Diversity is the new black. At least that’s what we’re hearing from venture capital firms like Bonnie Cheung’s 500 Startups. But why do most female founders fail before they ever really begin? She lets us inside the typically masculine world of VC investment to find out.
“We’re losing a lot of great female entrepreneurs, simply because they shied away from the battle in the beginning. My job is to change that.”
She may not be the embodiment of macho bravado we’ve become accustomed to from investors on hit television shows like Shark Tank, but as Partner in venture capital firm 500 Startups, Bonnie Cheung is just as resolute.
Having grown up with parents wanting her only to pursue practical majors like engineering or accounting – “thank god I actually love engineering!” she says with a broad smile – she was exposed early-on to clear gender disparities in the so-called ‘hard’ sciences when she attended the prestigious Dartmouth College in the US.
“When I graduated from engineering in 1998, 19% of the cohort was female. Remarkably in 2016, that had risen to 54% - which is the first time the majority has shifted for a bachelor’s degree in engineering at a national research university in the US,” she says.
Still, translating these numbers into budding startup founders is another question.
Making it as a female founder
“Very often I see lots of women with technical backgrounds who have – subconsciously – built into their thinking that the idea of a female entrepreneur is almost impossible,” she says with frustration.
“I notice there’s a tendency for female founders to overthink. The negative is that many don’t take the first step. But the positive is that if they do take that step, they tend to have better thought-out business plans and are willing to ask for help – this is what the best entrepreneurs do; they recognise their limitations.”
When it comes to funding, she pinpoints two key elements she tells any founder, whether male or female. “First, understand who your potential investors are – do they understand what you’re trying to build? Second, do you understand your target market?”
“If I have an all-male startup pitching an app to me about monitoring ovulation cycles, for example, I would probably give them a tougher time in terms of making sure they truly understand the problem they’re trying to solve. It’s not that it’s about male vs. female – you simply need to work harder if you’re not part of your own target market.”
It’s logical, then, that most of the female founders she encounters are found in the sectors of education, e-commerce and healthcare; areas where women have typically been decision makers in a household.
Of course, sometimes just getting a foot in the door can be particularly problematic for female founders. “Investors in VC firms are always short on time. So we tend to favour introductions made through friends. As most investors are male, this can be a problem.”
Slowly, and most importantly, this is actually being recognised as a problem where previously it was simply the status-quo. Diversity on all fronts – be it gender, nationality or economic background – is increasingly attractive to investors.
“We have a fiduciary duty to return profit to our shareholders and we notice that this diversity is overlooked, which means it’s undervalued. So in our last batch of funding we had over 40% international founders and 30% of companies with at least one female founder.”
She expects this trend to continue, especially in Hong Kong. “We’re surprisingly above the global average for percentage of female entrepreneurs.” Still, nothing changes overnight.
“There will always be a struggle; the point is we’ve made progress and it’s something we’ll continue to push for.”