Why you should care
Because screening out the rotten eggs in the VC world helps everyone.
Layla Sabourian, founder of ed-tech startup Chef Koochooloo, wasn’t surprised when a sexism scandal hit Silicon Valley this past summer, with many of her female peers not only speaking out about bad behavior from investors but also naming them. Amid the swirl of revelations, though, she spotted an opportunity for change.
Sabourian had heard horror stories from other female founders, and while never sexually harassed, she’d been a victim of unconscious bias, time and again. On many occasions, she had been asked who was taking care of her kids while she was pitching. “Investors would cut me off in the middle of a pitch, and say, ‘I’d love you to meet my wife,’” she recalls. “But I’m not here for customers, I’m here to ask for money.”
Most VCs want to be more diverse and inclusive.
Layla Sabourian, startup founder
Now, she asked herself: Why not build a resource to warn women and minorities away from the bad eggs in the business? That’s how FairFunders was born, a website built by an army of female founders, for people to rate and review investors. It launched in August to overwhelming support, a backlash to shows like Shark Tank and Silicon Valley culture in general that suggest entrepreneurs need to bend over backward to impress investors. And FairFunders isn’t alone. The unwillingness to quietly accept sexism and discrimination, which exploded in the #metoo campaign that lit up social media this fall, has also spawned or boosted a wave of websites that aim to bring founders more details about which venture capitalists to turn to, and which to avoid. Know Your VC launched this past summer, and the Funded, which launched in the early 2000s, is gaining more traction than ever, with a 12 percent rise in user comments since 2012. All these platforms inform entrepreneurs if a venture capitalist is sexist, a time-waster or an all-around bad hombre. At FairFunders, Sabourian and her colleagues are also trying to help minority founders connect with investors and share their struggles.
“Most VCs want to be more diverse and inclusive,” says Sabourian.
Globerly founder Kiki Mwiti — both a minority entrepreneur and a woman — recalls how she faced a lot of pushback when she tried to raise money. “I’m African, I have an accent, I [don’t] come in the package they’re looking for,” she says. At the time, she didn’t have anyone she could talk to about this, thinking no one would connect with what she was going through. That’s why she got involved with FairFunders from day one. “Now for the first time, underrepresented groups have a space for that,” she says.
This take-no-prisoners approach is emerging at every level of the VC world, including the legislative sphere. In August, State Sen. Hannah-Beth Jackson from Santa Barbara, California, introduced a bill to stop sexual harassment in the VC sphere. “Every woman deserves a workplace free from harassment, especially women who are starting their businesses and may be even more vulnerable to inappropriate coercion,” she said in a statement. The bill will go to the Senate floor in January 2018.
That legislative effort began after a number of Silicon Valley sexism scandals went public, from 500 Startups founder Dave McClure telling women he didn’t know if he should “hit on [them] or hire [them]” to Justin Caldbeck, then of Lightspeed Venture Partners, being exposed as having a long history of harassing women.
The stories of sexual harassment in the Valley hit 22-year-old Anthony Zhang hard. The Los Angeles–based entrepreneur had received funding from some of these hot potatoes and was alarmed at his ignorance of their behavior. “I realized there’s no place entrepreneurs could safely share this,” he says. “The VCs are the gatekeepers and have the power, and people are afraid of saying the wrong thing.” To improve transparency, Zhang built an online ratings site, KnowYourVC.com. Since August, his site has amassed 18,000 active users and thousands of reviews. To ensure these are credible, and not just the handiwork of trolls, Zhang and his five-person team verify them. This involves asking founders for evidence and reading through screenshots and email conversations. “It’s time-consuming, but reputation is so crucial,” Zhang says. He also wants to highlight the VCs that are doubling down on diversity. So far, he has a 70/30 split of male to female users.
There are risks that come with some of these initiatives, cautions Laura Montoya, the East Bay director of Women Who Code and founder of Accel AI. “In their current state, which is very early in development, these sites are underwhelming and provide limited feedback,” says Montoya, who is also concerned about women and underrepresented founders getting a bad rap. “If their name gets attached to a supposed false report, even upstanding VCs will be less likely to trust [them].” But on the whole, she sees the growth of these sites as a positive. “There isn’t one thing that will stamp out discrimination, but I’m happy to see more work being [done] to bring light to unfair practices,” she adds.
But as rose-tinted as this talk is, can it really effect change, or is it just a Band-Aid rather than a long-term solution to a problem as entrenched as sexism is in the investment community? Globerly’s Mwiti insists that public consciousness is changing, referencing the concurrent sex scandals that are battering Hollywood and the media.
“A lot of people had whisper networks, but now organizations are taking action and concrete accountability is being demanded by founders,” she says, adding that the swift justice victims see happening gives them the courage to come forward. Now, that’s a world to invest in.