Gouw and Cassidy discuss gender bias in the VC industry with Bloomberg’s Chang on Bloomberg West. Cassidy:
At the end of the day, our own data shows that women face discrimination and bias. 67% of women tech founders said they encounter that. When you try to change any ecosystem — particularly ones in The Valley — you start with what’s possible. In fact, entrepreneurship thrives on the idea of possibility. Have we faced bias? Yes. Have men faced bias, who are older than the young 22-year-old founder? They have too. The point is if we want to make progress on this issue, we do actually need to showcase what is possible. The return to possibility is one of the ways, in fact, to enable change. It is important to amplify what’s possible in the women entrepreneurs who are succeeding in The Valley every day.
Culture is actually important in people’s ability to succeed or not succeed in a particular environment. What Sukindar wrote in Choose Possibility is important for two reasons. One, the fastest way to make a change is to start something new, and the second is it brings a positive narrative of people who are succeeding and killing and starting things in Silicon Valley.
In an interview with Silicon Valley Business Journal Gouw talks about deal flow:
About 40 percent of our companies have female founders. About 60 percent are all men. Exabeam, for instance, isn’t just an all-male founding team. It’s an all-male company. That’s very representative of the deal flow that we get. We definitely get great early first looks at female-led companies…about 20 percent of founding teams in technology have a female founder or co-founder on it. We are clearly seeing deal flow that’s about double that.
Will Aspect remain a female-only firm?
Definitely not. We’ve seen all the data that says that having diversity in a board room and in a founding team leads to increased success in financial outcomes. That is partially gender diversity, but it’s also other things. It also means having some tech and product people as well as sales and go-to-market expertise, and having a mix of investors and operators. Our goal with Aspect Ventures, just as with our portfolio, is to simply build the best early stage- and Series A-focused venture capital firm.
We think that there is a real opportunity to bridge from the seed stage to the larger later stage. So that’s been a focus. And we collaborate, trying to bring syndication to Series A deals. Bringing syndication to Series A investments has been very well received both by the seed and investor community which have provided us with many, many leads. We have also been well-received by larger venture firms, who appreciate partnering with someone who is more flexible on writing potentially a $2 million to $5 million check, and not necessarily needing to be a $10 million investor. That is actually welcome by a lot of larger firms.
Gouw and Fonstad raise $150 million for Aspect’s first fund. Gouw:
We’re targeting $2 million to $5 million checks, but wanted to be small enough to also be able to work with a bigger platform firm if it’s a $10 million round — and there are a lot more of those now than there used to be. We’ll also devote around 20% of the fund to seed deals with the intention of then leading the A round.
Gouw and Fonstad talk about diversity and their fund on CNBC with Boorstin. Fonstand:
Fundamentally we think diversity as a thesis is a very important part of any success in business. Whether that’s in a board room, in a venture firm or in a management team. But we think of diversity much more than just gender, though gender often becomes a litmus test for that. We certainly think that because we come at it from a different perspective that has given us a very wide scope from which to look at opportunities and to invite opportunities in. We’re collaborative in nature, we’re not trying to use sharp elbows and trying to knock out angel investment groups.
The two are optimistic that the recent media attention on Ellen Pao’s case will drive more change. Gouw:
The fastest way to make cultural change—because cultural change is very hard—is to start your own firm and build the culture from the ground up.
As part of a CNET special report exploring what people and companies are doing to make the tech industry more diverse, Fonstad says:
Both Theresia and I got to the point in our careers where we decided to focus on the early stage startup again so we can be more collaborative and company-building. We help them as they grow — getting the management team hired, and helping them get early customers and follow-on financing for the next stage of growth. It’s why we both became VCs…I’m noticing an industry shift in general. There’s been a significant inflow of newly wealthy women who are investing for themselves, becoming angels or forming microfunds with less than $4 million. It’s just more gratifying to work for themselves.
In an interview about the influence of the Ellen Pao case, Gouw talks about the impact of what she describes as the ‘unconscious bias’ in Silicon Valley.
We’ve all had those little inequities, those death by a thousand cuts. The person who won’t speak to you and addresses all of their questions and comments to your male colleagues in the room, or being asked to take notes or fetch coffee…The fastest way to make cultural change,” Gouw said, “Is when you see something that is not being met in the marketplace is to go out there and start your own firm.
Fonstad says the Pao suit has opened up an important dialogue in the tech world.
This is an opportunity for both men and women to talk about what it is like to have a diverse culture and create an environment for both men and women to be successful. When that works and when that doesn’t, then I think the unconscious bias is associated with that.
Gouw and Fonstad talk to Chang and Johnson on Bloomberg West about how Aspect Ventures looks to help start companies for the long-term and where they see growth. Gouw:
This is our entrepreneurial thing. It’s like when entrepreneurs see a vision and you are both called to something. And we think this is a great time to be focused on seed and early-stage investing around mobility as a theme, through the stack, from enterprise to consumer. And to work with someone you know for two decades.
There is an explosion of opportunity in the mobile space, our firm will be focussing exclusively in the mobile space, but we define it much more broadly than you’ve seen in the press in the past. We think that that mobile will infuse and touch every aspect of the software stack.
Gouw says that working with dozens of entrepreneurs, and meeting hundreds more every year, drives her passion:
The greatest thrill is to be there and see that company grow… and be there on the stock exchange… and see the company be a billion dollar company, when it was an idea that one or two people had, and a nice looking Powerpoint.
Wired profiles Gouw and Fonstad. Gow describes how, when working as Accel, she felt excluded from certain networking opportunities because she was a woman, and she would use a secret code on her calendar to conceal when she was going to a women’s networking event. That changed when Sheryl Sandberg’s book Lean In came out, and word spread that the Facebook COO had been conducting all-female salons at her house. Accel’s partners started asking Gouw to target specific women when she attended female networking events. She says her participation in women’s gatherings was now seen as an asset, and she stopped using secret codes on her calendar.
It was literally a 180.
Fonstad tells the story of an all-male engineering team she knew that was developing a hardware prototype. When they showed it to a newly hired female engineer they saw that her longer nails rendered it impossible to use, and the team ended up completely redoing the user interface. Gouw:
These companies are creating technologies that didn’t exist before — business models that didn’t exist before — and going after whole new markets. They’re dealing with complicated decisions and strategies that have no prior art. [With a diverse range of people around the table] you’re going to get a more 360-degree view on the business.
Gouw and Fonstad’s launch of Aspect Ventures is featured in Time. Gouw:
There’s tons of data showing that diversity on boards, both public and private, and in management teams, leads to better financial returns. It helps to have a board room where people are looking at the same complicated problems from different angles. There is a growing understanding among entrepreneurs and executives that there are real customer and product advantages to having a more diverse group of people on your management team and in your board room. If you’re a consumer-facing service, half of your audience is going to be male and half of your audience is going to be female…We are venture capitalists. We are in the business of making money for our investors and our entrepreneurs. Diversity makes a difference for business and the bottom line.
Gouw and Fonstad start Aspect Ventures, a venture capital fund focusing on the “emerging mobile marketplace.” Gouw and Fonstad have together created $10 billion in public market value, helped lead 15 M&A transactions and over 300 rounds in follow-on capital raised for their portfolio companies. The founders have pooled enough of their own money to back companies for the next couple of years. Aspect will make around a dozen investments per year, ranging from $500,000 to $2 million in seed and Series A funding. The firm will lead investments but also co-invest. Gouw:
We’ve launched Aspect to meet the need in the market for a new kind of firm that can provide investment and advice to entrepreneurs over the long arc of their companies’ growth. From the start, Aspect Ventures is built to partner and collaborate – with entrepreneurs and also other players in the startup world from angels to multi-stage venture capital firms.
Through our diverse perspectives and experience, we work to add value to our companies from Day One, as active advisors, board members, and partners throughout the roller-coaster ride of building important and successful companies.
Gouw and Fonstad talk about starting Aspect, being women in the boardroom, and investing in mobile start-ups. Fonstad:
We both really wanted to get back to our roots and invest in startups at the early stage — rolling up our sleeves. We’ve both been working with companies for two decades each, and really wanted to work with companies through the full arc of their growth, form seed all the way through to long -term sustainable businesses.
Jen and I have both lived through two major boom and bust cycles, from Internet 1.0 to the age of mobility and I think that we have not yet seen a slowdown in technology innovation or in the growth of the early-stage companies. So I actually think it’s a great time to be investing in startups.
In an interview with Career Girls, Gouw says she looks for three things when deciding to invest in a start-up company. The first is the person, the entrepreneur, and their passion and drive, as well as their “domain expertise” and what they know about the space.
We really want to back the person who wants to make that successful for the long haul.
The second is whether she believes there is a market and a need for the product. The third is about the product – how unique it is, and how technically difficult or technically different it is, and whether the customers love it.
Gouw and Stanford University finance professor Strebulaev talk about angel and venture capital funding at Silicon Valley Open Doors event in Mountain View. Gouw tells entrepreneurs to think of the term sheet as a prenuptial agreement where the relationship between the entrepreneur and VC is like a marriage that will last about eight to 10 years. To make it work, Gouw points out five strategies:
1: Focus on doing a set number of things right
2: Know the value of the venture capitalist – VCs can help the entrepreneur with follow-on rounds of funding and finding the right talent.
3: Strong boards are critical – in the end the best boards vote unanimously
4: Vesting can be costly – find an equal vesting ground for everyone
5: Funding goals – make sure they match your personal goals
Gouw talks with Bloomberg West‘s Chang, about the Accel Partner’s $7.9 million investment in Joyus, a startup that helps shoppers discover goods via short-form videos. She also discusses Accel’s investment strategy and the impact of social media on consumers.
We always look for entrepreneurs with huge vision and strong domain expertise, and going after a large market that’s growing in a discontinuous way, because of technology or distribution, such as social sharing.