Let’s go Unisex

A hard look at gender diversity in the startup ecosystem

It was March 1, 2017 and I had just walked out of our latest IC meeting. Walking into our office I announced to my intern that the deal we had been working on passed the IC. He showed some surprise and then laughingly asked, “Is there a specific intention of us investing in female founders?” The company we had just decided to invest in was PopXO.

The reason for the question was obvious. The last 3 investments we have made all have a female founder on board: Flyrobe, Saleswhale, and PopXO. And the fourth one to be announced this month has a female founder as well. That’s 4 out of 4. The answer to my intern’s question is “no”, investing in female founders is not an intentional strategy. But I love the fact that it has happened.

I don’t have to recount the horror stories that have come in light in the last few months. While Uber is having fingers pointed at it in the valley, India is probably further ahead (behind) in gender gap with stories from The Viral Fever and ScoopWhoop coming into light. Unfortunately, but frankly, this is not news in India as only 18% of the formal workforce in India is women.

But it’s sad to see that the general culture issues that have plagued corporates in these markets have creeped into the startups as well. Before all of the press uproar started, I did not pay so much attention to these stories. I also thought sexual harassment in the workplace was a one-off case and would never creep into startups that I personally know. But lately I am hearing more and more women bring this up to my attention. A female friend recently explained to me that she faced serious gender issues in her last company and left the company within a week or two of joining it. She then joined another startup, a well-funded one this time, and faced similar problems (amongst other issues) resulting in her leaving this job as well. It just saddens me to see that access to such high quality talent is wasted away because of bad culture and no processes in place.

And this issue is not just about sexual harassment. This is about diversity in general. There are only around 17% startups with female founders in the US. In India, this number is around 9% according to YourStory. Another study for venture deals in 2016 indicates this number was closer to 3%! China on the other hand seems to be faring much better. According to Chinese ministry data (yes I can see you roll your eyes), 55% of Chinese startups have a female founder. According to TechInAsia this number is closer to 30%. But there is no denying that China is leading the way in terms of gender diversity in the startup ecosystem. Granted that the numbers for all the regions have grown significantly from a decade ago (US for example used to be at 7%), there is still a long way to go before we can find equal gender representation in the startup ecosystem.

Further, this issue extends to the Venture Capital industry as well. I don’t want to spend more space and time shouting out percentages, but almost in every region barring China, the female VC representation amongst GPs is in single digits if not completely non existent.

So how do we fix this?

The solution, I guess, is very simple to understand but very difficult to implement. First, we need to acknowledge that there is a problem. Most of the ecosystems fail at this step itself. I now truly acknowledge it. Second, find the root cause of the problem. Is it because entrepreneurship is not encouraged among women? Is it because there are not enough women engineers? Is it because VCs are predominantly male? Is it because VCs are biased? This would require some digging into data, asking people about their own experiences, and I hope that each of the tech media journals spend a bit of time doing this. And the reasons will be very different from region to region. Third, figure out what can be done to solve each of these core issues at a macro level. While in the short term this might mean creating a level field for female entrepreneurs, in the long term it might mean societal change and grassroots education campaigns. Fourth, the founders and VCs need to actively encourage gender diversity within their firms. They also need to create an open and transparent culture that encourages women participation and takes strong action against cases of sexual harassment and overall unequal payscales and behaviour by its management.

What is GREE Ventures doing about all of this?

It starts with our own team. I am glad that we have 2 female investors (Natsumi Negishi and Yuri Nakayama) out of total 6 investment folks in Japan. And then we have our very dear fund admin Yuri Yagi. I personally am very focused to hire some one female as the third member to join our South Asia investment team. This should bring us closer to that 30% number, which is (at least) a short term target. In the industry, some of my closest friends in the Venture Capital network are women. Shannon (C31 Ventures), Lucy (Monk’s Hill Ventures), and Juliet (Jubilee Capital), are all examples of great VCs that are GPs in the making. I hope to continue working with them to create a better ecosystem overall.

The ball then moves to our investment decisions. Luxola, one of our most successful investments in Southeast Asia, and probably one of the largest exits in the region, was founded and run by a female founder, so having an open mind has paid off for us already. As I mentioned above, 4 out of our last 4 investments have been in a company with a female founder. This is 4 out of total 5 investments from our second fund, bringing our investment track record into women at 80% for this fund. I hope that we are able to maintain this spectacular ratio. Let me walk through some of these founders in our latest portfolio:

1. Flyrobe: I probably have talked to around 10 other investors about Flyrobe since our investment. All of them agree that Shreya Mishra is probably one of the smartest founders that they have met in the recent years. It’s no accident that she has managed to create an entirely new category in eCommerce in India, and with immense support from her co-founders, this female CEO-led company really understands what needs to be built for the female audience base of fashion rentals. It is also no accident that Forbes included here in the 30 under 30 list this year.
2. Saleswhale: Venus Wong, founder and Head of Product/UX in Saleswhale is arguably one of the best UX designers in Singapore. Self-taught front-end coder and designer, she is the reason that customers love Saleswhale and give rave reviews of the way she manages customer support everyday.
3. PopXO: Of the women, by the women, for the women, that’s how I describe this company always. Priyanka Gill has built the stickiest digital brand yet for young female audience in India, and she has been able to do it because of her crazy understanding of the female consumer.
4. Undisclosed: Led by a female engineer, this company is building one of the most ground-breaking cloud technologies sitting out of India. I am impressed by the quality of engineering of the whole team here and credit goes to the founders (wife-husband duo) to have built such a great team.

Going forward, my focus will be to make sure that the companies without women in the top management are actively seeking ways to change that. They should also be focusing even more on gender equality within their ranks and creating a culture that they can be proud of. While so far we had been making unconscious decisions of investing into women, I do want to do this with an even more conscious effort to attract female entrepreneurs. If that means writing posts like this one, speaking about this issue in the panels and conferences, I am more than willing to do so. And I hope that the rest of the VC world can follow suit.