Extra Crunch Live: Join Kapor Capital’s Freada Kapor Klein and Mitch Kapor for a Q&A today

On the heels of a lively conversation with Precursor Ventures partner Charles Hudson last week, we’re gearing up to chat with Kapor Capital’s Freada Kapor Klein and Mitch Kapor in a few hours. Today at 10 a.m. PT, Extra Crunch Live returns for a conversation about maintaining diversity, inclusion and equity during a global pandemic.

Kapor Klein has been a longtime advocate for diversity and inclusion in the tech industry. The author of “Giving Notice,” a book about the dangers of hidden biases, she is a founding partner at Kapor Capital, co-chair at the Kapor Center for Social Impact and co-founding member of Project Include.

Kapor, co-founder of The Electronic Frontier Foundation and founding chair of Mozilla, has worked with Kapor Klein for the last 10-plus years at Kapor Capital. Together, they invest in startups focused on closing access gaps and addressing social injustice.

During today’s call, we’ll explore the topics of layoffs, executive pay cuts, decision-making around ceasing or continuing operations in underserved communities, H-1B visas and more.

Beyond that, Mitch and Freada will discuss how they’re advising their portfolio startups during these unprecedented times, as well as what areas are begging for innovation right now.

During the call, audience members will be able to ask questions, but to join the conversation, you’ll need to be an Extra Crunch member — if you’re not already a subscriber, please sign up here.

Extra Crunch Live: Navigating the pandemic with an equitable lens

Amid the COVID-19 pandemic, the tech industry has yet again found itself in a vulnerable state.

As we saw in the dot-com era, when the economy takes a hit, so do companies, and they need to make critical decisions — whether it’s laying off or furloughing employees, pausing operations in select markets, taking on additional debt or some combination of all four.

Given the disproportionate impact the coronavirus has on people of color and low-income communities, the tech industry — a predominantly white male ecosystem that struggles to foster diversity and inclusion — has an opportunity to approach this new reality through an equitable lens.

Kapor

Kapor Capital’s Freada Kapor Klein and Mitch Kapor

As part of Extra Crunch Live, our new virtual speaker series with trusted tech experts, I’ll talk to Kapor Capital’s Freada Kapor Klein and Mitch Kapor on Tuesday, April 28 at 10 a.m. Pacific/1 p.m. Eastern. Full details are at the bottom of this post.

Freada Kapor Klein, a founding partner at Kapor Capital, has advocated for diversity and inclusion in the tech industry for more than a decade. Through Kapor Capital, she invests in startups focused on social impact and closing gaps for people of color, as well as folks in low-income communities. Kapor Klein is also a founding member of Project Include, which works to help founders and investors implement effective diversity and inclusion strategies.

Mitch Kapor, also a founding partner at Kapor Capital, similarly invests in startups geared toward social good. Prior to Kapor Capital, he co-founded The Electronic Frontier Foundation, a nonprofit that protects digital rights and civil liberties. Together, Mitch and Freada also lead the Kapor Center for Social Impact to remove barriers in education and in the workplace.

I’m looking forward to chatting with Freada and Mitch about how startups should approach this ever-changing new reality, strategies for helping companies eliminate inequities and the differences and similarities between how the recent pandemic and the dot-com era are shaping the tech industry.

During the call, audience members will be able to ask questions, but to join the conversation, you’ll need to be an Extra Crunch member — if you’re not already a subscriber, you can sign up here.

All Raise CEO Pam Kostka on how the world isn’t ending

This isn’t the first economic downturn All Raise CEO Pam Kostka has been through. 

“I was here during the dot-com bust and rush, and here during the financial fallout that happened, so we’re a little overdue for some corrective action in the market,” Kostka said. “While I’ve been through boom and bust cycles before, this one is more meaningful because life and death are associated with it.”

All Raise is a nonprofit that focuses on increasing diversity within venture capital, both from a decision-maker and a deal perspective. It recently released its annual report, and we covered how female-founded startups landed more deals than ever before in 2019, per PitchBook data.  

After our piece looking at the numbers came out, however, some readers weighed in that our coverage missed the mark: In the headline, did we focus too much on progress and not enough on what is left to be done?

Because we’re both social distancing, I caught up with Kostka on the phone and got her take on how to report numbers around diversity without glossing over the work that remains to be accomplished. We also discussed how to stay optimistic during a downturn, potential innovation that might come out of COVID-19 and why diversity matters now more than ever.

Sponsors could be key to solving tech’s lack of gender diversity

Women pioneered the field of computer technology. Yet, in 2020, the sector is still dominated by men. Though the industry has made efforts toward achieving diversity and inclusion, progress has been slow, with only 26% of women — and even fewer Hispanic (2%) and African American (3%) women — currently in the tech workforce.

While it may be relatively easy for women to enter the industry, they often stall in lower-level positions, leaving women feeling stagnated in their careers. Companies can, however, improve their gender-diversity efforts and accelerate the number of women not only entering, but advancing and succeeding in, the tech industry by implementing sponsorship programs.

Sponsors include those in leadership positions who go beyond merely offering guidance and advice to more junior colleagues and instead act as advocates by using their leadership skills, power and influence to proactively help build and advance the careers of their “sponsorees.” In fact, a study by the Center for Talent Innovation found that respondents working in STEM careers ranked sponsorship programs among the top five most effective initiatives in retaining and advancing women in STEM roles and careers.

For women who want a career in tech, a sponsor can help eliminate bureaucratic red tape and other hurdles by putting the focus on an employee’s skills and accomplishments, recommending her for coveted assignments and identifying and helping female employees secure opportunities to expedite advancement within a company. When a female employee is sponsored by a senior- or executive-level employee, it can give her more of a voice within her company and specific department, improving the likelihood that she will contribute proactively to the team, help promote a positive company culture and improve the overall business.

The problem is that many tech companies aren’t taking the best approach to promoting gender diversity. According to a report by AnitaB.org, eight in 10 tech companies offer formal gender diversity training programs to reduce gender bias at work. While the aim of these programs is to help every employee understand the value of gender diversity and address the barriers to creating a diverse and inclusive team, research has shown that these programs don’t actually increase workforce diversity.

One study found that after five years of instituting required diversity training programs for managers, companies showed no change in the number of women in management positions, and actually experienced a decrease in the proportion of Asian American and African American women in managerial roles.

Although it is laudable that companies are making more conscious efforts to tackle gender biases, initiatives such as re-skilling and career development programs do more to help women advance in the workplace and drive forward their careers. To correct the gender imbalance, employers should place a bigger emphasis on providing career progression offerings, like sponsorships.

Developing and encouraging the use of sponsorship programs that offer women support and recognition can be vital to attracting and retaining top female talent. In 2017, Accenture, a professional services company, publicly committed to reaching a gender-balanced workforce by 2025. To drive this initiative, the firm developed a sponsorship program in which senior female employees are paired with C-suite executives who assist them in driving their careers forward, and the results have been promising. Forty-seven percent of Accenture’s new hires are women, and women comprise 44% of its global workforce. The company maintains that 100% of its female employees participate in programs intended to mentor, sponsor and develop their careers.

IBM has also established programs to advance women in technical leadership roles. Through its Technical Women’s Pipeline Program, the company aligns mid-career women with both a sponsor and an executive coach to help them navigate opportunities that would not be accessible otherwise. Women currently hold a quarter of management positions worldwide and comprise 29% of the total workforce.

Deloitte has also seen the positive results from its implementation of a sponsorship program. In the 2019 fiscal year, women accounted for 44% of the company’s workforce and almost a quarter of its Global Board is made up of women.

With a sponsor by their side, women are more likely to be promoted to leadership positions than their peers who don’t have a sponsor. Sandy Carter, VP of enterprise workloads at Amazon Web Services, has said that “sponsorship is one of the most important elements for success of all aspiring leaders.” In fact, Catalyst research found that when women are partnered with sponsors, they are just as likely as men to receive a promotion. And according to a recent report by PayScale, as professionals scale up the corporate ladder, the more likely they are to have had a sponsor. The report found that 59.2% of managers reported having a sponsor, and, at the executive level, 65.5% of individuals have a workplace sponsor.

And while these programs are essential in helping women advance in their companies and careers, sponsorships are also crucial to helping women move closer to bridging the gender pay gap, which is currently at 3% within the industry. A Ripple Match report found that women entering the job market make just 76% of what their male counterparts make. But with a sponsor, individuals tend to make 11.6% more than those who don’t have a sponsor.

Sponsorships can also make a real difference in helping the industry meet and exceed its diversity goals. If women feel supported and represented within a company, they are more likely to remain and contribute to the advancement of other professional women around them, creating a long-lasting positive impact. Business leaders who have participated in sponsoring relationships have reported feeling an increase in job satisfaction and a greater sense of commitment to their organization, resulting in a longer tenure.

If tech companies want to ignite real change within the industry, they must bolster their dedication to empowering female talent. Offering sponsorship programs shows women that employers are committed to aligning them with advocates who will ensure that sexism will not play a role in hindering their career growth in the tech industry they helped create.

The rise of the winged pink unicorn

Like most investors, I am a little too obsessed with unicorns.

But not just the Silicon Valley kind. As the mother of a five-year-old daughter, my interests also veer in a pink, sparkly direction. So it should not be all that surprising that I recently found myself in a dusty corner of the internet where die-hard unicorn fans go to spread their wings.

It was there, deep in the My Little Pony forums, that one question stopped me in my tracks: “is a male alicorn possible in the future?1

An alicorn, for those uninitiated to the mythological particulars, is the rare winged, female version of a traditional unicorn.

My Little Pony popularized the term, and the fan forum on which user “Green Precision” asked his question back in 2015 had some interesting answers to the particulars of this philosophical dilemma.

Shadow Stallion responded immediately, “I don’t think a male Alicorn will be possible in the future. Not because its [sic] not wanted or because its [sic] not genetically possible…but generally when male characters are introduced to a show where female characters are prominent, things get ugly.”

Malinter posited, “they probably do but given the female-to-male ratio of Equestria2 they are probably exceptionally rare. The real problem for a male alicorn is not that they exist but where is their place in the world? …Our male alicorn has some pretty big hoof prints to fill in while at the same time not make a trainwreck of established lore.”

Wind Chaser went straight from unconscious bias to conscious bias in their response: “aesthetically a male alicorn just wouldn’t look right, because their bodies are already naturally larger than females, thus the wings would cause an imbalance to the design.”

But it wasn’t all bad news.

“Until it’s proven otherwise, it’s safe to say that something like a male alicorn is possible,” responded Geek0zoid. Crysahis agreed. “Overall yes, I believe there could be a male alicorn it may just take a while to actually happen!”

It doesn’t take a PhD in philosophy from Stanford or the one lone female investing partner at Sequoia3 to posit that these same conversations were probably happening all over Sandhill Road in December of 2009, as male VCs discussed whether female unicorns could actually happen4.

As we move into 2020, though, we’re about to see a pink, winged stampede.

Just look at the recent trends. In 2019, more female-funded unicorns were born than ever before.5 And things are only looking up. (I’m looking at you, ClassPass!)

Public opinion agrees. Alongside TruePublic, where I am an advisor and angel investor, I ran a study asking if people believed we would see more female-led unicorns in the 2020s.6 At the time of this article, 68% of the 6,500 respondents said they believed we would see more, with 30% of women responding “many more” (as opposed to only 16% of men). Only 4% of women, but 9% of men, responded “no, not a chance.”7

Kaben Clauson, founder and CEO, says “to represent Gen Z, Millennials and Gen X, TruePublic needs a weighted sample of roughly one thousand Americans to represent that population of the USA.” This particular study already has 6,500 respondents, making it statistically significant.

In fact, female-founded and female co-founded companies are actually over-indexing for unicorn status despite a lack of investment dollars.

Shelby Porges, co-founder of The Billion Dollar Fund for Women, explains: “Recent tracking has shown that female-founded companies represent 4% of all unicorns. That’s astonishing considering that in the past couple of years, they have gotten only slightly more than 2% of all venture funding.” Porges, whose group has mobilized more than 80 venture funds to pledge to invest over a billion dollars into women-founded companies, continues, “It demonstrates why we say, ‘when you invest in women, you’re in good company.’ ”

Here are the three reasons I believe a herd of winged female unicorns (OK, alicorns) is coming down the pipeline in the 2020s:

1. Women invest in women at 3x the rate of men

New data reveals that women invest in women at nearly three times the rate that men do and with the (slow) rise in the number of female investing partners at VCV firms, we are poised to see more and more gender-balanced founding teams getting funding.8 Like one male GP at one of the world’s top VC funds said to me when discussing one of the few female partners at his firm, “she always brings us parenting companies.” It might be cringe-worthy if TechCrunch hadn’t declared 2020 “a big year for online childcare” and that same female partner weren’t about to make a big chunk of cash thanks to all the upcoming parenting alicorns she was smartly funding.

Sophia Bendz, a partner at Atomico who also leads the Atomico Angel Program, said, “I’m confident we’ll see more female unicorns in the next decade because there’s a growing wave of ambitious female founders building incredible products and services. There are also more women in VC now and I’ve seen first-hand the impact having female investment partners can have on increasing the amount of investment into female-led companies. The data shows that women invest in women at three times the rate as male investment partners.”

My study at TruePublic coincided with these findings. When asked if a female investor was more likely to invest in a female entrepreneur, 64% of people responded affirmatively (64% of these individuals were women and 63% were men).9

Jomayra Herrera agrees. An investor at Cowboy Ventures (which thanks to Aileen Lee coined the term “unicorn” in the first place), and a volunteer with AllRaise, a nonprofit promoting women in VC, she says: “As the venture industry continues to diversify, especially as it relates to gender and race/ethnicity, I am optimistic that we will see more female-led and people of color-led unicorns over the next decade. We know that diverse teams not only function better, but they are able to see areas of opportunities that more homogenous teams might miss. I think the next generation of investors are more likely to question conventional wisdom, forms of pattern recognition that may lead to bias, and other structural barriers that have historically left out promising entrepreneurs.”

Camila Farani is a well-known investor in Brazil. As founder of G2 Capital, former president of Gavea Angels and a personality on Brazil’s “Shark Tank,” she says “having diverse points of view at the table makes the decision clearer and more certain. People who think differently than you and have other visions of the market, sometimes can show you what you can’t see by yourself.”

She also reminds us not to forget the impact that angel investors can have. “The investments market is still made up mostly of men, but this landscape is changing gradually. It is interesting to see that angel investing is being the most common choice for women who want to make their first investments.”

This trend of investing more in women isn’t just limited to female investors. Susana Robles has spent two decades leading the charge to invest in women in Latin America and alongside Marta Cruz of NXTP Labs is co-founder of WeXchange, a platform that connects women entrepreneurs from Latin America and the Caribbean with mentors and investors.

As Robles says, “I think the world is finally waking up to the fact that there is serious research proving that startups with women co-founders win in all aspects: profitability, as well as greater social and environmental awareness. Investors should want to have this triple win.” She continues, “women tend to return money to investors faster than men, and at the same time, they obtain higher returns. Women are in charge of 64% of all global purchasing decisions on products and services, so having women on C-level positions increases the chance that a startup [will] be highly attractive to a massive market and become a unicorn.”

It also extends to the LPs in the funds. “I also think many investors in funds (mostly DFIs [development finance institutions] but not exclusively) have become more vocal in stating that they don’t want any more to invest in teams led by an all-white, all-male cast who choose startups with all-white, all-male founders.” Jennifer Neundorfer is the co-founder of Jane VC and an investor in Kinside, a parenting app that just raised a $3 million seed round. When describing her fund’s rationale for focusing on female founders, she drops the mic: “we’re going to invest in an under-looked asset class that is overperforming.” Boom.

2. Female founders are creating new billion-dollar markets

Another reason we’ll see more female-founded “alicorns” in the 2020s has everything to do with the new markets that female founders are creating. Hunter Walk of Homebrew was one of the initial seed investors in Winnie, an online marketplace for childcare that recently raised a $9 million Series A. At the time, he saw something that others investors didn’t. Winnie co-founder Sara Mauskopf explains, “Four years ago when we started Winnie, parenting and especially child care were not hot investment areas. This has been changing. It certainly helps that more investors are women and are in the thick of their child-bearing and rearing years.”

Part of what Walk says he recognized was the clear founder-market fit displayed by Mauskopf and her co-founder Annie Halsall. As Mauskopf says, “With Winnie, we saw an opportunity to solve the child-care crisis that other founders either did not recognize or did not care to solve. While everyone else was starting crypto and scooter companies, we were building the first-ever tech platform for $57 billion child care industry. Lack of access to quality child care disproportionately impacts women, so it shouldn’t be surprising that it took a female led team to capitalize on this opportunity.” Expanding on the concept of founder-market fit, Walk says, “I love to come away thinking, these are the absolute right founders to build this business.”10

Bendz, the Atomico partner who specializes in femtech and is also an avid angel investor, agrees. “Often I meet founders that you can tell are at the right place at the right time with the right mindset and the right team. It’s almost like all of the experiences they have had prior to launching a company have been preparing them to create that business at that time. These are the kind of founders who I know are in it for the long haul, and who are going to weather the ups and downs.” As a woman who uses the products and services she invests in, Bendz is also an example of investor-market fit, which I believe will open new markets in the decades to come.

Something else investors like Walk and Bendz believe in? Outsized opportunities. And the potential for outsized opportunities are especially ripe in untapped markets. The rise of femtech is yet another example of how the intuitive success of the concept of founder-market fit ultimately needed more female founders for certain markets to blossom. As Bendz explains, “Throughout a woman’s life there are many big events that have a big impact on our overall health — from childbirth to menopause. I know all women are tired of poor or non-existent solutions for women surrounding those life events, and that’s why we are seeing so many companies launching to better serve women’s needs. When you think about the fact that women have only had the right to vote and educate themselves for 100 years, it’s mind-blowing how long the world was operating with only 50% of the population in control. That’s reflected in the products and services we as a society have funded.”

Women’s consumer products are another area. Ornella Moraes is one of four female co-founders of Brazilian-led Sousmile, which recently raised a $6 million USD Series A led by Kaszek Ventures. “Our brand is a woman,” Moraes says of her dental beauty startup that retails throughout São Paulo. And so are the leaders of the company. At Sousmile, there are four female co-founders and two male co-founders. “More dentists in the world are women than men, so it’s been critical for our team to have more female founders,” she says. In this way, the rise of female founders and co-founders can completely change markets. “We believe this will fundamentally create a different type of product,” says Walk.

3. Emerging markets will take the lead

Finally, certain emerging markets pose a particular opportunity for female founders by over-indexing for both large IPOs and female founders. 2017 was the first year that more of the largest IPOs in the internet sector globally came from emerging markets. Nazar Yasin, founder of Rise Capital, which invests in emerging markets, says “This trend isn’t going away.” After all, most GDP growth comes from emerging markets, where most global internet users live. As he explains, “the future of market capitalization growth in the internet sector globally belongs to emerging markets.” And yet this type of innovation takes resilience. “If you’re a startup in one of these markets, it’s like trying to grow a plant in the desert.”11 In an environment that demands more daily resilience, there is a different appetite for risk and innovation. (I call this resilience innovation.)

Perhaps the easiest example of emerging market innovation fueled by resilience is fintech. Emerging markets and their often unstable economies boast a much higher number of frustratingly unbanked individuals. This brings about innovation. Hanna Schiuma, the Brazilian-born fintech founder of ElasBank, where I am an angel investor and advisor, explains how ubiquitous such fintech innovation is becoming.

“Soon all finance will be tailor-made and fintech will be common ground because all financial services will be technology-intensive.” She also argues that the nature of such an innovation allows the industry to become more innovative, and thus inclusive, which is exactly what is happening with her own women’s bank, launching in 2020. “That means great opportunities to better serve women’s financial needs to offer dedicated products, and to gather female talent to build those products from a diverse and innovative perspective.” Ultimately, “resilience is key for us to build that pool of talent and open the doors for gender balance and financial inclusion.”

Furthermore, data shows Africa and Latin America both beat global averages for percentages of startup female founders. Laura Stebbing is co-CEO of accelerateHER, a global community of leaders addressing the under-representation of women in tech through action. Raised in Southern Africa, Stebbing is passionate about Africa’s rise as a hub of female entrepreneurship.

“Africa has both the highest proportion of women founders at 26% [Latam comes in second]12 and a $42 billion funding gap. There’s clearly no lack of talent across Africa’s 54 countries, so for the investors, corporate executives, policy makers and established founders that aren’t moved by the moral arguments for gender parity, notice the enormous business opportunity. We will start to see a higher volume of resilient, scalable companies emerge as leaders build more diverse networks and ecosystems that support women to unlock their entrepreneurial potential.” Nathan Lustig, founder of Magma Partners, a VC firm in Latin America which invests in female founders above the regional average, explains, “investing in and empowering resilient women entrepreneurs is just good business, and is one of the biggest investment opportunities, especially in emerging markets.”

I believe Latin American can have an edge. I am a Silicon Valley-born investor now living in “Silicon Aires,” where I have been thrilled to see exciting numbers of female founders in Latin America. Susana Robles agrees, and says the reason is in part due to the nature of a committed ecosystem to support one another. “It’s the sheer need that forces you to collaborate.” An ecosystem like Silicon Valley doesn’t have the same need to do so. Of Latin America, Robles says, “In 10 years, we will have created a much more collaborative market than the developed ones.” And that collaboration is leading to great female founders. 2019, in fact, saw more funding going to female co-founders in Latin America than in Europe or the USA.13

This will lead to future alicorns. Ann Williams, COO of Creditas, a Brazilian fintech currently closing in on its own unicorn status, says “the conversion funnel for unicorns works just like any other selection process. We fill the top with a bunch of great women in supporting roles in emerging market startups, these women take their experiences and found rocking new companies. A percentage of these will convert to scaleups raising Series C and D rounds with valuations at $1 billion or higher. And voila! we get women-led unicorns.” She continues, “the odds are with us and I am sure the talent is too!”

Juliane Butty, startup head at Platzi and former regional manager of Seedstars, one of the leading accelerators and investors fostering female entrepreneurship in emerging markets, joins Williams. “We have definitely seen the rise of female founders and investors in emerging markets in the last decade. One supports the other. And we know that success breeds success.”

Perhaps My Little Pony fan Malinter said it best when he suggested how a male version of the alicorn could finally emerge in such a female-dominated space: “The simplest way they could probably add one in would be to make said alicorn the ruler of a neighboring nation.” In the same way, emerging markets may just hold the key for female unicorns.

No matter the region, Robles says “if we keep opening doors to women entrepreneurs who are as ambitious as men in growing their companies, we’ll begin to see many more unicorns with gender diversified teams.” Hanna Schiuma, the Elasbank founder who just might be building the next female-founded unicorn, agrees. “The alicorns are coming. And we’re ready to fly.”


2Equestria is of course where the My Little Ponies and their assorted unicorns, alicorns and friends all live.
3Go Jess Lee!
4Yes, Aileen Lee of Cowboy VC first invented the term in her 2013 TechCrunch piece, but we’re in a unicorn-fueled time machine, people.
8“Do Female Investors Support Female Entrepreneurs? An Empirical Analysis of Angel Investor Behavior,” Seth C. Oranburg, Duquesne University School of Law, Pittsburgh PA, USA and Mark Geiger, Duquesne University School of Business, Pittsburgh PA, USA
12Forthcoming research from TechCrunch/Crunchbase
13Forthcoming research from TechCrunch/Crunchbase

Latin America takes the global lead in VC directed to female co-founders

When Flavia Deutsch and Paula Crespi were raising a groundbreaking $1.7 million seed round for their parenting startup in Brazil, they had to turn away male investors.

“The men were already writing us checks, but the women — we had to convince them,” Deutsch explained of the seed round for Theia, which ended the year as the largest all-female founded company raise in Latin America. “For every male investor we had, we wanted one female investor as well,” Deutsch said. And for good reason.

Many studies have established that female-founded companies outperform their all-male counterparts. Boston Consulting Group reports that for every dollar a female founder or co-founder raises, she generates 2.5X more revenue than a male founder.1 First Round Capital’s research held that the female-founded companies it backed performed 63% better than all-male founding teams.2 The Ewing Marion Kauffman Foundation’s showed that return on investment from women-led teams is 35% higher than their all-male counterparts.3 AllRaise, a nonprofit promoting women in VC, found that “companies with women on their founding teams are likely to exit at least one year faster compared to the rest of the market, and the number of exits for companies with at least one female founder is growing at a faster rate year-over-year than exits for companies with only male founders.”4 Jen Neundorfer, founding partner at Jane VC, succinctly explains her fund’s thesis of investing in female founders as, “investing in an overlooked asset class that is overperforming.” After all, it’s a “trillion-dollar opportunity.”5

And in the 2020s, much of that opportunity will be in emerging markets. The first year that the largest IPOs globally came from emerging markets was 2017. Since then, it has been a straight line up and to the right. Nazar Yasin, who invests in emerging markets as the founder of Rise Capital, says, “this trend isn’t going away.” Given that most GDP growth now coming from emerging markets, where most global internet users live, “the future of market capitalization growth in the internet sector globally belongs to emerging markets.”

Latin America takes the global lead in funding women

And it just may belong to the women who start companies there.

New data from Gene Teare at Crunchbase shows that Latin America currently takes the global lead in investment dollars directed to women.

via Crunchbase

In 2019, investments into mixed female-male founding teams represented 16% of dollars invested in Latin America, 9% in the U.S. and only 8% in Europe.

This number includes a $400 million Series F into Nubank, the Brazilian challenger bank co-founded by Cristina Junqueira, who was — not for the first time — pregnant at the time of the raise. Junqueira is not only the female co-founder currently leading the largest neobank in the world, she is also the female co-founder currently leading the world’s largest venture-backed company.

via Crunchbase

Overall, total investment dollars into both mixed male-female teams and female-only teams represented 17% of total dollars invested in Latin America, 13% in the U.S. and 9% in Europe.

In terms of deal volume, mixed female-male founded teams make up 15% of investments in 2019 in Latin America, in comparison with 14% in the U.S. and 11% in Europe. One contributor is fintech. In Latin America, 35% of fintech companies have a female co-founder, 5X more than the global average of 7%.6

That said, in terms of funding all-female teams, the U.S. still leads. In Latin America, the women-only teams made up 4% of investment deals in 2019, on par with Europe but behind the U.S. average of 8%.

Read the conclusion, Women are the secret ingredient in Latin America’s outsized returns, on Extra Crunch.

Women are the secret ingredient in Latin America’s outsized returns

Read the first part of this article, “Latin America takes the global lead in VC directed to female co-founders,” on TechCrunch.


Latin America lags when it comes to female investors

Interestingly, these positive numbers for Latin America come in spite of a lack of female investing partners in Latin America.

New data shows that only 7% of VCs with check-writing ability in Latin America are women. This is just over half the current U.S. average of 12%.

See the full data set here.

This is a critical finding, given that studies indicate that investments in female founded or co-founded teams increase when more women sit across the table as investors.1 Specifically, 2019 research shows that women invest in female entrepreneurs at nearly three times the rate of male investors.2

This means that Latin America could be on the early side of a positive cycle. In other words, more female investors in Latin America would lead to more female co-founders, and faster exits at higher valuations.

Other parts of the world have seen the effects of this positive cycle. Sophia Bendz, a partner at leading European VC Atomico, has watched this happen: “I’ve seen first-hand the impact having female investment partners can have on increasing the amount of investment into female-led companies.”

Goldman Sachs’ new board member diversity rule misses the mark

Goldman Sachs CEO David Solomon recently said the investment bank won’t take companies public that don’t have at least one board member from an underrepresented group. The main focus will be on female board members, he told CNBC, because companies that have gone public in the last four years with at least one woman on their board of directors performed “significantly better” than those without. The new rule is set to go into effect in the U.S. and Europe on July 1.

While the move is significant, what Solomon and Goldman are doing is not a novel idea, nor is it the best version of an outdated idea. It reminds me of something Salesforce CEO Marc Benioff said a few years ago at Dreamforce:

Overall, diversity is extremely important to us. Right now, this is the major issue [gesturing to the room/crowd]. I think when we feel like we’ve got this, you know, a little bit more under control, then I think that one is gonna surface as the major thing we’re focusing on. We’re not ignoring it, it’s something that we support, it’s something that we’re working on, but this is our major focus right now, is the women’s issue.

At the time, Benioff failed to address the complexity of diversity, which is what Goldman Sachs is doing. A “focus on women” does not take into account the intersectional identities many people have. And it’s those intersectional identities — whether it’s being a black woman, a trans man and so forth — that bring both intellectual and financial value to the table. By focusing on women, as Solomon said, Goldman Sachs is setting itself up to exclude women of color, as they are oftentimes left out of women-focused initiatives. This outdated and misguided strategy, where diversity equals more (white) women, needs to be squashed.

While this requirement will likely increase returns for Goldman Sachs and operate as a forcing function to boost diversity at startups, it needs to go further. By focusing on a broader definition of diversity, Goldman Sachs could be more inclusive and make its returns even greater.

TechCrunch Include yearly report

Welcome to the third annual TechCrunch Include Progress Report. Our editorial and events teams work hard throughout the year to ensure that we bring you the most dynamic and diverse group of speakers and judges to our event stages. And finally, at the tail end of 2019, we bring you … 2018 data. (You can see 2017 data here.)

In 2018, TechCrunch produced Disrupts in San Francisco and Berlin, as well as regional Battlefield events in Zug, Switzerland; Lagos, Nigeria; São Paulo, Brazil and Berlin, Germany. We also produced a number of Sessions events, including the increasingly popular Robotics edition, as well as Blockchain and AR/VR.

It is important to us that we foster an environment that reflects the increasingly diverse tech industry. We are pleased to report that we saw an overall increase across the board with regard to inclusion, while still acknowledging that we weren’t yet where we needed to be when it comes to women and people of color across our stages. Happily, 2019 has been even better, and we’ll bring you those numbers soon.

Below we have compiled data from our 2018 events about the makeup of people who appeared as panelists, judges and founders of the Battlefield competitors. 

Disrupt

Our flagship conference attracts speakers, judges and Battlefield contestants from all over the world. It serves as a global arena for startups in all stages of development, as well as investors interested in finding their next big investment.

At Disrupt SF in 2018, of the 153 total speakers and judges, 33% were women and 27% were people of color. On the Battlefield stage, of the 22 teams, 36% had female founders. This is up from 29% the year before.

At Disrupt Berlin, of the 56 speakers and judges, 39% were women and 18% were people of color. Of the 12 teams that competed on the Battlefield stage, half the founders were women.

Regional Battlefield 

Our Battlefield competition isn’t limited to Disrupt. We take it on the road in order to give as many startups an opportunity to compete. In addition, these events include panels designed around region-specific topics. In 2018, we hosted Battlefield competitions in the Middle East and North Africa, Latin America and Africa regions.

Battlefield MENA showcased 15 teams; of those, 53% were founded by women. Of the 28 speakers and judges, 35% were women and 75% were people of color.

Fifteen teams competed in Battlefield LatAm, 20% of which were led by women. Out of the 28 speakers and judges, 32% were women and 68% were people of color.

And finally, in Battlefield Africa, a total of 15 teams competed. Of those, 33% were founded by women. Of the 28 speakers and judges, 14% were women and 75% were people of color.

Sessions

Our daylong Sessions events are targeted at specific topics. In 2018, we held events about Blockchain, robotics and AR/VR. TechCrunch Sessions events attract to the stage specialists in their industries speaking to rapt audiences.

Of the 28 speakers who appeared onstage in Berkeley for Sessions: Robotics, 25% were women and 21% were people of color. In Zug, Switzerland for Sessions: Blockchain, of the 29 speakers, 17% were women and 21% were people of color. And in Los Angeles at Sessions: AR/VR, 34% of the 29 speakers were women and 24% were people of color.

Miscellaneous

Tel Aviv

Our event in Tel Aviv leaned heavily toward mobility, and served as a preview of what would become Sessions: Mobility in 2019. Of the 38 speakers in our programming, 21% were women and 63% were people of color.

VivaTech

In 2018, TechCrunch also hosted a hackathon at VivaTech in Paris, as well as presented editorial programming. Of the 20 speakers, 45% were women and 30% were people of color.

US VC investment in female founders hits all-time high

Venture capital investment in all-female founding teams hit $3.3 billion in 2019, representing 2.8% of capital invested across the entire U.S. startup ecosystem this year, according to the latest data collected by PitchBook.

While that number may seem insubstantial, it’s a step up from last year’s total. In 2018, venture capitalists struck 580 deals worth $3 billion — up from just $2.1 billion in 2017 — for all-female teams, or only 2.2% of all U.S. deal activity. So far, female-founded and mixed-gender teams have raised a total of $17.2 billion, with roughly three weeks remaining in 2019. That’s 11.5% of all venture capital investment, an increase from 10.6% last year, when those groups attracted $17 billion across some 2,000 deals.

Crunchbase, another organization focused on tracking and analyzing fundraising data, reported in October that $20 billion in global capital was invested in female-founded and female co-founded startups so far this year. Three percent of global venture dollar volume was funneled toward female teams, Crunchbase said, and 10% toward teams of women and men.

Despite efforts from female founders, venture capitalists and diversity advocates in Silicon Valley and beyond, female entrepreneurs continue to struggle to raise as much capital as their male counterparts. The lack of equity in VC is in part caused by the lack of women on the other side of the table; venture capital funds still employ very few women.

Although dozens of firms have made concerted efforts to diversify their ranks, fewer than 10% of decision-makers at U.S. VC firms are women, according to a 2019 Axios analysis, which determined just 105 investors out of 1,088 were female. While the study noted an increase from the previous year’s 8.93% and 2017’s 7%, it proved venture capital is still very much a male-dominated industry.

Carta, a venture-backed company that provides startups tools to manage their equity, released its second annual gender equity gap study last month, noting that male founders and employees still receive significantly more equity wealth than women. Men have 64% of all startup equity, according to Carta’s findings, and represent 80% of cap table millionaires. Carta used data from 320,000 employees, some 10,000 companies and 25,000 founders to determine these results, which paint a disappointing picture for women at startups.

Another venture-backed company, Tide, conducted its own study around female founders this year. The study focused on entrepreneurs in the U.K. and U.S., which both struggle with diversity in entrepreneurship. Tide determined that of the 403 degrees obtained from universities in the U.K. by female founders, roughly a quarter were from the University of Cambridge and the University of Oxford, the country’s top schools. Of the American entrepreneurs included in the study, most went to Stanford University, MIT or Harvard University. The conclusion? Of the female founders who ultimately succeed in raising funding from private investors, most are graduates of elite universities, suggesting a certain socio-economic status. Of course, accessing capital is even more difficult for entrepreneurs who do not attend top universities and who therefore struggle to gain access to investor-friendly networks.

The diversity issue in VC expands beyond women. While several funds have cropped up with a mission to back female founders exclusively, including Female Founders Fund, BBG Ventures, Halogen Ventures, Jane VC, Cleo Capital, accelerator program Ready Set Raise or XFactor Ventures, minority entrepreneurs, including men of color, struggle to secure financing. And while companies like PitchBook and Crunchbase track gender, they do not track race, making it difficult to understand the size and scale of the race funding gap.

On a mission to close that gap, firms like Harlem Capital invest in minority entrepreneurs and organizations like BLCK VC seek to provide community for black venture investors. The New York-based team behind Harlem Capital announced a $40 million debut fundraise last month, one of the largest-ever pools of capital for a fund with a diversity mandate. Harlem, similar to BLCK VC, hopes to attract more minorities to venture capital, where the vast majority of deal makers are white or Asian men.

“You need diversity funds like ourselves to get this market anywhere close to parity,” Harlem Capital managing partner Jarrid Tingle told TechCrunch last month.

Other efforts focused on women in VC and technology include All Raise, which hired its first chief executive officer in Pam Kostka earlier this year. 2019 has been a banner year for the nonprofit organization focused on increasing representation across the entire tech ecosystem. Not only did it bring its first official leader and several employees, it announced new chapters in Los Angeles and Boston, launched a program called VC Cohorts and hosted its annual conference, several in-person and virtual fundraising workshops and networking sessions.

“Women are hungry for the support and guidance we provide,” All Raise’s Kostka told TechCrunch in October. “I think the movement is just gathering momentum.”

Large and growing “unicorn” startups founded by women have also helped move the needle this year, proving companies led by women can gain support from Silicon Valley’s elite. PitchBook notes Glossier and Rent the Runway, two companies founded and led by women, as examples of new entrants to the unicorn club (companies with valuations of $1 billion or larger).

Glossier landed a $100 million Series D led by Sequoia Capital, with participation from Tiger Global and Spark Capital in March. The round valued Emily Weiss’ business at a whopping $1.2 billion. News of Rent the Runway’s $125 million round led by Franklin Templeton Investments and Bain Capital Ventures came just a couple of days later. The deal valued the clothing rental company at $1 billion.

The newest data may indicate progress, but all-male teams still raised more than 85% of all U.S. venture capital dollars in 2019, while decision makers at venture capital firms were still more than 90% male. The venture capital industry, as it stands, is still a boy’s club.