Writing | Monique Woodard

In Good Company Conference – Women Raising Money

In Good Company ‘Raising Capital’ Panel with Bee Shapiro, Monique Woodard, Ariane Goldman, and Cheryl Contee

Last week, I was at the In Good Company conference for women and as I said on Instagram, I’m still buzzing from the high of being in a room that was in full support of women founders, creatives, and mom entrepreneurs.

In Good Company didn’t just invite all badass women and moms in their network. They also set aside pumping rooms and milk refrigerators and created an overall atmosphere where pregnant women and women carrying their swaddled babies seemed both natural and welcome.

Of course, this is exactly what you would expect from the publisher of Mother magazine, but it’s also an example for how the rest of the business world should be — giving women the access and ability to be fully in the room at every stage of life.

In many ways, women have been shut out of the startup industry’s value creation. Women are disproportionally underrepresented on cap tables as both founders and employees and hold just 9% of the equity value in startups.

The disparity continues when it comes to raising money. Companies with female founders get only 15% of all venture capital dollars, with teams of exclusively female founders raising even less. Yet, when First Round Capital looked at their own portfolio, they found that their investments in companies with at least one female founder performed 63% better than their investments in all-male founding teams.

Now imagine how dismal those numbers are for women of color.

When I talked to the women at the In Good Company conference, I met a lot of women building businesses in retail, beauty, and other highly lucrative categories. But businesses in categories dominated by women consumers are often underestimated and as a result, undervalued and underfunded by venture capital.

Stitch Fix founder Katrina Lake raised less than $50M before the company’s 2017 IPO and has been candid about being underestimated and not getting the same high-flying valuations as male founders in companies not built on women consumers.

Companies like Rent the Runway, Shine, The Skimm and more all have early examples of female founding teams having to prove themselves and build category-defining, innovative companies on far less capital.

Entrepreneurship is about solving big problems, but too often, the venture community is only funding problems that half of the world deems important.

Women often see problems that other people miss, but without the capital to execute, they sometimes end up building smaller businesses.

I’m confident that this will change as we get more women writing checks in venture.

I keep meeting women (on both the founder side of the table and the venture fund manager side of the table) who are so eager to figure out how to crack the code of raising capital.

And so many of the questions and answers that come up center how we can make ourselves better and more worthy of funding. Be more assertive. Wear this, not that. Show more confidence. And for god’s sake, don’t be pregnant. Most of these have no grounding in how great of a founder you are, but how we are allowed to show up as women in business.

Capital should rise up to meet the best founders, not the other way around.

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The thing that actually needs to be hacked aren’t you as a person or the mechanics of raising money, but who gets to distribute capital in the first place.

Thanks again to In Good Company for providing a place where women can show up and be their most authentic selves.

On Being a VC Who Travels

“If you travel long enough, every story becomes a novel.” — Gloria Steinem

On the Road/Off the Road

I just finished reading My Life on the Road, Gloria Steinem’s first-person account of her travels and being an activist who was (and still is) known for being in all of the places that it makes sense to be in no matter where they are ‒ the March on Washington, the 1977 National Women’s Convention, a third-class rail car in India on her way to an ashram.

Steinem stresses the importance of personal connections ‒ the kind that aren’t made over Skype, but happen in cabs, on trains, and over dinner with one another.

I just came off of 5 weeks of straight travel ‒ New York, Martha’s Vineyard, Boston, Florida, New Haven, Cape Cod, back to Boston and then back to New York before finally returning home to San Francisco.

And before that ‒ New Orleans, Cleveland, Atlanta, LA, and Albuquerque.

I traveled by train, plane, car, and boat. Including one epic adventure with a fellow investor that had us stranded for 12 hours in a New York City airport and then taking a 3 hour Uber to Providence, snagging one of the last hotel rooms in town, and waking up for an early morning ferry. If that doesn’t create bonds, I don’t know what will.

Traveling almost constantly for an entire month is not cheap and on a lot of days, it isn’t even fun ‒ but it is necessary.

Inside the Bubble/Outside the Bubble

Over the last several months, it’s been incredibly energizing to make regular trips outside of the Silicon Valley bubble.

We can get so caught up in living several years into the future that we get ever so slightly removed from the real life of a stay-at-home mom in Tampa or an Uber-driving military veteran in South Boston.

I find it fascinating to talk to people about how they do things, the products they use, and the ones they don’t or haven’t even heard of. Regularly talking to and interacting with people who don’t use an app to send their laundry out, still drive to physical grocery stores, and don’t own any cryptocurrency makes you think a lot harder about the products that do get venture funding.

It’s forced me to in a constant state of asking and answering the question of ‘yes, but ‘will it play in Peoria’?

Being in a perpetual state of travel has also given me the gift of deeper connections with founders and other investors. It’s one thing to meet up with non-Silicon Valley folks when they come to town, but it’s quite another to drop in on them in their hometown. I’m lucky to have not just friends all over the world, but people who will introduce me to good food and even better founders.

We all know that the founders building the most important technology of tomorrow might not be in Palo Alto or San Francisco, but how many of us are getting out to Atlanta, Cleveland or Kansas City to meet them?

Enjoy the Journey

When I was a kid, we traveled a lot by car ‒ autumn leaf changing in North Carolina, Jazzfest in NOLA, family in Atlanta ‒ and I’ve always been an “are we there yet?” kind of person. It’s one of the reasons that to this day, I hate long car rides. But being able to thrive “on the road” means embracing it as a state of being and you have to be just as excited about the journey as you are about getting there.

Income Inequality is Bad for Startups…and VCs Should Be Pissed Off About It

VCs who don’t take an active role in helping companies solve for inclusion and wage inequality are acting against their own self-interest.

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Today is Equal Pay Day and despite diversity efforts, not only are women often excluded from the hiring pool, but a recent Hired.com report on wage inequality makes it clear that even when women are hired, there is a persistent pay gap.

The report found that 63% of the time, men were offered higher salaries than women for the same role at the same company; and on average, companies offer women anywhere from 4% to 45% less pay for the same job.

And for women of color, the wage gap is even larger, with Black and LatinX women making 90 cents on the dollar compared to white men. Overall, Black tech workers can expect to make an average of $6,000 per year less than their white peers.

Bigger than raising another $100B+ SoftBank-killer fund, helping your portfolio companies solve hiring and wage disparity for women and other underrepresented groups could provide the biggest change to the founder landscape while also be the most self-serving thing VCs could do.

Read the rest of the article on Medium: Income Inequality is Bad for Startups…and VCs Should Be Pissed Off About It

Staying Alive

Your first job as an early stage startup founder is to get your first customer. Your second job is to stay alive so you can get the next one.

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Blowing Money Fast

So you’ve raised your first round of funding, huh? It’s tempting to see all that cash in a previously empty bank account and start spending money on everything you wanted before you got startup-rich.

I’ve always kept my personal burn low because it allows me to do what I want to do, not what I have to do.

Capital efficiency is freedom.

For some startups¹, capital efficiency can mean the difference between being able to negotiate your next round of investment from a position of strength versus needing to accept terms that are less favorable than you want so that you don’t run out of money.

In the early days of your startup, you should be using money to build a lean, mean, product building and selling machine. What you spend money on is just as important as how much.

Is your monthly burn helping you build faster/better or fueling growth?

No investor wants you to cut costs to the point that you slow growth and can’t reach important milestones. But being efficient with capital means being smart about how and where the money is being spent.

Here are some of the wrong things I’ve seen early stage companies spending money on:

An expensive PR agency before you’ve even found product-market fit
Being top-heavy on well-paid ‘executives’ — staff who aren’t engineering or front line sales
Paying market rate salaries instead of off-setting lower cash compensation with equity
A marketing agency who manages your customer acquisition spend…and that growth knowledge leaves when they do
Expensive outsourced tech teams that don’t live in-house

It’s really hard for an early stage investor — VC or angel — to invest in those companies. I’ve met founders where I’ve liked the team and product, but when I find out what they’re burning capital on and how much, they become a much less attractive investment.

Burn Baby Burn

The first step to being capital efficient is to understand and constantly track your burn rate and runway. Here is a simple way of thinking about burn rate and runway.

burn rate: the amount of money your startup spends every month

If you spend $60,000 per month and your startup’s monthly revenue is $10,000 per month, then your monthly burn rate is $50,000.²[MonthlySpend-Revenue=(Net)Burn]

runway: The number of months of cash you have in the bank before you run out of money (at the current burn rate)

If you have $500,000 left in the bank and your monthly burn rate is $50,000, then you have 10 months of runway. [Cash in Bank/Monthly Burn=Runway]

Burn rate and runway are important because it helps you (and your investors) understand the health of your business and most importantly — when you’ll run out of cash, how quickly you need to start raising your next round of funding, and whether you have the metrics to do so.

You should be keeping your investors constantly informed on your burn rate and runway. These are the numbers I want to see in a regular update email — even if it’s bad. The amount of help you can get when you have 6 months of runway is very different than if you don’t raise a flag until you have 2 months of runway.

I’m naturally drawn to founders who have managed to build product and find their first customers with limited resources. If you can build something and show early wins without having raised a lot of money and you can keep that same capital efficient energy, you’ll be better positioned once you do raise money.

But whether you raise venture capital or not, you have only one job…to not die.

¹For the purposes of this post, I’m specifically talking about to startups who have shipped early product and raised an initial round of funding, but probably haven’t yet found product-market fit.

²I chose these numbers to keep the math simple, but it opens up the question: is this an acceptable burn rate? It depends. It depends on what you’re trying to do, the type of company you want to have, how much you want to rely on venture capital, and how expensive that capital is. If I saw a company with this burn rate to revenue ratio, it’s a conversation opener. I’d have a lot of questions around where the money is being spent, when you started booking revenue, what kind of revenue this is, and what the MoM revenue growth has been.

Finally, my friend, Mike Sigal, does a great talk on not running out of money — You’ve Raised Money, Now Don’t Run Out of It (SlideShare)