Investing in Female Founders — Lessons from Behavioral Finance, Gender Research and Real Life Experiences

A story of a conversation between an academic researcher, VC investor, CVC investor and an entrepreneur

2019 brought more female-founded unicorns than ever before, and more new female partners at VC firms. Despite this progress, VC remains one of the most gender-skewed industries in the US. Last year, approx. 87.8% of the VC funding was raised by all male founder teams. We also see an emerging evidence that the disruption caused by COVID-19 is bound to disproportionately affect women. As reported by Pitchbook, Q1 2020 already showed a decline in share of deals with startups founded by women.

Wait… but why?

I am a nerd. I studied Finance & Accounting, I studied Psychology, and then I got an MBA. I have always been fascinated by behavioral economics and academic research proving that we are irrational in a systematic way when making decisions under uncertainty. If you haven’t read yet — Thinking, Fast and Slow by Daniel Kahneman is a good place to start. Yes, he is that psychologist who was awarded the Nobel Memorial Prize in Economic Sciences.

Now, why it matters in VC. Mixed gender or women-led startups are not performing worse than male-led — actually it’s quite the opposite. So isn’t it rational to invest in them? From behavioral economics, we know that decisions under uncertainty are influenced by the actual framing and context. Biases and heuristics come into play when it comes to VC investing — it is no different than thinking about weighing potential gains and losses under uncertainty. So what can we actually do to help scale investments in female founders if we can’t change how we’re all wired? Let’s look at it from three different perspectives represented by (#1) a researcher, (#2) two investors, and (#3) an entrepreneur.

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“Have a good understanding of your strengths.” with Penny Bauder & Vanessa Liu

Vanessa Liu is the VP of SAP.iO, a global organization responsible for building an ecosystem of startups around SAP. In her role, she is overseeing SAP.iO’s North American Foundries in New York and San Francisco, including programs devoted to women and diverse-led B2B enterprise tech companies.

Vanessa was most recently the Chief Operating Officer at Trigger Media Group, a $22MM digital media incubator. In her role, she co-founded, incubated and oversaw business operations and strategic initiatives of Trigger’s portfolio companies: InsideHook (the essential digital lifestyle guide for adventurous and discerning men) and Fevo (SaaS technology bringing friends and networks together for group experiences at live events). Vanessa currently serves as a board observer of Fevo and is an advisor or investor in start-ups including Bounce Exchange, Grata Data, GroundSignal, Knotel and Narrativ. She mentors female founders through Declare’s Lead Program.

Previously, Vanessa was an Associate Partner at McKinsey & Company’s Media and Entertainment Practice, based in Amsterdam, London and New York. In this role, Vanessa was responsible for serving clients in a variety of media and high tech sectors including online advertising, magazine and newspaper publishing, television, video content production, and information services, particularly on issues of digital media strategy, emerging market strategy, growth and innovation. Vanessa graduated magna cum laude with an AB in psychology from Harvard University and cum laude with a JD from Harvard Law School. She was a Fulbright Scholar at Universiteit Utrecht in the Netherlands where she conducted independent research on the International War Crimes Tribunal for the Former Yugoslavia and the International Court of Justice. She serves as Vice President, College Alumni Affairs, of the Harvard Alumni Association.

Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?

Ihave always been inspired by innovation — from the age of 12 through my senior year in college, I actually wanted to be an astronaut and spent much of my adolescent life learning about science and innovation that way. In college, I switched gears and decided to go into law, doing research on the International Criminal Tribunal for the Former Yugoslavia and going to law school. However, I realized very quickly that addressing atrocities years after the fact wasn’t satisfying. I wanted to be a part of the solution in terms of economic development and to prevent these atrocities from ever happening in the first place. So, I started working for McKinsey and went into management consulting. On my third project, I was staffed on a digital media project. I was tasked with helping my client launch a new free internet service provider for the Dutch market. We had 6 months to create a business plan and to launch the service. I was immediately hooked. While at McKinsey, I worked with media companies — newspaper and magazine publishers, broadcasters, information services companies — where I crafted their digital plans and launched new businesses for them.

After 8 years though, I realized I had outgrown my time at McKinsey. I didn’t want to give businesses back to clients to run; I wanted to continue running them myself. At a time when many would regard as least optimal to start a business — I had just moved back to NYC from London and delivered my second child — I teamed up with a business partner and we launched a venture startup studio, called Trigger Media. Over the course of 6 years, we co-founded two portfolio companies — InsideHook, a digital lifestyle publication for men 35–50; and Fevo, a platform that enables groups to purchase experiences together. As the co-founder and interim CEO of both companies at various moments, I realized firsthand how much more difficult it is for women and diverse entrepreneurs to get funding — not because they don’t have the ideas, but often because they don’t have access to the right networks. I joined SAP.iO because I wanted the opportunity to help other underrepresented founders gain the access they deserve to help propel their businesses forward.

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SAP.iO Hosts Investing x Women with Stanford Women’s Network of New York

On Thursday, February 27, Joanna Maryewska, Principal at SAP.iO Fund hosted an event with Stanford Women’s Network of New York launching an initiative “Investing x Women” at SAP.iO Foundry New York.

After an introduction to SAP.iO Foundries’ mission, the event kicked off with a discussion on diversity on startup boards and why it increasingly matters to founders. Joanna was joined by Alexa von Tobel (Founder and Managing Partner at Inspired Capital), Rebecca Kaden (Managing Partner at Union Square Ventures), Jemma Wolfe (Head of Launch with GS). As only ~2% of VC funding went to female-only founding teams and ~10% to mixed gender teams, the discussion involved discussing ways to approach challenges and common biases – at the industry, organizational and individual level. As research points out – the best way to drive change is by addressing the structural and process-based factors. Therefore the discussion focused on actions to increase the number of women in VC with the goal of bringing more role models, and harnessing the power of professional networks.

Investor panel was followed by a conversation led by Alison Wyatt (Co-Founder and CEO of Female Founder Collective – network built by Ali and Rebecca Minkoff). Three members of FFC joined the discussion on Women collaboration networks: True value beyond the buzz. The guests (Gina Hadley – The Second Shift, Jennifer Justice – The Justice Department, Tina Wells – Buzz Marketing Group) shared their advice on how to make the most out of the professional networks, and how FFC has been supporting them in their entrepreneurial endeavors.  

We also received flowers from Repeat Roses – a zero-waste company disrupting single-use-straight-to-landfill floral business. Its signature service transforms event flowers into bouquets that brighten hospitals, nursing homes, and shelters—then composts the blooms to keep waste out of landfills and ensure a closed loop solution. To date, they have donated over 53,000 arrangements on behalf of their corporate and wedding clients, and have diverted over 198,000 pounds of waste from winding up in North America’s landfills – and their customers receive data on environmental impact as well. 

The event concluded with Joanna and other board members of Stanford Women’s Network inviting the attendees to continue being involved throughout the next events and small group dinners planned as part of the Investing x Women initiative. 

How SAP.iO Helps Underrepresented Entrepreneurs Succeed

SAP.iO, SAP’s strategic business unit that works closely with early-stage startups, made clear its commitment to inclusive entrepreneurship when it launched the SAP.iO No Boundaries initiative just over a year ago. No Boundaries offers venture capital and access to innovation for underrepresented entrepreneurs, with a goal of funding or accelerating at least 200 startups over a span of 5 years through SAP.iO Fund and Foundries. The SAP.iO Fund has committed to investing up to 40% of investible capital to inclusive entrepreneurship. 

The ideal outcome of No Boundaries is that the startups will thrive in the SAP ecosystem, deliver great value to SAP customers, and as a trickling effect, other investors will see the value in these entrepreneurs and will want to support them as well. Another goal of No Boundaries is to inspire VCs and other ecosystem players to follow SAP’s lead and enable a culture of diversity.  

Studies have shown that companies that have more diverse management teams have 19% higher revenue due to innovation (Boston Consulting Group). In 2018, companies founded solely by women received only 2.3% of the total capital invested in venture-backed startups in the US (Pitchbook). Racially and ethnically diverse companies perform 50% better than companies with only diversity of gender (McKinsey). 

There is clearly work to be done. 

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Unleashing the power of Europe’s women entrepreneurs: Six ideas to drive big change

Focusing on gender diversity and developing entrepreneurial talent are among the top 10 priority areas identified in Innovate Europe: Competing for Global Innovation Leadership, a report published by Digital Europe, an initiative of the World Economic Forum to promote a pan-European approach to innovation.

At a workshop in Berlin in September 2019, over 30 European founders, investors and corporate leaders (both men and women) came together to explore the underlying underrepresentation of women as entrepreneurs and investors in Europe. The workshop was hosted jointly by the World Economic Forum and SAP. The workshop began with a panel representing the founder, investor, corporate and government perspectives, followed by a design-thinking activity in which participants were split into five idea teams, each challenged to develop one new solution leveraging their existing resources and expertise. After the workshop, the five teams continued collaboration via an online platform to further elaborate their ideas and document the first steps needed for implementation.

This paper builds on the workshop results and summarizes the big ideas that will be further explored for implementation.

Read the full report here

SAP partenaire de l’association Les Déterminés pour soutenir l’entrepreneuriat dans les quartiers populaires et milieux ruraux

SAP France annonce que son accélérateur SAP.iO Foundry Paris accompagne la 12ème promotion de l’association Les Déterminés dont la mission consiste à développer l’entrepreneuriat dans les quartiers populaires et les milieux ruraux. Dans le cadre de ce partenariat, SAP.iO Foundry Paris s’engage à mettre à disposition ses locaux et l’expertise de ses collaborateurs pour accompagner les 20 entrepreneurs de sa nouvelle promotion, sélectionnés sur plus de 470 candidats.

Par cette collaboration, SAP entend contribuer au développement de la diversité dans l’entrepreneuriat et donner la possibilité à ses équipes de participer et s’engager dans une action avec un impact sociétal en ligne avec ses valeurs et l’initiative NoBoundaries de SAP.iO

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Die Beschleunigerin

Alexa Gorman sucht für SAP die besten Software-Start-ups – und achtet dabei besonders auf diverse Teams.

Alexa Gorman weiß, was ein gutes Start-up ausmacht, trotzdem wollte sie selbst nie gründen. Das liegt daran, dass sie seit 20 Jahren einen Job bei SAP hat, der ihr “super viel Spaß macht”. Und davor war die Start-up-Welt noch eine andere. “Damals gab es keine Gründerkultur, keine Acceleratoren, kein Ökosystem”, sagt die 46-Jährige. Heute gibt es sie, die Inkubatoren und Acceleratoren – zu Deutsch: Beschleuniger, die Jungunternehmern helfen, zu starten und zu wachsen. Einer davon ist SAP.iO. Gorman ist Leiterin der Foundries, der lokalen Ableger, in Europa und Israel. 141 Start-ups haben die weltweit acht Foundries seit der Gründung 2017 gefördert. Die durchlaufen ein dreimonatiges Programm und dürfen am Ende ihre Software über eine SAP-Plattform anbieten. So bekommen die Start-ups Zugang zu SAP-Kunden und das Software-Unternehmen ein breiteres Angebot und eine Provision.

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SAP Showed up in Style at Austin Startup Week 2019

SAP stepped up its presence in Austin, Texas for Austin Startup Week (#ASW19), the largest innovation event in the city after SXSW.

As title sponsor of the event, SAP reinforced its commitment to expand its innovation footprint in Austin. Together, with its customers and partners, SAP presented its brand promise to thousands of local startups, entrepreneurs, and community members.

Vanessa Liu, VP of SAP.iO Foundries North America, gave a spirited keynote speech on how the entrepreneur and tech communities can continue promoting women.

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Mehr Startups von Frauen!

SAP.iO ist SAP‘s strategische Geschäftseinheit, die mit dem SAP.iO Fund und den SAP.iO Foundries innovative Start-ups im B2B Techsektor durch Investitionen und Accelerationsprogramme unterstützt. Mit SAP.iO No Boundaries haben wir uns entschieden, bis zu 40 Prozent des investierbaren Kapitals aus dem SAP.iO Fund für die Förderung von inklusivem Unternehmertum einzusetzen. Durch den Ausbau und verstärkte Aktivitäten bei unserem Programm SAP.iO Foundries wollen wir in den nächsten fünf Jahren mindestens 200 Start-ups weltweit unterstützen. Der SAP. iO Fund und die SAP.iO Foundry Programme zur Förderung von inklusivem Unternehmertum spiegeln die Vision der SAP wieder, die Abläufe der weltweiten Wirtschaft und das Leben von Menschen zu verbessern.

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Women in Tech Summit at Austin Startup Week

Vanessa Liu, SAP.iO Foundries North America, gave the keynote address to kick off the Women in Tech Summit at Capital Factory for Austin Startup Week, one of the largest technology, innovation, and business events in Austin where SAP served as the title sponsor. The Women in Tech summit was a day full of programming to help inspire, engage and elevate female entrepreneurs and tech professionals.

Livestream coverage: https://youtu.be/kI5BH4WqYEo?t=1277 (starting at 21:17 for Vanessa)

Link to official Austin Startup Week 2019 schedule for SAP’s Sessions