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Here's how female-led startups can succeed in 2021

Female-led startups received 2.3% of VC funding in 2020, according to a report conducted by Crunchbase. Pippa Lamb, Sweet Capital Partner joins Yahoo Finance Live to break down being a woman in a male-dominated field and the outlook for VC funding amid the pandemic.

Video Transcript

[MUSIC PLAYING]

AKIKO FUJITA: Women wake up-- make up nearly 5% of venture capital investors in the US. That number is even lower when it comes to the amount of VC funding that goes into female-led startups. That amount accounted for just 2.3% of overall funding, allocated last year. That lags far behind the UK, where female VCs account for 13% of overall investors.

So let's bring in Pippa Lamb. She is a partner at Sweet Capital and joins us from London today. Pippa, let's start with some of the progress that you have seen in London. 13% still not a significant number, when you think about how big the VC pie is. But what are some initiatives that you have seen there that you think have really led to at least an uptick in that number?

PIPPA LAMB: Sure, and thank you so much for having me today. So I think it's a complex picture if you look at what's happened in the last few years. There's absolutely been more discourse and dialogue around the topic, which absolutely does help. That said, we're seeing a lot more things like female office hours or people of color office hours. What I'm more concerned out about is actually seeing dollars backing those founders.

And if you actually look at the numbers, as you pointed out, unfortunately, despite the fact that global venture funding was up 4% year on year to $300 billion female founders were funded less. And it was a decrease from 2.3% to, I think, 2.1%, which is tiny, if you think about those numbers in an absolute sense.

Yeah, and I wonder how much of that stems from, you know, we have this conversation a lot, specifically when it comes to diversity in tech. Some people say, look, those people just aren't out there. And I know that that's not the case for female-led companies because you've invested in a few. We've had Jaro on the show before. That would be one example.

PIPPA LAMB: Yes.

ZACK GUZMAN: So what do you think is kind of one of those drivers behind it? Is it really that there is just fewer female-led companies out there, or are there issues in just allocating capital across all of VC?

PIPPA LAMB: Absolutely, Zack. And yes, Jaro is one of my angel investments. And I was thrilled to see them come on your show. So I think that, really, what is most important is that it's actually a systemic issue. If you look all across the tech industry, it's not just venture capital representation. It's not just female founder representation. It's also the limited partner level, the investors' investors.

And I'd also point that often, it's not actually about simply having more female CEOs, board members. It's also about having more female engineers and the whole tech stack also attracting more female talent, which I know is out there. I see it every day through my job. And I think through the very fact that we've just seen one of the youngest female CEOs take a company public with Bumble, there is really no excuse these days, when Bumble can have an IPO board of over 70% female. It's really a call to action, I think, for the rest of the market to really take a hard look at how they're composing their companies.

AKIKO FUJITA: Yeah, it does feel like we've had this conversation many times before. And I'm thinking back to 2017, 2018. There were questions about sexual harassment over in the Valley, and whether that had actually led to some real changes within companies. And yet, when you look at the makeup, at least at the board level, we just don't see the kind of diversity that a lot of these companies had vowed to shift to.

When you look at the impact of women-- on women during the pandemic, to what extent has that affected the types of startups that you see? Is the activity still as brisk as you would have seen it even before the pandemic? Or have you seen a drop-off?

PIPPA LAMB: It's really interesting you raise that point. And I think a study by Crunchbase showed that women have been more adversely impacted by the pandemic. And perhaps whether that is a reason that we have seen a decrease in female funding, it's hard to know whether that that is the correlation. But what I would say is that at this point, the pandemic has impacted those that have caregiving needs more greatly.

And until this day, we are still seeing that a greater proportion of females in the household are the primary caregivers. So that may play a factor. But I'm hesitant to just simply say that this-- we can blame the pandemic. This is an issue that has predated a global pandemic. And, you know, as I said, when we're seeing this great decoupling of global economies with what's happening in the private and public markets, it's really no excuse that you can see a larger pie being created, but less of that going to female founders.

ZACK GUZMAN: Yeah, and I mean, recently, we've been talking a lot about the SPAC boom here, how it's impacted the VC side of things, as some valuations really started to catch quite a bit of a jump. That kind of unfolded a little bit over the last couple of weeks. I'd be curious to get your take on maybe how those conversations are going on the VC side of things in the private market in your discussions, a sense maybe from founders once we saw that uncoupling begin just a few weeks ago.

PIPPA LAMB: Mm. Well, I think that, Zack, it's a great point because I'd almost date this conversation back to last March, when you had global economies around the world starting to go and feel the impacts of the pandemic. Yet, at the same time, we've had the run that we've had in markets. And as you said, it's only in recent weeks when we started to see some wobbles.

So I'd say, broadly, venture capital has still not really felt the impact that we're starting to see in the public markets certainly, as you point to, with some of the SPACs. And certainly if you look at the funding, as mentioned, it's up 4% year on year. It's up $300 billion. And I would say a lot of that has happened in the latest stage part of the venture capital market, so Series C and above, which is up around 8% year on year.

So I would say that there is a delay in that sort of sentiment shifting. And certainly at the moment, from what we're seeing in the ground here in London, it's still very much one of the hottest VC markets that we have seen in some time. Just a few days ago, we had Hopin, which was, I think, founded less than a year and a half ago, get valued at $5.6 billion after being founded in such a short period of time.

AKIKO FUJITA: You've got a pretty broad range of focus here on investments, everything from consumer tech to fintech as well. What do you have your eye on right now? Where are you seeing the real opportunities to invest? So I think there are a few things. I'd say broadly, this rotation into consumer technology has benefited those companies and those funds that really positioned themselves at the intersection of a consumer facing technology.

So, as mentioned, that is Hopin, which, if you're not familiar with, is providing video conferencing software and really taking away some of the market share from some of the traditional event players. We're not an investor in Hopin, but it's probably one of those really signature companies I'd say that symbolizes where a lot of the dollars have gone through the pandemic.

For me personally, I'm spending a lot of time looking at education, education tech, consumer technology, and social. I'd say that one of the big winners of the pandemic has also been the audio space, which you've seen several players come out of, as we've finally seen the Western markets catch up with the trend that has been very prevalent in the East for a long time, which is using audio as the primary means of communication.

ZACK GUZMAN: Yeah, Hopin CEO Johnny Boufarhat on the show not too long ago. So, very interesting to see them really cash in--

PIPPA LAMB: Yeah, there you go.

ZACK GUZMAN: --cash in on the video conferencing wave we've seen here. But Pippa Lamb, Sweet Capital partner, appreciate you coming on here to chat today. Thanks again, and be well.