups do not successfully raise, and if they raise, they don’t successfully scale, and if they successfully scale, the vast majority do not successfully exit.

If you’re playing this game, the odds are terrible, really no matter who you are. If you believe in yourself enough to play, then believe in the $7 Billion and that you can grab a piece of that.

Because two things can be true, I can also say that the 2% needs to change. That the people in control of making those decisions need to acknowledge the underlying barriers to that number changing, and need to set an explicit intention to break down those barriers.

One way I would start is to encourage more traditional investment firms to stop setting aside what is often 2% or less of their overall capital for special, dedicated funds to invest in women or other underrepresented groups. Rather than changing the equation, this segregation of funds serves to cement the 2%, and it allows firms to consider themselves as part of a solution if they set aside and invest those funds. They moved the goal post by saying we’re going to be specific about investing in under-represented founders, and then they basically move them right back to the status quo by carving out only a very slim piece of the proverbial pie for that purpose. That ain’t it. If you want to support intentional investment in under-represented founders in a way that builds a bigger pie, go find the firms like Fearless Fund or Brain Trust or Astia that are dedicated to the task and give them your LP dollars…and ask the more traditional firms what they’re doing to invest in such founders from their flagship funds, not small set-aside funds.

But that’s just me, suddenly hungry for pie. What would you suggest?

This Week-ish with ElisaCP

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