All Articles Tagged "venture capital"
Welcome back to “Behind the Click,” the column in which we profile Black women in STEM professions. Want to pitch this section? Email firstname.lastname@example.org.
Favorite read: My favorite book is The Art of War by Sun Tzu. I love the simple, powerful lessons on strategy, they apply to work, dating, everything!
Recent read: Zero to One by Peter Thiel. Interesting business advice for startup founders.
Most inspired by: Possibility. Hard work and smart work are vital but without a dream to strive towards, work feels empty. Believe in the green light, the future before you, and the path to get there will seem much easier to navigate.
One quote that inspires you: “I do not care if the guy is yellow or black, or if he has stripes like a f*ckin’ zebra. I’m the manager of this team, and I say he plays. What’s more, I say he can make us all rich. And if any of you cannot use the money, I will see that you are all traded.” – Leo Durocher on Jackie Robinson. It’s great to be reminded of times in history where barriers were broken and playing fields were leveled.
Ultimate goal for 2015: To make it to 2016!
Twitter handle: @SarahKunst
Similar to the technology industry, there’s an existing gender gap in venture capital. Whether you’re looking at it from the perspective of those cutting the checks or those seeking funding, the issue is similar on both sides. However, there are women working to change the game and level the playing field.
Enter Sarah Kunst, a partner at search firm Fortis Partners. The millennial investor is turning both the tech and investing industries on their head from within. We caught up with Kunst to discuss how she started her career in tech, tips for seeking angel and venture funding and what’s next.
MadameNoire: What’s a day in the life for you as an investor, philanthropist and startup advisor (to name a few of your roles)?
Sarah Kunst: Lots of emails, calls and meetings! Most jobs are either outward or inward facing, make sure that your personality matches the job requirements. Today I had a photo shoot, phone call, emails, meeting, call, meeting and then finally sat down to do real work. If you need a lot of focus, or are an introvert, don’t pick a job that has you interfacing with hundreds of people a day. Same if you are energized by others, don’t do work that has you alone with a computer all day.
MN: How did you get your start in technology and, ultimately, the investor space?
JM: I ended up in tech because I was looking for money. I was in college at Michigan State University and realized that campus rep jobs paid very well and I needed to pay my sorority dues, so I took roles with Ford Motors, TAG body spray and, ultimately, Apple computers. Apple is the job that showed me the possibilities in tech and introduced me to many of my early career mentors. Work hard and smart and opportunity has a way of sneaking up on you.
MN: You are a 28-year-old Black woman venture capitalist, which is a rarity among the predominantly white, Ivy League squad that dominates Silicon Valley and Silicon Alley. What are some of the challenges you’ve faced in dealing with your counterparts? How have you worked through those potential roadblocks?
SK: Everyone has roadblocks and challenges. The key is facing them, deciding if the path you’re on is the right one and then figuring out what your competitive advantage is. This applies to any career path or business. Tech is mainly white and male and that has significant proven downsides. The silver lining is that I am often memorable to the people I meet because I am sadly one of only a handful of Black women in my industry. I use that to my advantage when I can and also actively seek out others like me to pull in to the industry. Figure out the upside to your disadvantages and how to help others when you succeed.
MN: Women-owned businesses struggle to secure funding. In the tech industry, women founders represent less than seven percent of startups that get VC funding, according to data from MIT. What are three tips you’d provide to a female founder seeking angel or venture capital funding?
SK: There are no female-focused tips, but there are tips for everyone seeking to build a world-class company with outside funding.
- Get smart. Know everything about your market and customers and competitors and the history of success and failure in your space. If you’re doing an e-commerce company, read every book about Amazon and Walmart.
- Be unimpeachably good. User growth doesn’t lie. Revenue doesn’t lie. Customers don’t lie. Don’t build a business that isn’t strong enough to survive; build something where you can get paying customers, revenue growth and lots of users. Few investors will pass up a company that is inarguably successful.
- Let your ambition be bigger than your ego. Warren Buffett famously chalks up his biggest mistake to letting his ego talk him into a deal that made little financial sense. He lost money but learned something important: often, the little voice in our head telling us to protect our ego is at odds with what is right to achieve our dreams. Focus on your ambition and don’t let anything, including your own pride or vanity stop you.
MN: What’s the best business advice you’ve ever given or received?
SK: “Your excuses suck.” Often, we come up with a long list of reasons to not do things instead of just admitting that we don’t have the desire to do something. The Wright Brothers invented air travel; they literally defied gravity when it was the easiest thing in the world to just say it couldn’t be done. Kind of makes your reasons for not doing something look lame.
MN: What types of startups are VCs such as yourself funding these days?
SK: Ones with revenue. Don’t fall so in love with your ideas that you can’t abandon them if they aren’t profitable. Hype and excitement don’t last long and we’ve seen many big companies fail once they are forced to live and die by their revenue instead of their cool factor.
MN: What’s next for you?
SK: My birthday is in April and I’m looking forward to a much needed beach vacation in Cabo!
Brian Shields started IncubateNYC, an educational community and incubation program for entrepreneurs, with co-founder Marcus Mayo in January 2012. “We designed our incubation program specifically to help aspiring entrepreneurs get started the right way and to continue to make progress. We accomplish this through the power of community,” reads the group’s website. The organization currently has 60 alumni who have gone through the incubation program, and is planning to expand more in 2013.
Shields spoke to Madame Noire about diversity within the technology industry and among entrepreneurs, advice for starting a business, and his personal journey with IncubateNYC.
Madame Noire: Tell us more about IncubateNYC and your role there.
Brian Shields: IncubateNYC is an entrepreneurial education organization that provides people curriculum and content through experiences. We’re really big on learning by doing and everything we do is tailored adult education that helps people learn in the most effective way. To learn sales, we make them pitch, which is obvious. Or to teach market research fundamentals, we make participants go out and talk to people. We make people learn things by executing it and we provide content around it.
Marcus and I have known each other for 10 years and tried to start a bunch of businesses, but we weren’t super passionate about any of them. We’ve been angel investing for a long time and decided that, because we’ve seen so many great things through entrepreneurs, learned a ton from working with and advising them, and funding them and seeing great exits, we decided to create an academy that provided people the education they needed to be successful.
MN: What are the goals for Incubate?
BS: From a business standpoint, this year is really about rocking out with the companies that we have. We’ve had about 60 founders come through so far in our six months of existence. So it is about enriching the alumni program and continued incubation.
And for next year, our goal is to roll out a la carte classes for people in three areas: business, product development, and industry expertise. One of the most important things is you have to know the industry you’re in and people who are entrepreneurial really thirst for learning more from people. We bring in new people once a month to talk about different industries. We’re going to be doing music in January.
MN: You said there are 60 alumni so far. What are some of the success stories from IncubateNYC?
BS: One example is a company called The Women’s Age, which is a media business for women to have a conversation about their ages and aging gracefully. This is a woman who is about 33 but most of the people in her family have died really young. She’s created this platform to celebrate women aging gracefully, through a combination of written media and a ton of guest bloggers and video content, like talk shows and interviews.
When she first came to the program she had a business idea that she wasn’t totally connected to, but [the experiential learning] eventually got her to this. She’s been doing this for two months, taught herself HTML and CSS, and started her own website.
MN: What is the percentage of blacks and women in your program?
BS: Our program is about 70 percent minorities, meaning not white males. It’s not by design. We are open to everybody and aren’t minority focused, but it is partially because Marcus and I are minorities and people gravitate to people they know. There are great programs like NewME, which are specifically minority focused. But we have the belief that the best want to work with the best, so we hope to attract the best.
MN: What can be done overall to get more minorities into technology and digital fields? How can the industry attract African Americans?
BS: You have to make tech cool. “Cool” is a relative term and “cool” is different for people who have grown up with two parents or parents who were doctors or teachers or bankers. They understand the fundamentals of business or math and science, and where that can take your career. But for a lot of minorities, in particular African Americans, our culture isn’t defined totally by that, [particularly] if there is a separation in the family foundation.
It would be great to elevate role models who people can relate to. That’s a big part of it. If I were to rewind the clock, I don’t know if I would relate to Mark Zuckerberg. Think about the impact that Barack Obama’s election had on people’s vision of what’s possible in this country, race-agnostic, and I think that can be applied to a business industry that is meritocratic in and of itself.
MN: What about diversity within investors? Is that something that is changing or on the rise?
BS: It’s changing. It’s the chicken or the egg thing when you are trying to get people in. It’s the same thing with women. Do you need more women investors or do you need more women entrepreneurs? Can you have one without the other?
If you look at the way the VC market is going now; it’s going more heavily operational. Entrepreneurs want to work with a funder or investor who understands what they are dealing with and who can help them think through questions, not just somebody who is about money. Entrepreneurs want to work with somebody who understands them and you can cut that down any segment or line: women, minorities.
MN: What is your advice for people who are starting out with their own business and how to jump in?
BS: My general advice is, look, it’s going to be hard and you aren’t going to make the right decisions. There’s a lot of research that says 2/3 of business decisions, either in new business or corporate, is going to be wrong. So just go do it; you’re not going to be right. But being wrong is the fastest teacher and you’ll learn the right answer sooner. And just stick with it. The hardest thing we find is getting started and then sticking with it. We tried to start like eight businesses, but we couldn’t stick with it because we weren’t passionate about it. So find that thing that really matters.
Quote that inspires you: “Life’s battles don’t always go to the stronger or faster man; But sooner or later the man who wins is the one who thinks he can.” – Walter D. Wintle, “The Man Who Thinks He Can”
Favorite Website: LinkedIn’s News Section
Current Read: The Start-Up of You, by Reid Hoffman
Who Inspires You and Why: My Mom. Whenever I think about where I am today and the viewpoints I have on life, I have always appreciated my mom for that.
(NY Times) — An entrepreneur’s first pitch meeting with venture capitalists is many things — risky, nerve-wracking, potentially lucrative if the idea sells. But is it good television? Daymond John hopes so. He’s a co-star of ABC’s “Shark Tank,” a reality show that is giving venture capital the “American Idol” treatment. In each episode, a handful of entrepreneurs pitch their business ideas — which range from magnetic collar stays to single-serving wine containers — to a panel of angel investors, or “sharks,” who decide whether or not to back the start-ups with their own cash in exchange for stakes in the businesses. The series, produced by Mark Burnett, is based on “Dragons’ Den,” a British series that was first broadcast in 2005.
(Wall Street Journal) — For acquisitions of private companies backed by venture capital, it’s becoming increasingly complicated to collect cash after the deal has been signed. In contrast to a decade ago, when many such deals went through with little trouble, today’s venture-backed acquisitions are fraught with landmines that can result in delayed payments and reduced purchase prices long after the deal has been struck, say venture capitalists, entrepreneurs and deal attorneys.
Such complications were evident in the $125.2 million acquisition of privately held surveillance-technology firm Era Systems Corp. by SRA International Inc., a tech supplier to the federal government. While the deal was struck in mid-2008, Era’s shareholders took a haircut on their purchase price and didn’t collect their reduced amount until last year, partly because of a disagreement during the escrow period.
(Entrepreneur) — You may want to explore the viability of partnering with an angel investor or an investment group such as a venture-capital firm. These types of investors can offer industry expertise and a strong network of contacts which could help your business grow and provide the opportunity to form strategic partnerships with larger companies. Keep in mind that it can be very difficult to obtain financing from these investors. But if you succeed, these relationships can be very helpful.
(VentureBeat) — In his best-selling book “Blink,” Malcolm Gladwell made famous the natural human reaction of quickly judging other people. This behavior is especially true of VCs and angel investors. The first few minutes of an interaction are crucial. The way an entrepreneur starts an investor pitch meeting can actually determine their success in that meeting. Those first 10-15 minutes, where the entrepreneur presents himself or herself – before they even present the idea – establish not only credibility, but the right to continue to pitch to an engaged audience. Yet, it is amazing to me how few entrepreneurs start investor meetings crisply and confidently. The formula for the start of the meeting is almost always the same – you are trying to answer the simple question on the mind of the investors: Who are you and why are you here? But when asked to review their backgrounds, entrepreneurs often fumble through incoherently, or ramble on tangents that aren’t relevant to the situation.
(Bloomberg) — Stung by a drought in technology initial public offerings, venture capital investing plunged in 2010, with the number of active firms dropping 47 percent in the first half from last year, according to Ernst & Young LLP. The number of U.S. venture firms making at least one investment a quarter sank to 167 through June from 313 in all of 2009, the accounting firm said this month in a report: “The Limited Partner Venture Capital Sentiment Survey.”
(Black Web 2.0) –Black Web 2.0 has discussed at length some of the unique challenges that African-American tech entrepreneurs face in an increasingly overwhelmed marketplace. One of the most frequently mentioned hurdles is a (suspicious) lack of funding from traditional sources such as angel and other investors. Commenters on our site (and other sites) often discuss how to go about receiving startup capital in an industry where the odds aren’t stacked in our favor. Some say get a loan. Others say talk to friends and family then try to make it work from there.
(Entrepreneur) — If your face was on the ten o’clock news, how many people would look up and say, “I know that person!”? The list is probably longer than you’d think–and includes more prospective investors than you’d imagine. They need not be millionaires, and they need not be loyal relatives.
If you’re like many small-business owners, you first reaction to the topic [of raising money from friends and family] may be, “But I don’t know enough people with money, much less people I’d feel comfortable asking for money.”
(Entrepreneur) — The venture capital community has an image problem. That’s right. Most people think venture capital is just for high-tech startups, but it turns out that way of thinking is so very last century.
The real deal is that only a small percentage of private equity (institutional fund investments in mostly privately held businesses) goes to “seed stage” startup entrepreneurs.
Busting VC myths
According to Thomson Reuters, the amount of funds that go to startups is consistently below 10 percent. “Early stage” companies, or businesses that require funds to fully commercialize their products or services, receive about 18 to 25 percent of invested capital.