Women Make Strides at Start-Ups

Making Strides at Start-Ups

Mentoring Groups, Increased Openness Create a New Generation of Female Leaders

From the Wall Street Journal | July 5, 2011 | By EMILY GLAZER

When Marissa Mayer was growing up in the 1980s, she knew only one female computer scientist. Now Ms. Mayer is a vice president at Google Inc.—and a role model for many women entrepreneurs. She also is helping create a new generation of female founders by investing her own money in women-led companies such as discount home-decor site One Kings Lane and online invitation company Minted LLC.

Bloomberg News

 

'Encouragement can't be underestimated,' says Google's Marissa Mayer, seen in January in Davos, Switzerland.

 

"Encouragement can't be underestimated," 36-year-old Ms. Mayer said. "Now we have Google, Facebook, Twitter and others touching the lives of girls in middle school, and you have people saying, 'Well, gosh, how do you build that?'"

 

A growing number of U.S. female executives, mentoring groups and women investors are helping to crack the glass ceiling in start-ups. The percentage of women among start-up capital seekers grew to about 20% last year, up from 12.6% in 2000, according to the University of New Hampshire's Center for Venture Research. Of those women, the number who received funding grew to 13% in 2010, up from 9.5% in 2008.

 

"It's not that women before were not networking, but now it is a much clearer path," said Theresia Gouw Ranzetta, a partner at Accel Partners, a Silicon Valley venture-capital firm that was an early investor in Facebook and has financed women-led companies such as online handicraft marketplace Etsy, beauty-products company BirchBox Inc. and personal-finance website LearnVest.com.

 

The growth of fields such as fashion and e-commerce—where women have held top roles—have opened more doors. "A male [venture capitalist] will think: she's a woman, she understands the buyer better than I do," said Dave McClure, founder of seed venture fund 500 Startups. Of the 140 companies Mr. McClure has invested in, he estimates that 25% were founded or co-founded by women, and 12% are run by women.

 

Despite this progress, women are far from being on equal footing with men, a notable disparity in an industry that prides itself as a meritocracy. Women represent just over 15% of angel investors, and only 5% to 7% of partners at high-tech venture capital investor firms in the U.S., according to a recent study by Illuminate Ventures, an early-stage venture firm.

 

In an attempt to close the gap, a number of mentoring and investing organizations have popped up or grown significantly over the past few years, such as Women 2.0, Golden Seeds and Pipeline Fund.

 

In August 2009, designer Alexa Andrzejewski, who focuses on product strategy, research and design, attended a Women 2.0 workshop aimed at helping women to launch a start-up. She initially wanted to create a cookbook, but came out of the eight-week mentoring program thinking it would be better to build an app for Apple Inc.'s iPhone that served as a field guide for food. At the workshop's finale pitch event, she landed $5,000.

 

The feedback and money she gained from other women founders gave her confidence to start her own company. In January 2010, Ms. Andrzejewski co-founded Foodspotting, an online service that lets people snap photos of their favorite food dishes and share their location with fellow foodies. That May, she quit her consulting job, and two months later the company received $750,000 in funding from a group of angel investors and well-known early stage investors such as Felicis Ventures, High Line Venture Partners and 500 Startups.

 

"I realized people like me can make these ideas real," said Ms. Andrzejewski, 27. "Go into a traditional [venture-capital firm]...they're looking at you like 'This is cute, a girl wants to start this food start-up.'"

 

Ms. Andrzejewski is one of about 35,000 women involved in Women 2.0, a group for female entrepreneurs founded in San Francisco in 2006.

 

Shaherose Charania, chief executive of Women 2.0, estimated 50% of those women are aspiring entrepreneurs, 30% are current entrepreneurs and 20% are would-be investors. The group runs programs such as networking events in several cities, and an annual start-up competition. In June 2010, it began an incubator program in San Francisco, and this May it opened one in New York.

 

Still, many women say that venture capitalists, a male-dominated group that can make or break a company, often don't understand the reason for some female-founded start-ups.

 

In June 2010, Julia Hu dropped out of the M.B.A. program at the Massachusetts Institute of Technology to start Lark, a company that makes a sleep sensor and silent alarm clock. Ms. Hu, now 26, got the idea after getting tired of being woken by her boyfriend's alarm clock that went off at 5 a.m.

 

In meetings with potential investors in the fall of that year, she cited research explaining that women are more sensitive to high-pitch frequency noises and cannot fall asleep after hearing them. But male financiers didn't get it—until they ran the idea by their wives. "A day later they would always email me frantically or call me and say: 'What can we do to get one? I talked to my wife, and she said...this has been a problem for the last 10 years,'" Ms. Hu said.

 

One of Ms. Hu's mentors at MIT, Jean Hammond, introduced Ms. Hu to women at Golden Seeds, a seven-year-old group dedicated to investing in young companies founded or led by women. Several months later, Ms. Hu raised $125,000 from a number of angel investors affiliated with the group. Lark was one of 12 investments Golden Seeds made in 2010, triple the number of investments it averaged the previous three years.

 

In June, Lark's silent alarm clock made its debut in Apple stores, retailing for $129.

 

—Amir Efrati contributed to this article.

Write to Emily Glazer at emily.glazer@wsj.com