On the first day of the D10 conference  last week, the (mostly male) attendees dipped into their swag bags and pulled out lacy, yellow thongs . The panty placement was a bold move to bring attention to True & Co. , a lingerie e-tailer launching at the conference. But founders Michelle Lam and Aarthi Ramamurthy were placing even ballsier bets on their bra business.
Replacing tape measures, clueless salespeople, and humiliating fitting room ventures with algorithm-based e-commerce, True & Co. aims to bust the spandex stranglehold Victoria’s Secret has on approximately half of the estimated $12 billion lingerie industry. Lam says given how reluctant most women are to replace their bras, she estimates the right experience could boost the entire channel.
The size of the market (and True & Co.‘s potential for improving the customer experience) is just what attracted Aileen Lee, a partner at Kleiner Perkins Caufield & Byers, to invest in the company’s $2 million first round of funding out of the seed fund she established, along with former LinkedIn executive Ellen Levy, SoftTech VC, First Round Capital, and Softbank Capital.
Another Glass Ceiling?
Though its story sounds cut and dried, True & Co.’s experience snagging early stage funding is not all that common for women-owned startups. A report from the Center for Venture Research at the University of New Hampshire  found that women-owned ventures account for 12% of entrepreneurs seeking angel capital. Of these, only one in four received angel investment during the first half of 2011. Research from the Diana Project indicates that less than 5% of new businesses funded by venture capital have women on the management team (much less as owners), according to Candida Brush at Babson College .
This doesn't mean, of course, that women aren't starting businesses. There are an estimated 8.3 million women-led businesses in the U.S. that generate nearly $1.3 trillion in revenue and employ nearly 7.7 million people, according to the State of Women-Owned Businesses Report, commissioned by American Express  OPEN.
Where the Girls Are
One part of the problem: The venture capitalists women have to win over are, by and large, male. The Center for Venture Research estimates that women represent just 12% of angel investors and less than 5% of a community made up of more than 3,000 investors on matchmaking service AngelList .
True & Co. investor Ellen Levy suspects there may be more women out there than we know. “There’s inclination about being under the radar,” says Levy, who admits she’s taken a behind the scenes role in many ventures and leaves the spotlight to her former LinkedIn colleague Reid Hoffman.
Joanne Wilson, the angel investor known to many as simply Gotham Gal  (and wife of Union Square Ventures  principal Fred Wilson), speculates that it’s an East Coast / West Coast thing. “Many women who had tremendous financial success in the East were in much more risk averse businesses,” she observes. Rather than take a leap of faith on a new business, these investors will wait for a Series B or subsequent round so they can investigate worth, revenue structure, and analytics.
Networking from Both Sides of the Check
Kylie Grenier, cofounder of WomenLaunch , a peer startup accelerator, agrees that women are more conservative investors, so are more likely to join an investing club or group. To do this, many of the women she’s talked to have joined forces with men, through work or friends of their spouses, because there is no visible network of women who are investing as groups. What women need, she says, is a network of women who want to join together to invest in other women.
Likewise, Levy gets on her “LinkedIn soapbox” to remind women entrepreneurs that the worst time to build relationships is when you need something. “Deeper networking is so fundamental,” she says. Understanding what an investor is interested in by researching who else they funded is a lot more beneficial than handing out a business card at a cocktail party. The relationship she had with Michelle Lam led her to invest in True & Co. “I loved it and I told others about it because I knew Michelle and knew she had credibility long before she was looking for funding.”
The Value Proposition: Humility + Knowing Your Worth
Aileen Lee says VCs tend to look for companies targeting large markets, but she also notes that a largely male group of investors respond to confident, articulate women entrepreneurs. Insights and expertise, along with the “scrappiness that comes when you figure stuff out on your own,” helps women be credible. “Don’t over reach and know your numbers,” she adds.
Lam and Ramamurthy were quick to point out that while they each had successful careers before the True & Co. launch (Lam at Bain Capital Ventures and Ramamurthy at Microsoft and Netflix), Lam says she was the first woman in the Ventures group at Bain. Ramamurthy says that constantly taking feedback makes it hard to be over-confident.
Though she grew up having to “sharpen her elbows” to get a seat at a male-dominated work table, Wilson says women investors need to have as much confidence about what they can offer besides money. “Yes you do know something if you had a career. That gray hair you got building a business and raising a family means you can make an impact,” she says.
What’s important for women to keep in mind, Wilson adds, is that they can often change the perspective of the company by getting involved because they think and analyze things differently. "I have been that champion," she says, "but I also bring to the table my maternal instincts."
[Image: Flickr user Drew Bandy ]