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The United Kingdom and the United States have more in common than just language. Both countries — and for that matter, the entire world — have far too few female venture capitalists, so female founders receive very little venture funding. In the United Kingdom, 13% of investment decision-makers are women, according to UK VC & Female Founders, A report by the British Business Bank, in collaboration with Diversity VC & BVCA. In the United States, 11% of VCs are women, according to All Raise. In the United Kingdom, 11% of venture capital goes to founding teams with women and 12% in the United States.
To increase innovation, grow economies, create jobs, improve competitiveness, we need everyone — not just half of the population that have a Y chromosome — starting and scaling companies that raise venture capital. The business case is compelling. Like the United States, research (First Round Capital and Boston Consulting Group’s analysis of MassChallenge accelerator program participants) is finding that founder teams with women outperform men-only teams. Despite being less likely to raise follow-on funding, founder teams with women are more likely to exit and have a higher internal rate of return (IRR) — 112% versus 48%. Recent research by Zenger Folkman found that women score higher than men in most leadership skills.
Jessi Baker founded Provenance in 2013, as a side project to her Ph.D. in computer science. If consumers knew how the foods they eat, the beverages they drink, the clothing and shoes they wear, and the other consumer products they use were made, they would choose those made ethically and with a less negative impact on the environment, she thought. Blockchain technology enables this. Provenance is a digital platform that collects content and data from disparate sources for its clients and makes the sourcing of raw materials and manufacturing of them readily available to consumers online.
When Baker started Provenance, few investors believed that for-profit companies could make money and have a social purpose. Impact investing was in its infancy. It’s still an emerging field, but more and more investors are recognizing the potential of social enterprises to do good and well at the same time.
Initial funding was grant dollars provided by the British government and foundations. Raising the first equity round of seed money was messy and chaotic, said Baker. She didn’t have a network. Female founders are 13 times more likely to reach the investment committee of a VC if they have a warm introduction, according to UK VC & Female Founders. “I was lucky to meet a few entrepreneurs and angels who helped guide my process,” said Baker. It took seven or eight months. “They provided guidance on which lawyer to pick and which investors are worth chatting with. There’s a fantastic group in the UK called the Angel Academy.” Both women entrepreneurs and angels are a part of the group.
In August 2017, Provenance raised an initial seed round of $800,000 (£650,000) from Humanity United (a foundation that is part of the Omidyar Group), Humanity Merian Ventures, Digital Currency Group (DCG), Plug and Play Tech Center (an accelerator), as well as select UK angel investors. In July 2018, it secured additional seed funding of $1.3 million (£1 million) from musician Peter Gabriel, as well as its existing group of investors, led by Working Capital Fund, including Digital Currency Group, Merian Ventures, and Plug and Play to continue product expansion.
The company is gaining traction. It started with a few small United Kingdom-based food and beverage companies as clients. Now, 50% of its business is from companies based outside the United Kingdom, including some in United States. It will need an additional cash infusion by March 2020. Baker will begin fundraising in the fourth quarter of this year. She has learned that in order to raise money quickly and efficiently; you need to build relationships long before you need them. To prime the fundraising pump, she is having lots of coffees with potential funder now.
When the company started, not much interest was shown in how companies produced their products. Baker had to do a lot of education. She built thought-leadership by speaking at conferences and publishing white papers based on her pilot programs. However, it was the media that created momentum in the movement around supply chain transparency. “We had several scandals in the press,” said Baker. “That focused consumers attention on the need for our service.”
Provenance was one of the first companies to use blockchain technology to verify the integrity of the supply chain and enable companies to make that information available to the public online in an easy-to-understand format. “Luckily we’ve managed to always stay one step ahead of the competition in the application of blockchain tech to supply chain transparency,” said Baker. The reality is as the adage says, “Luck is what happens when preparation meets opportunity.”
How will you use technology to make the world more sustainable?
July 3, 2019 at 07:05AM
Forbes – Entrepreneurs