Just before the holidays I had coffee with Anne, an ex MBA student running a fairly large product group at a search engine company, now out trying to raise money for her own startup. She had an interesting insight: existing content/media companies were having the same problem as hardware companies that rarely made the leap to new platforms. And she had a model for a new media company for mobile and wearables.
I thought we were going to talk about her product progress, so I was a bit taken aback by her most pressing question, “Why is it so hard for a woman to still get taken seriously by a venture capitalist?”
I had lots of answers, but none of them good enough for either of us.
I had a better one when I came back from New York.
——
Entrepreneurship at Columbia
I was in New York last week teaching my annual 5-day version of the Lean LaunchPad class at the Columbia Business School. We had 130 students in 30 teams who got out of the classroom and did 2154 customer interviews in 5 days – a remarkable effort for 120 hours. Their amazing Lessons Learned presentations can be seen here.
In the last year entrepreneurship at Columbia has taken a pretty remarkable leap across the entire university. The Columbia Startup Lab is a visible symbol of how the university is making entrepreneurship an integral part of all colleges at the university.
New York Startups
The Columbia Startup Lab is in a building completely taken over by WeWork – a company that provides co-working spaces in 12 cities worldwide. I wandered through four full floors of SohoWest WeWork sticking my head into the random startups’ offices.
Looking at office after office of startups a few things stood out.
- This was just one of the 14 WeWork co-working spaces in New York City— there are over 100 co-working spaces in New York
- Michael Bloomberg has yet to get his due for engineering the New York entrepreneurial ecosystem
- I was struck by something that had been slowly percolating through my head during my entire week – there are a higher percentage of women on the founding teams of New York City startups than in Silicon Valley
Women in New York Startups
This last point is definitely not a data-driven survey. However after spending a week teaching 130 entrepreneurship students, ~35% of them women, and then walking through ~100+ WeWork and TechSpace offices in New York, I get the impression that the number of women leading startups in New York is much higher than in the San Francisco Bay area.
When I mentioned this to my friends running the NYU and Columbia entrepreneurship programs, they looked at me like I just discovered that it gets dark at night. Their answer seemed to make sense: a higher percentage of startups in New York are focused on media, fashion, communications, real estate, financial tools – all the products of industries centered in NYC – and all are attempting to disrupt them with products that run on and are delivered by 21st century platforms. (Think of what Refinery29 is doing to Conde Nast.)
These are industries where women have had a history of leadership positions and more importantly, where young women entrepreneurs can find role models and mentors as their male counterparts do in Silicon Valley’s tech-centered, pay-it-forward culture.
This raises an interesting question: is the credibility of female entrepreneurs in the eyes of New York VC’s something about the venture firms, or is it about the industries they are funding?
One can make the case that New York venture capital industry is rooted in the 21st century not the 20th. While some venture firms have been around for awhile, perhaps the newer partners have a different model of what a successful founder looks like than their west coast peers.
Or perhaps it’s as simple as New York VC’s are funding startups that play on the disruption of New York’s key strengths in Media, Fashion, Finance and Real Estate, and the women founding New York startups have an existing track record in those industries, and pass a gender neutral “VC credibility” bar.
Correlation does not imply causation
Those bemoaning the dearth of women founders in Silicon Valley might want to see if there is a real disparity between the coasts or if it is just my selection bias?
If it’s real why?
- Women founders already had leadership roles in the industries they’re about to disrupt?
- Women can find existing role models?
- Women have built a network of women mentors?
What role does the type of startup play?
- Companies that get started and built in New York City tend to be applied technology
- Companies that get started and built in Silicon Valley have historically focused on core technology
What role does venture capital play?
- Is there any difference in funding women for old-line firms versus 21st century firms?
- What role does industry segment play? (i.e. lots more women founders in media companies than you find in enterprise software companies.)
- On the West Coast the history of successful startups is technology first, and perhaps VC’s weigh that more in what they want to see in founders.
- Is it as simple as having credibility in the industry you want to startup in?
—–
I sent Anne, my student, an email when I returned, “You may want to take a trip to NY and pitch some of their VCs.”
Lessons Learned
- Lots of entrepreneurial activity in NY
- Different industry focus than in Silicon Valley – more media, finance, real estate
- Women seem to be more represented as founders
- If a NY bias toward women as founders is true, why? And what are the lessons for Silicon Valley?
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Filed under: Family/Career/Culture, Lean LaunchPad, Venture Capital |
Thank you for sharing your observations and picking this topic Steve. I think most, if not all of the possible conditions you mentioned, are contributing factors.
I would definitely add fashion industry to your list for NY. Another maybe is education – NYC school district is the largest school system in the country and there are a lot of hackathons and events around EdTech in NYC, creating a great ecosystem for EdTech companies, although it might be the case for entire East coast (add Boston and Washington DC).
– NYC-Based EdTech Company Founder
Lilia,
Yep, you’re right. I missed the fashion and education segments.
steve
I am also in the EdTech sector and would be curious to see what is the percentage of women overall that receive funding compared to male owned business and subset by geographical areas. My hypothesis is that for a market where 87% of the customers are women, women are very under-represented in terms of venture capital support.
I think the women owned company Lydia.com, by Lydia Weinman received that largest edtech investment to date and that was after bootstrapping for 17 years.
Based on west coast, not NYC, but curious how much impact Golden Seeds is having on funding & culture of women entrepreneurs in NYC.
Molly,
Great question.
I really don’t know much about them but interesting strategy.
Another thing to look up when I teach at NYU in August.
steve
Golden Seeds is located in Silicon Valley too. When I pitch to them they where more interested in A rounds and not really seed. The Pipeline Fellowship is another group http://www.pipelinefellowship.com/
whose focus is in training women to be angel investors, but do have a pitch competition. They are located across the US.
[…] Just before the holidays I had coffee with Anne, an ex MBA student running a fairly large product group at a search engine company, now out trying to raise money for her own startup. She had an interesting insight: existing content/media companies were having the same problem as hardware companies …See More Details HERE! […]
Steve,
I do think you are on to something, and I think it has long been true that the East Coast has more of a door open for women, both entrepreneurs and executives. Both Harvard and Columbia business schools have made more of an effort, and their grads in the East have been more open to talented women.
The VC community in Silicon Valley has long been white (or Asian), male, and closed. Even women with good ideas, credentials and drive, like your former student Ann run into many more barriers than male peers.
I suggested to Watermark that they have you and some women entrepreneurial leaders have a panel on this.
Kathryn
Steve,
What is the definition of “media” startups?
Thanks,
Jennifer
Sent from my iPhone
>
Steve I disagree with the 4th bullet in your lessons learned session! You ask why a “bias towards women founders is true, why?” Personally I think the key observation here is that, unlike the more homogenous Valley ecosystem, NYC does not have a bias AGAINST female founders.
I could still cite many female founders who have found fund raising from NYC venture hard, perhaps differentially hard vs male founders. And the number of female VCs in NYC is pretty modest, female angels are under represented too for that matter although less so than VC. Still, for some of the reasons you cite I agree that there is at least a (somewhat) closer approximation to a level playing field in New York. One characteristic I would add is that NYC has is very diverse across multiple dimensions – industries obviously as you note but also crucially in terms of the backgrounds of people here. As a consequence there I suspect much more acceptance of and understanding of the potential of what one VC here calls “non traditional entrepreneurs”.
On the angel/early stage investing front in addition to Golden Seeds there are a number of groups in NYC supporting women entrepreneurs including 37 Angels, Astia Angel, Pipeline Fellowship, Female Founders Fund and Plum Alley. Also co-working spaces like Grand Central Tech that very actively seek to recruit diverse founding teams. All of that helps too I am sure.
Adam,
I believe you may have misread the 4th bullet.
“NY has a bias towards women founders” means NY supports women founders.
The definition of the word bias is:
noun
prejudice in favor of or against one thing, person, or group compared with another, usually in a way considered to be unfair.
verb:
cause to feel or show inclination or prejudice for or against someone or something.
“readers said the paper was biased toward the conservatives”
steve
Where you stand depends on where you sit. My point is that NYC is prejudiced against women founders too. Just less so than the Valley.
Steve,
In response to your point –
“If a NY bias toward women as founders is true, why?”
Just because NY startup culture is more supportive of female founders doesn’t mean that they are biased towards them. The fact is that a lot more needs to be done to make it better but definitely there is much better support structure in NY for female founders than in SV.
And as for the lessons learned for SV, there are a number of points mentioned in the earlier comment – how NY is working towards making the startup scene better for women.
This sounds about right to me. I think there is far less diversity in Silicon Valley proper and thus, less exposure to both women and “non-traditional entrepreneurs” – in the Silicon Valley sense of the term. We are a culture based on classification – from income and education to color and gender. It’s all about “pattern recognition” and checking boxes. Until this becomes inconvenient in practice, people are going to resist challenging their assumptions, prejudices, biases, and habits – not necessarily in a malicious way, but in a defensive or “not my problem / passion” way.
Great article. As much as people like you talk about women entrepreneur we have the possibility to have more women engage in the ecosystem. I´ll appreciate a lot if you support the “woman entrepreneur day” and sign our manifesto http://manifiesto.martacruz.com.ar/
Steve,
Absolutely great points and I’m living this right now. I’m woman who has a PhD in Computer Science so I have tech credibility. However, our product market is online cosmetics shopping (growing 30% a year). We have a technology and user experience that will transform e-commerce for cosmetics shopping and solve “what color should I buy” accurately.
My experience is that pitching in SV the VCs are very uncomfortable with non-tech markets. I see a lot more women in NY and the two VCs I spoke with in NY were much more responsive to our market. So heading east maybe the right way to raise seed funding for women. The people in SV exited tech companies that’s the markets they know best. 2/3 of consumer spending is done by women so this is a major blind spot for SV. Once the company is up and going then the “boys” of SV can come in because then it’s a safe deal. I’ve had wonderful Angels tell me they like me, think the technology is amazing but it’s scary to go into a market they are unfamiliar with AND how will I be able to get follow on funding from people in their network who have the same discomfort.
Validation for Steve’s anecdotal observations:
Data (2012) analyzed by Startup Genome put the proportion of female led startups at 18% in NYC vs 10% in Silicon Valley.
See this TechCocktail write up:
http://tech.co/startup-genome-report-women-2012-11
Oldie but goodie. The ol’ “meritocracy” might be better described as “mediocritacy.” But studies show that men tend to feel more confident about mediocre scores than women, so…:
“Silicon Valley falls mediocrely in the middle, with 10 percent women entrepreneurs. ‘Silico Valley, BE ASHAMED OF YOURSELF – you need to double that percentage by 2013,’ says Cindy Gallop, founder and CEO ofIfWeRanTheWorld.”
#FAIL
[…] discussions concerning the venture capital industry. Well-known entrepreneur Steve Blank wrote a post recently discussing the number of startups founded by women in New York City compared to Silicon Valley, […]
The way for SV to recover from the 50% drop of women graduates in Big Data fields such as math and computer science in the last 25 years is to follow the leads of University Statistics Departments and the American Statistical Association where women are a growing force.
Rebranded as part of the high-tech field of data science, statistics is where many new startups will be created with over 2 million new jobs to find meaningful relationships within big data for many applications.
Model programs can be found at the University of Nebraska-Lincoln, Harvey Mudd College, the first Women in Statistics Conference this year, revised curricula, and related K-12 school presentations.
The proportion of women taking math degrees has NOT fallen by 50% over the last 25 years. There is only ONE major where the % of women graduates has dramatically fallen since the 80s … and that is Computer Science.
For CompSci the proportion was 37% in 83/4 at the peak and has fallen to sub 20%. See the data in the chart here:
http://www.randalolson.com/2014/06/14/percentage-of-bachelors-degrees-conferred-to-women-by-major-1970-2012/
The fact that this is uniquely true from CompSci clearly has implications for the demographics of founders and investors in a SV focused on core technology. It is still relevant, but less so, for the entrepreneur side of things at least when it comes to applied tech focused NYC and other non Valley markets. But as noted, at least other STEM disciplines the numbers over the last couple of decades are flat to up.
The timing of your post is incredible! Thank you for writing this. I am a female Founder of a mobile food tech startup overlapping into digital health that won the SF Food Hackathon in 2013. On a side note, I was at NVIDIA when it was a startup, and left 2-1/2 years after the IPO. After 2-1/2 years of trying to make things happen in Silicon Valley, I’ve decided that to achieve my goals, NYC is a better place to do that. So, one day soon, I’ll be able to tell you first hand what the difference is.
Alley Watch just featured a post I wrote about why I’m moving my food tech startup from Silicon Valley to the Big Apple. http://bit.ly/1uUIrEs.
I have so much to add. To keep it short, I will focus on two big things I’ve experienced myself as to why female founders have a more challenging time in Silicon Valley.
1. The notion that SV is a meritocracy is false. It’s really a mirrorocracy. The VCs are funding and paying attention to mirror images of themselves. Just pull up the Team page or Portfolio page of any VC firm, or the speaker list page of any tech related conference here and what is the profile of the people you see? Besides gender, the mirror also applies to race, age, and educational background. Until the view in the mirror changes, the system will stay the same.
2. The ecosystem in Silicon Valley to support and build startups is driven more to create a great exit in 5-8 years versus creating a business long-term with a revenue-generating model from day one. So far, I’ve noticed, the first question investors in SV ask, “What’s your traction?” (How fast is your user base growth?), and investors outside of the SV bubble ask, “So, how do you make money?” (What is your financial growth?) Both are important questions, but the first one asked is the telling one. Most female founders I have met want to build a long-term business versus a fast exit. And everyone knows that the pitch deck numbers are all inflated and shots in the dark, but I’ve seen how men tend to be more bold with their numbers and women more conservative. I’ve learned to be bolder.
That’s my personal point of view from the trenches.
It sounds stereotypical but it makes a lot of sense. Either way, It is great insight on the directions in which both of these areas’ (Silicon Valley vs NYC) entrepreneurship communities are headed.
It is interesting to note how diversity varies from region to region within the states. Being a Canadian based startup it has given me a great idea to analyse whether this disparity is also present here.
Zunaira Omar
http://www.markitech.ca
Great article! Women can do great things indeed and it is interesting how different it varies in different regions. I wonder about Europe now.