The Door Won’t Stay Open Forever

There’s never been more pressure on VCs to fund women than now. Whether the desire to have founder diversity in their portfolios is genuine or simply due to increased scrutiny, investors are funding more teams with women. What we need to realize is that investors are giving us a chance, and it’s not an indefinite one. If a woman doesn’t create the next Amazon or Google at some point semi-soon, investors may stop making a concerted effort to fund them.

That’s the danger that no one is talking about: it’s a change that may not be permanent.

Professional investors are, after all, in the business of making money. They have a fiduciary responsibility to their own investors to make decisions that are in the best interest of the fund’s performance. And more practically speaking, if VCs don’t get good returns on their investments, they’ll struggle to raise more money in the future.

In the past, VCs’ returns have come from funding mostly men. Obviously, they have the same financial expectations for the women they are now funding. The question is: how long will they give us to prove women are a good investment? Probably as long as a few great exits take. We’re talking maybe 10 more years—a bit longer if some of the investments are looking very promising.

If there aren’t any big hits, investors will feel justified in funding only men. Or perhaps they’ll become more superficial in their investments for women—giving them small amounts of funding to keep their diversity stats looking good, but holding back on large rounds and taking board seats.

And I couldn’t blame them. Funding more women is a really positive change. But we can't reasonably expect it to be a permanent one if, in getting more opportunities to build the next big startup, women don’t actually make it happen.

Sure, there have been some good outcomes for women’s startups. But professional investors don’t want small but safe returns. They want the outliers—both for the returns for their funds as well as the prestige of having chosen a big winner.

Katrina Lake, Julia Hartz, and Michelle Zatlyn are cofounders of companies that have recently gone public. We need more of those if we’re really going to effect change.

Luckily, the window for funding women is still open. I think if an investor were deciding between two startups that seemed similarly promising, but one had a woman founder and the other didn’t, many investors would choose the one with the woman. They get the same returns and they look better.

Which means instead of feeling like the cards are stacked against you as a woman founder, you should have an extra level of confidence that they want (or need) to fund you if you’re a good enough bet. Then, it’s up to you to make sure you prove them right.

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