It’s no secret that the VC world skews male, but the numbers are especially troubling. According to the CFA Institute, only about 2% of venture capital dollars make it to companies founded by women.
This inequality in equity has likely led to countless missed opportunities, but it’s also shaped how women operate startups. Speaking at Yahoo Finance’s All Market Summit, Susan Lyne, president and managing partner of BBG Ventures, noted that it gives women-run companies a key advantage.
“I hate to make generalizations, but female founders tend to look at their businesses earlier and make sure they’re building a sustainable business,” said Lyne, who is former chair of Gilt Groupe and former CEO of AOL Brands and Martha Stewart Living.
Lyne said it’s something she talks about a lot with the people and companies in which she invests.
“You never know when there’s going to be a downturn and there isn’t going to be all that capital out there to raise the next round,” she said. “You have to have some sense that you’re going to continue to grow at a reasonable pace, but in a more profitable way.”
“The VC markets were valuing different things in companies than it turns out public markets do. They’re valuing growth above everything else — and companies like Lyft, Uber, and WeWork and a number of others were growing at a staggering pace but losing billions of dollars,” Lyne said. “When they went public, the public said ‘I don't think I want to invest in this. I don’t understand where this ends up.’”
Being forced to be profitable too early may kill some businesses that could succeed later, if they really need the breathing room to get significant scale to make the margins work. But that’s a far cry from the profits-don’t-matter landscape that stereotypes certain brash companies.
Anu Duggal of the Female Founders Fund, who was on the panel with Lyne, mused about what it would be like if a woman led one of these companies with growth-only tunnel vision.
“This would be a great point at which to appoint a female CEO and see what happens,” she said. “I do think that if you look at whether it’s Uber or Juul or WeWork, there’s definitely some patterns there.”
WeWork, now known as the We Company, pulled its IPO after investor concerns over losses and corporate governance issues. Uber, in addition to being perhaps overly valuated in the private markets, got into trouble with regulators numerous times for its behavior. Juul got in trouble for marketing vapes to young people.
“Hopefully, [these instances are] a lesson to both VCs as well as to public markets that growth at all costs is just not sustainable,” said Duggal.