Smarts. Fire. Audacity. Technical chops. Focus. Strong network. Innovative product ideas. That’s what venture capitalists look for when they are selecting which entrepreneurs to support and which businesses to fund.
Unfortunately, VCs tend to see these characteristics most often when the entrepreneurs themselves are “white, male, under 30, nerds, with no social life who dropped out of Harvard or Stanford).”
VCs look for shortcuts to sift through too many entrepreneurs with too many ideas. They want fast ways to identify and pounce on the next big things, the next Foursquare, Twitter or Boxee.
VCs look for trends. Much like entrepreneurs, who use pattern recognition to identify business opportunities, VCs need to spot trends in complex, seemingly unrelated areas and uncover links between them. Unfortunately, it seems that many VCs overuse the pattern of ‘young, white, male dropout nerds‘ and fail to see other important trends that would actually help them identify new opportunities that are presented by female entrepreneurs.
Female entrepreneurs, especially in the digital space, don’t fit the traditional pattern of what a “digital entrepreneur” looks like. Instead, female digital entrepreneurs have their own patterns.
Here’s a pattern that I just noticed last week:
- A female entrepreneur,
- Working in partnership with another female entrepreneur,
- Where they both have MBAs from Harvard, and
- Are developing a digitalized product/service in the fashion industry.
Four pairs of entrepreneurs who establish this pattern are:
- Laura Kofoid and Grace Tsao-Woo of Laudi Vidni
- Hayley Barna and Katia Beauchamp of BirchBox
- Alexis Maybank and Alexandra Wilkis Wilson of Gilt Groupe
- Jennifer Hyman and Jennifer Fleiss of Rent the Runway
Two Women + Two Harvard MBAs + Digital Fashion = Great Investment Opportunity
All four businesses are consumer oriented, web based, fashion retailing, giving busy women (and men) the chance to buy fashionable, stylish, of the minute items easily. Not coincidentally, all four pairs met during their MBA programs at Harvard Business School.
Although I’ve known about Laudi Vidni and Gilt Groupe for a while, I didn’t notice a pattern until I saw a story on BirchBox and that same day had a friend recommend Rent the Runway. It may be that you have to be a woman of a certain age with a soupcon of interest in fashion to be involved in the potential consumer space and thus notice these trends. If that’s true, then it’s another data point suggesting that we need more women in VC firms. VC firms need people who are likely note these trends because they are living the same lives as the potential customers.
Three data points is a trend… and four data points suggest an opportunity to me. I wonder, is anyone seeing what I’m seeing?
Patterns aren’t perfect proxies.
Even if VCs were to use this new pattern of Two Women + Two Harvard MBAs + Digital Fashion = Great Investment Opportunity, they’d still miss some compelling women entrepreneurs working solo on their start-ups without another (female or male) partner. VCs would miss entrepreneurs like Tereza Nemessanyi, founder and CEO of Honestly Now Inc. Nemessanyi has an MBA from Wharton, and her start-up touches on but is not focused on fashion. These VCs would also miss entrepreneurs like Michelle Madhok of SheFinds.com and MomFinds.com. Madhok got her masters’ from Northwestern, and comes from a print media background.
There are many audacious entrepreneurs with compelling business ideas who, as persons, don’t fit the pattern of being ‘young, white, male dropout nerds’. Truly sharp venture capitalists strive to be ahead of the pack, and they need to recognize trends sooner than anyone else.
So, while the “two-white-guys-in-a-garage stereotype remains the romantic ideal”, it’s time to open up what we’re looking for so that we can recognize new patterns.
Maybe the new ideal should be “Two Women + Two Harvard MBAs + Digital Fashion.”
You can start by looking for “Two well dressed women in Section B.”
See also:
Doerr and Moritz Stir VCs in One-On-One Showdown, WSJ (source of Doerr’s now-legendary white male nerd quote)
Lack of female entrepreneurs – a VC gender problem, by Vivek Wadhwa
How to Find a Tech Cofounder from 12MonthsToLaunch
Authentic From the Start-Up: 4 Tips from Cindy Gallop and IfWeRanTheWorld
Note: Pattern recognition is not the same as stereotyping. “Pattern recognition is the process through which specific persons perceive complex and seemingly unrelated events as constituting identifiable patterns… recognizing links between apparently unrelated trends, changes and events” to identify a business idea. (R. A. Baron, 2006. Opportunity Recognition as Pattern Recognition: How entrepreneurs connect the dots to identify new business opportunities, Academy of Management Perspectives, pp. 104-119.)
I am an organizational consultant, change advocate, and organizational identity/reputation scholar with a PhD in leadership & organizations. I research, write about, and consult with organizations on the relationships between organizational identity, actions, and purpose. I teach Technology Management, part-time, at Stevens Institute of Technology.
My current research focuses on how social technologies in the workplace can drive organizational change, generate meaning, and catalyze purpose. See the 
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