Three Workarounds For The Venture Capital Good Old Boys’ Club

We ask the founders of Clue, a fertility tracking app, how to get funding for a womens’ product–even when the audience of investors is mostly old dudes.

Three Workarounds For The Venture Capital Good Old Boys’ Club
[Image: Flickr user KellyB.]

Berlin-based Clue is a period and fertility tracking app, one among a spate of similar if slightly different positioned products including Glow, Kindara, and Ovuline. It is an emerging space and potentially big business–a Chinese competitor Dayima has 65 million downloads. Joanne Wilson, angel investor and wife of Fred Wilson has invested in Clue, suggesting womens’ health offers opportunities for any innovator in search of whitespace.


But there’s still a big problem: Going after this market can run your company into a stone wall of invisible gender barriers that determine whether and when you get funded. How do you get support for products that are labeled “for women” in a male-dominated investment world? And how do you do it in the way that gives you the greatest chances of success?

The VC Boys Club

“In general, the lack of females in the VC industry is leading toward a bias toward male-focused products,” says Hans Raffauf, Clue Cofounder.

Certainly it is a hot topic right now given the disproportionately fewer numbers of women in the VC industry–and lower numbers of female-founders being funded. Journalist Josh Constine recently nailed a notable Silicon Valley VC on stage about gender inequality in his own hiring. And according to a July study done by the National Association of Women Business Owners in conjunction with Wells Fargo, about 38% of U.S. businesses are owned by women. Yet just 2% of the money invested by venture capital firms goes to women-owned firms. (That report is not publicly available online, but one other interesting studies are.)

“I Can’t Feel The Product”

While fertility is an issue for men and women, it didn’t show up that way for Raffauf and Tin when they were first pitching VCs. And not just because of the period tracking part.

“There was one investor who was saying I can’t feel the product because he’s a guy. While he was saying that, he was beating his breast with his fist. It was very gentle and friendly. But still clear,” says Raffauf. “In building out Clue, we knew this was a problem so we took steps to build our business accordingly.”

Obviously, the biggest challenge any founder can face is to build a strong business with a product people want. Accounting for how gender perceptions can shape investors’ decisions unconsciously? That was a whole other issue. I asked Raffauf and Tin to give me a roadmap for the issues.


1. Start With Powerful (Female) Angels

Choosing angel investors appropriately is no small thing. After all, they help to mentor, advise and shape the future of your business. The question is: how do find great angels–and find the right mix?

Her advice–connect with people who are friends of friends. Especially individuals who come highly recommended by several different people you trust. “Often when we’d explain our product, people have someone in mind who they know it will resonate with. It was amazing how often we would have meetings and the person would say, “You must talk to X,” says Tin. “When X’s name would come up with three different people, we’d know it was worth reaching out.”

Aside from character, there a some specific skill sets other entrepreneurs should look for in figuring out which angels to include.

“Angels should be able to contribute something that is either specific about your business, e.g., in our case…Knowledge about how to scale an app, health apps or data analysis,” says Tin. “Or have general business value–an angel that is or was a CFO, Product Manager, et cetera. On top of that it’s massively valuable if they have great networks future investors or potential partners.”

Still, there’s no substitute for having a female investor.

“Given that we still have a long way to go before we reach gender parity in terms of female-led startups and product offerings, I think that it would be difficult for any angel, male or female, to ‘specialize’ in womens’ products even if they tried. At the end of the day it’s about recognizing an opportunity when it’s in front of you,” says Tin. “Maybe that opportunity is a little more obvious to female investors if it’s a product that they can relate to on a personal level,” says Tin.


Women as angels is not a new topic. Dave McClure addressed it in his argument that more women should become angels, a post worth reading for the comment thread alone. And 500 Startups’ controversial Women Investors Now challenge asks women to commit to investing in at least 3 startups, giving them each $5,000 each over the next year.

But finding excellent female angels is becoming easier for founders and more women are taking up that charge. The Women 2.0 series “this is what an angel investor looks like” spotlights powerful female angels. And angel and advisory groups like the 37 Angels and the Golden Seeds are built around women who support startups by mentoring, advising, and providing financial backing.

It is also getting easier for female founders to get angel investment. The Center for Venture Research won’t release new numbers until October, however according to stats from the first half of 2013, women-owned ventures accounted for 15.9% of the entrepreneurs seeking angel capital and 23.6% of these women entrepreneurs received angel investment. Those are still low numbers. But they show that a higher proportion of women are getting funded this way. In short: the angels are rising. This is working.

As Raffauf points out, the power of the network can be as important as willingness to to write a check. “Ultimately we asked our angels to be involved because of their skill sets and huge networks,” adds Raffauf. “But it is important that they are women.”

2. Ask Male VCs To Ask Their Wives And Girlfriends

When your investors can’t relate to your product for whatever reason, it gets tougher to successfully pitch them. “As a general rule, investors tend to invest in products that they can use themselves or see themselves using,” says Tin. “For us, it is important that leaders in the fund get the female perspective–no matter what level–and that we ask them to do that. We get a far more positive response when that happens,” says Raffauf.

“Sometimes that means asking their partners to use the product,” he adds. And in a comment that gives great pause about the current VC landscape, “sometimes it means pulling in their secretaries.”


“It’s the same way an investor who has children might be more receptive to a kid-focused product. So that approach that has proven successful when talking to male investors,” says Raffauf. Tin adds, “At the end of the day it’s about figuring out how your product and your company story resonates with the potential investor, regardless of gender. But also if they have people in their surroundings who are users or can be users, that is another entry point.”

3. Search Out People With Empathy

When you look for financing, you’re investor-dating–and it usually ends up in marriage. You want to know that this person not only understands you but also loves you.

“Do some research on the VC. Check out their Twitter feed. Read their bio. See if they have a blog,” says Tin. “See if you can find interviews or presentations they have given. If they talk about their family, their passion, or causes they believe in (even in their professional context), that is often an indication that they look at investments with both an analytical and empathetic eye.”

She also advocates that when you meet investors, it is important to find out whether they are interested in solving the problem on a deeper level or whether they only talk about money and exits. “Ask them how they solve company troubles,” she says. “Some investors will tell you straight that they replace founders if needed. Others say we never replace founders. Ask them directly.”

Raffauf and Tin also employ a tag-team strategy during pitch meetings. “It goes back to strategizing which founder is the best fit for that particular meeting. Some investors think the way we’re planning to incorporate men into our audience and future roadmap is interesting, and then I might do the pitch,” says Raffauf, “Some like the visionary founder story. Then Ida takes over.”

To address the tricky part that comes from women’s product, they employ a different strategy: framing the conversation differently depending on who they’re talking to. “We talk with the less empathetic ones less about the problem [period/fertility tracking] and more about the business opportunity.”


While gender should ultimately be stripped out of the conversation altogether, it is still an issue when it affect which products, projects, and founders get funding. The question is: how do we solve the problem?

“I think as we see more successful startups (that happen to focus on women’s products) become successful, there will become less of an inherent bias against them,” says Tin. “But there also needs to be more education on the investor side, so they can be aware of what subconscious resistance they might be carrying into a first pitch meeting because they think they can’t relate to an idea for gender-based reasons. And we should have gender equality among investors.”

Perhaps more helpful in Clue’s case, “once a sector is seen as ‘hot’ everyone will want to jump in on it,” or so Tin believes. She is right. Womens’ health is heating up, meaning more entrepreneurs will be dealing with these issues–both male and female. As Tin says, “It’s not even close to being a niche area.”