How to handle ‘aggression in the room’ and other insights from women fundraising

To commemorate International Women’s Day, senior reporter David Bogoslaw hosted a discussion with three women from the venture ecosystem: Patricia Muoio, partner at SineWave Ventures; Vesna Prchkovska, co-founder and CEO of VC-backed QMENTA; and Dipanwita Das, co-founder and CEO of VC-backed Sorcero.

Among the key takeaways was the ongoing double standard that continues to hound women founders, from their companies being viewed more through a risk lens than an opportunity lens, to being questioned more aggressively than male founders, to typically not being able to raise nearly as much capital as men.

Das, who has helped Sorcero raise nearly $16 million in venture funding, recalls being asked some “very inappropriate questions” by VCs and noticing them focusing on her male partner, even though she is the company’s CEO.

Prchkovska, whose has helped QMENTA to raise approximately $10 million in funding, noted that it is easy to feel “intimidated” by the fundraising process. “[Women] often try to analyze the situation and maybe you doubt yourself more about whether you’re on the right path, which can slow you down,” she said.

The roundtable participants see a need to bust the myth that venture capital aims exclusively to make money rather than also contribute to a more humane world by backing solutions to real-world problems. For women who are drawn to more mission-driven lines of work, that could reduce the number that may be intimidated by the stories of unfair treatment in the industry.

There is certainly plenty of room for progress. In 2022, companies founded solely by women captured just 2.1 percent of the capital that venture firms invested in start-ups in the US, according to research by PitchBook.

The fact that more of the companies that Muoio is looking at today have at least one woman on their executive team may indicate more women feel comfortable entering the venture world. “Perhaps we can see that as a harbinger of good things to come,” she mused.

Following is a lightly edited transcript of the roundtable discussion.

Why have the numbers of women-led VC firms and start-ups grown so slowly?

Das: There’s a bit of the risk-versus-opportunity [issue] that we see both on the VC side as well as on the entrepreneur side. There’s of course inherent risk with every investment, no matter how promising it sounds out of the gate. I’ve seen when there’s a woman or multiple women at the helm, the perspective changes to one that is almost purely focused more on risk than opportunity, which impacts both the size of that investment and can slow you down, but also the support that is offered to that entrepreneur in terms of allowing them to own an objective.

Prchkovska: There’s a lot more aggression when starting your business and having to raise money. You can feel the aggression in the room and you get very intimidated very often. As women, we don’t overcompensate and we often try to analyze the situation and maybe doubt yourself more about whether you’re on the right path, which can slow you down.

I always felt like I would do the pitching and when there’s a discussion I would go a little bit behind [the scenes] because the men are talking. In order for my voice to be heard or to even believe in it, I would have to speak louder or really push myself to believe I have the right skillset and knowledge.

Muoio: There are fewer women in these areas to begin with. Also, many of the women that go into the tech fields are more of what I would call mission- or content-driven in their jobs. They want to do good. And in VC there’s a myth that you take advantage of the world to make money. That makes the venture world seem less appealing as a life’s work in some circumstances. And I think there is a strong voice that says women are unfairly treated in venture [and] that tends to scare people off.

I’ve heard the bias against female founders starts with how VC managers review start-ups’ pitch decks. Have you seen this?

Das: That’s definitely been my experience. When we were raising a pre-seed [round] and I think the company was eight months old, I got very vigorously questioned on things like [customer acquisition cost] and [cost of goods sold] and [lifetime customer value], which, even if I were to produce a number, would be absolute fiction because it was frankly far too early for any of those numbers to be bankable.

They didn’t really care at all about what the vision for this organization was or the market opportunity or even about understanding why this was a market worth solving business problems for. It was a veritable nightmare compared with organizations with more male presence on the executive team or a male CEO that would just be like, ‘This is such a great idea, incredible opportunity,’ and that’s good enough. That also got reflected in how much money would get allocated to a female founder-led company. And round sizes really impact what you can accomplish in a 12- to 18-month period.

Prchkovska: When we were raising the seed round, I was pregnant and right when we closed the round I had the baby. And several times I pitched and it was a no-go. [I got questions like] ‘Are you going to spend enough time in your company?’ and I remember for a period of time I had to hide that I was pregnant. It’s very challenging if you’re in your late twenties or thirties and you’re starting your entrepreneurship career plus a family. Plus the guilt [about wondering], ‘Am I spending enough time here or there?’ Having a balancing act all the time was another experience that was hard for me.

Muoio: It’s interesting that [Prchkovska’s] husband was in the same raise in the same situation and the question never came up whether he would spend enough time with the company once the baby was born. The assumption was that her input would automatically be degraded and it would have no impact on him.

Das: My partner is also one of the co-founders, and I 100 percent agree. I got asked very inappropriate questions when I was raising as well. It was interesting to watch as a conversation materialized, when you track people’s eyes, they’re looking at my partner.

Do you see a correlation between how many women are decision-makers as LPs and how much capital those LPs allocate to women-led or co-led VC firms?

Das: A lot of female LPs have fund managers. It’s generally their personal wealth that they’re deciding how to distribute. Many of these fund managers have traditionally invested in public equities and for the first time they’re looking at private investing, venture being one of them. So there is some lack of familiarity with the way the venture model works – valuations and the way you look at the math behind it.

In the end, you’re talking with their fund managers, particularly if they’re deploying meaningful capital into your company. Anything larger than half a million or a million dollars, you’re going to have to talk to their fund managers and they are more often men than not.

Muoio: Less than 10 percent of [SineWave’s] LPs are women. For our latest fundraising drive, I don’t see there were a lot of women that we even approached about investing. Perhaps there’s some set of well-known people who invest in VC and that is a male-dominated set by a good amount. So, there probably is room to make the whole industry more female-friendly for investing. It is the case that there are a lot more rich women around now than there used to be.

What was the biggest impediment each of you faced when trying to get into VC or raise capital from VCs?

Das: I definitely struggled with the excessive bloviating that is essential, particularly when you’re selling a vision. And striking a balance between staking a claim to an idea and keeping it real was a struggle. It took me a little time to understand the VC business model. At the end of the day, the success of those pitches is dependent on you understanding what the VC needs to get out of it. And even when they love you and the idea of the product, they still may not be able to invest [for some reason, including] the fund size to the age.

Muoio: I have seen pitches by male VCs and male entrepreneurs that were more ego than fact. And they asserted these claims with such compelling language and force that you would feel like a fool to doubt them when they had very little right to the assertion of those claims. It’s up to VCs to be able to see through that and know when somebody’s blowing smoke and when somebody has a real thing. That’s one thing that holds women back. There’s a strong gender difference in the comfort with hype versus fact and I think it is a strong factor in a lot of pitches.

Are the relatively small increases in funding to women-led start-ups and VC firms led or co-led by women the right metrics to gauge women’s progress by? Are there alternate metrics you suggest tracking?

Muoio: It is the case that more of the companies I’m looking at now have at least one woman on the executive team. So perhaps women are becoming more comfortable entering into the venture world. I generally look at seed[-stage] kinds of companies. So perhaps we can see that as a harbinger of good things to come and maybe the measure is there are more women who are entering into the venture endeavor in enterprise tech kinds of companies, and measuring that would give you a sense of whether there is progress being made.

That raises the question of how many women are able to persist through later financing rounds.

Muoio: That would be a good metric – tracking the number of women involved at various [stages] in the company’s life cycle, holding executive positions, and seeing when there’s an increase in entry and whether they sustain. That has traditionally been a metric in STEM fields. When I was working for the government, this was a big issue because the number of women who enter is small and the churn rate is much steeper than it is for men. I have not done any analysis of whether that’s also true in venture. But I think that would be a good metric about whether the environment is friendly or unfriendly – the steepness of that departure.

Das: I’d love to continue to track with a female co-founder and CEO if they stay the CEO [as a company matures]. Particularly when the company’s been around for at least four or five years. I suspect the numbers aren’t going to make us happy. But if they can stay on and keep growing the company through its life cycle and exit, and then potentially beyond, that’s really what we’re working towards.

What gives each of you the most optimism that women are being taken more seriously in VC and are getting opportunities they didn’t have before?

Das: I am seeing more women-led companies in the healthcare and life sciences space on the software side, as well as the biotech side, which is awesome. The more we’ve been vertically focused, I am seeing more female CEOs, not just founders. [Whether technically focused or not] they’re leading that organization, both across products or services that are specific to women as well as those that are not.

One thing I love about [Sorcero’s] customers and who we work with is that they are heavily diverse women-led. No matter my experience with venture, when I talk to a customer, it’s perfect. That soothes the burn of it. These are country-sized companies.

Muoio: When I was first involved in feminist activities in the ’70s, the issue was proving you were as good as men. The conversation now is that women bring something special to the game. They don’t need to be the same as men because they’re strong contributors as women and they bring a voice to the conversation that’s of value and contributes to the success of the company. The more that voice prevails in the conversation, I think the more progress we may see.

To what extent is women’s access to STEM education in primary and secondary school linked to the lag in women decision-makers in tech and tech financing?

Muoio: When I was in the government, we spent a decent amount of time trying to study that problem. Elementary school is almost too early to measure and so many of the influences there are more from the household. What are the expectations that we have for little girls to achieve?

In high school, any girl who was smart in science wasn’t cool. So trying to change the description of the work so it wasn’t geeky but its impact was understood to keep women brave enough to say, ‘Yes, I want to stay with science. I want to do mathematics,’ and not to be stymied by the peer pressure. Once there are women interested in applying to college, I think they sustain it through college. The numbers for grad school are quite positive.

Prchkovska: I think geography has a big impact. Coming from an Eastern European country, we have an inherent duty to make our parents proud. And to make your parents proud, you should be good at studies. And especially if you’re good at mathematics and physics, then you make your parents proud. For me and many of my friends – I was in the nerdy group – that’s the path.

Also, living in such a poor country, to be able to have any kind of career where you can get out of the country and be recognized. For medical school, it’s much more complex. But if it’s engineering and math, it’s a more universal language. My generation was very encouraged, regardless of the gender, to go into technical fields and explore. Get out of the country, have a better life.

What changes are needed to foster more access to capital by women-led VCs and start-ups?

Prchkovska: It comes to us who have been through these processes to take initiative and mentor people. It’s the good will of us sticking together and working together, mentoring, educating more.

Das: My mom always told me if you’re not at the table, you’re on the menu. When women have an opportunity to be at the table, supporting each other to stay at the table through the many [funding] cycles is going to be essential because we’re going to need more extremely wealthy female entrepreneurs to set up some of those funds.

Muoio: My optimism about why this might change is that the recent financial situation has made a lot of VCs examine their conscience, their processes and their decision metrics. Where have they gone for fluff? Where have they overinvested or paid higher prices on smaller evidence than perhaps would have warranted an investment of that type? To the extent that decision-making becomes evidence-based versus club-based, bias-based, you-look-like-me-based, women will do better in exactly the percentage where that change happens. I don’t think women need any special consideration because I do think it’s a very good investment proposition.

The fourth paragraph has been updated to reflect a corrected dollar figure.