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It’s an exciting time to invest in extraordinary female talent.
Founding Partner Anu Duggal knew this when she established New York City-based Female Founders Fund in 2014. The early-stage venture capital fund’s strategy then is the same as it is now. Female Founders Fund proves exceptional returns can be generated by investing in companies founded by women.
Over the last few years, Female Founders Fund has made it their mission to be surrounded at every turn by female disruptors. The firm’s portfolio is stacked with mega-watt businesses like Manicube, Lover.ly, and ArtStar. At the start of 2016, Sutian Dong joined Duggal as the fund’s second Partner. When Female Founders Fund celebrated its three-year anniversary in 2017, Duggal penned the blog post “Three Years In: $1B of Enterprise Value” reflecting on the journey to start a fund that invests in female founders.
What are they up to next? I recently chatted with Anu and Sutian about the early days in business for Female Founders Fund (abbreviated as FFF), how Sutian joined the team, and venture capital’s bright future for women-owned businesses and women who become investors.
Deborah Sweeney: Anu and Sutian, tell me more about your education and career backgrounds prior to establishing and joining Female Founders Fund.
Anu Duggal: I had co-founded an e-commerce company called Exclusively.In based in India backed by Tiger and Accel. We used the Gilt model to take Indian retail brands and offer them online outside of India for the first time. We raised $20M in funding and were acquired by Myntra (another Indian e-commerce company). Before this, I did my MBA at London Business School, and prior to the MBA had started India’s first wine bar called The Tasting Room.
Sutian Dong: Prior to joining FFF, I was an investor at a New York City-based venture fund, FirstMark Capital. FirstMark is one of the preeminent Series A firms in New York City, and I joined the fund at a time when the ecosystem was experiencing a renaissance after the financial crisis and recession of 2008. I noticed from my POV as an investor several important things: 1) the rising number of female founders coming to pitch me, 2) their unique points of view about the world and domain expertise in rapidly growing industries, and 3) their ambitions to for venture-outcome scale.
I saw an opportunity in the market to focus exclusively on female founders and build not just a venture firm, but a real brand and community for female founders to get to scale. Prior to FirstMark, I was in fashion marketing at Norisol Ferrari, and I went to New York University for finance.
Sweeney: Anu, what inspired you to start a venture capital firm for women?
Duggal: The inspiration for starting FFF came from both my own personal experience as a female founder, as well as the macro trends impacting women in tech. As a female founder, it was clear to me throughout the fundraising process that there was a massive disparity in female investors versus male investors, and the total amount of funding that went to companies started by women. It’s a well-known fact that less than 2% of VC funding goes towards women. Back then, it was even less with fewer success stories. This was a huge problem to me.
For many reasons, I felt the time was right to build a fund and a brand that funded women, but also created a larger ecosystem and brand. From a macro POV, it was clear that you had more and more women who had worked at and helped scale the Internet giants. Now, they wanted to use these skill sets to solve a different set of problems and address new opportunities. However, most of these women found it incredibly difficult to get that first round of funding (angel funding). If you can’t raise angel funding, the chances of building a venture-backed business are incredibly low. I felt that this was about to change. Consumers were looking for better online experiences and women were coming up with businesses that addressed these needs and more.
Sweeney: What were the early days at FFF like?
Duggal: The early days were not easy. Raising a first fund is challenging for most fund managers. As a sole GP female manager raising capital to fund only women founders, it was incredibly difficult. My initial strategy had been to focus on women in corporate America, but I quickly found that there was more risk aversion versus entrepreneurs and VC’s.
Being new to New York City (moved back in 2011), at the end of every investor meeting, my one ask was always to introduce me to one new potential investor. Seven hundred plus meetings later, I was lucky enough to work with a base of fantastic female founders, supportive male VC’s and investors from my prior company.
Sweeney: Aside from funding, how does FFF support women entrepreneurs?
Duggal and Dong: From day one, our vision for FFF was to offer more than just capital, but to create a community for female founders. In those days, most events in New York City skewed very male heavy. We felt there was a white space for events that catered to female founders and created an environment for knowledge sharing. Now, we host on average 40 events annually. We also co-host with other great New York City based funds. These range from CEO breakfasts with leaders like Marc Lore, Sheila Marcelo, Mindy Grossman, to quarterly Press Dinners for female founders to build relationships with journalists off-the-record. These events have led to new financings, story features and more.
Sweeney: Sutian, how did you first learn about FFF and join as a partner?
Dong: I was actually formally introduced to Female Founders Fund from one of our LPs, Ed Zimmerman. He is a lawyer by day but an amazing connector and supporter of the New York City tech ecosystem and diversity within its ranks. In 2015, I had started a women in VC initiative with Jessica Peltz, a partner at MDC Ventures, and had been very active in engaging the female VC community, especially in New York.
I was definitely very interested in doing more with the female founder community, so the introduction to Anu was very much the right place, right time. Anu asked me to sit on the Investment Committee of Fund I, where we “partner dated” and found that we complemented each other’s skill sets (and most importantly, loved working together!). At the start of 2016, I joined the fund as the second Partner.
Sweeney: What’s a typical day like working at FFF?
Dong: We say this all the time, but no day is typical! Within a given week, I talk to new companies raising capital for their businesses, spend time with our existing portfolio companies and workshop through problems or brainstorm on new initiatives in the pipeline. I also attend board meetings, interface with our investors (our limited partners to the funds), and make sure that our internal calendar of content, events, programming and other services is running smoothly for our portfolio founders and the broader female founder community. In all, a lot of meetings, calls and heads-down work that changes based on what is top priority that week or month.
Duggal: One of the best parts about being a VC is that your job is to “predict” the future and back businesses that will define new consumer experiences. As such, I would say a typical day consists of meeting new portfolio companies, internal meetings for new events and initiatives and checking in on portfolio founders via text or call. We work in SoHo (Manhattan) so walking to and from work is one of my favorite ways to decompress and catch up on podcasts.
Sweeney: Using your ability to “predict” the future, have you noticed any industries being disrupted by women?
Duggal: Yes! There are a few areas we’re excited to see already being disrupted this year.
- Alternate Communities. Consumers are looking for ways to connect with each other based on their beliefs, needs and interests as humans with the decline of religion amongst Gen Y and X.
- Women’s Health. Gender-specific healthcare solutions are long overdue in areas like reproductive health, stress, sleep, anxiety, weight, chronic disease, cannabis and more.
- Baby Boomers. Creating solutions for the 74M Americans who have disposable income, are Internet savvy, living longer and have been largely ignored.
- Financial Services. Creating better options for younger consumers for saving, financial planning and investing.
Sweeney: Why do you think it is still such a challenge for women entrepreneurs to get funding?
Duggal: I think the short answer is that there are many factors that, to date, mean that female entrepreneurs still have a harder time raising funding. Some of the bigger issues include lack of access to the networks of capital, and, especially for consumer-facing startups, lack of VCs or angel investors who personally understand the problem the company is trying to solve.
I do think that FFF is playing an important role as a female-run fund who can deeply understand the problem and solution set that companies are trying to solve. As more women become investors and start their own funds, we’ll see both the networks of female founders and funders deepen.
Sweeney: Are we heading in a brighter direction or is venture capital’s landscape still a work in progress?
Dong: It’s both. There is still an enormous amount of work to be done to level the playing field in venture capital so not just more women, but more people of different educational and socioeconomic backgrounds and life experiences, have the opportunity to raise money from investors for what has the potential to be a venture scale business. We’ve seen a ton of improvements over the last 24 months — both in terms of revealing bad actors and also in terms of celebrating the successes of IPOs like Stitch Fix and large funding rounds like Zola’s $125M Series D — that demonstrate the momentum for female founders and the incredible businesses they are building.
Duggal: It’s an incredibly exciting time to be a women working in venture capital, and in our case backing female founders. So much positive change has happened over the last twenty four months, both in terms of female founded exits like Stitch Fix, Event Brite, as well as major female partner hires across all of the top venture funds. I truly believe that as women have more visibility both as female founders, as well as female VC’s, we will level the playing field.
January 24, 2019 at 07:51AM
Forbes – Entrepreneurs