Women fight for funding in man’s world of tech start-ups

SAN FRANCISCO (AFP) – Lauren Foundos has excelled at just about everything she has put her mind to, from college sports and Wall Street trading to her Forte start-up that takes workouts online.

Being a woman in the overwhelmingly male world of venture capital was still a barrier – but, like many other female entrepreneurs, she only worked harder to succeed.

“In some cases, before I even spoke, they were asking me if I would step down as chief executive,” Foundos said of encounters with venture capitalists.

“This was a whole new level.”

Men would speak past her in meetings, discussing whether she could emotionally handle the job as if she wasn’t there, or wondering out loud who would take care of the books.

“When that happens, I tell them I am right here,” Foundos said. “I am the finance guy; I worked at big banks for more than 10 years. I’ve been the best at everything I have ever gone into.”

Black entrepreneur Fonta Gilliam worked overseas with financial institutions for the US State Department before creating social banking start-up Invest Sou Sou. PHOTO: AFP

Start-ups can only get by so long relying on friends, family or savings before eventually needing to find investors willing to put money into young companies in exchange for a stake in the business. Money invested in start-ups in their earliest days is called “seed” funding.

When it comes to getting backing for a startup it is about trust, and that seems to be lacking when it comes to women entrepreneurs, according to Foundos and others interviewed by AFP.

“I don’t think women need to be given things,” Foundos said of venture capital backing. “But I think they are not seeing the same amount of deals.”

Forte has grown quickly as the pandemic has gyms and fitness centres scrambling to provide online sessions for members. Foundos brought on a “right-hand man”, a male partner with a British accent, to provide a more traditional face to potential investors and increase the odds of getting funding.

She has taken to asking venture capitalists she meets if they have invested in women-led companies before, and the answer has always been “no”.

A paltry few per cent of venture capital money goes to female-led start-ups in the United States (US), according to Allyson Kapin, General Partner at the W Fund and founder of Women Who Tech (WWT).

Being sexually propositioned in return for funding, or even an introduction to venture capitalists, is common for women founders of startups, according to a recent WWT survey. Some 44 per cent of female founders surveyed told of harassment such as sexual slurs or unwanted physical contact while seeking funding.

And while last year set a record for venture capital funding, backing for women-led startups plunged despite data that such companies actually deliver better return-on-investment, according to Kapin.

“This isn’t about altruism or charity, this is about making a (load) of money,” Kapin said of backing women-led start-ups.

Prospects for funding get even more dismal for women of colour.

Black entrepreneur Fonta Gilliam worked overseas with financial institutions for the US State Department before creating social banking startup Invest Sou Sou.

Gilliam took the idea of village savings circles she had seen thrive in places such as Africa and built it into a free mobile app, adding artificial intelligence and partnering with financial institutions.

She created a Sou Sou prototype and started bringing in revenue to show it could make money, but still found it tougher to get funding than male peers.

“We always have to over-perform and overcompensate,” Gilliam said. “Where start-ups run by men would get believed, we’d have to prove it 10 times over.”

Gilliam got insultingly low valuations for her start-up, some so predatory that she
walked away.

“We are still lean and mean bootstrapping, but I think it is going to pay off in the end,” Gilliam said.