Lauren Flanagan: Women Investing in Women

Lauren Flanagan is one of the first female technology entrepreneurs to make the leap to fulltime Angel and VC investing. She’s invested in 40+ female-founded and led companies from her two funds – BELLE Capital USA and Phenomenelle Angels. She shares her excitement about what’s possible for #WomenInTech and how to get funded.
Melinda Wittstock:         Welcome to Wings Lauren.
Lauren Flanagan:             Hey, thank you for inviting me. I'm delighted to be here. It's always a pleasure to spend time with you Melinda.
Melinda Wittstock:         Oh, it's awesome. Well we talk a lot, as you know, on this podcast about creating an ecosystem where women invest in each other, write checks for each other. Now you are so inspiring to me because you were one of the first. And when was that moment when you said okay, I'm going to move from being this serial entrepreneur to being an investor and specifically an investor in women?
Lauren Flanagan:             Well I had actually sold my last company that I'd started. And I started advising some companies, working with my non-profit that I'm on the board of, Springboard Enterprises. And I realized there was a tremendous lack of capital for women entrepreneurs, and you know I realized I could be part of the solution. And as I started investing individually, I said “Oh my gosh, it's a really big problem.” And so I ended up starting a couple of funds and we've been investing actively. My first fund was Phenomenal Angels Fund, based in Wisconsin. And we invested in 10 companies, eight of which had women CEO founders. And then my second fund Belle Capital is actually a family of funds, but the one I run Belle Capital USA, we've made nine investments so far. And eight of those have women CEOs and founders and the ninth has women in the founding team. And those are … of my 20 … I've made another 20, some that I had done privately or in other vehicles. So I've been very actively doing this since 2003, in 40 some companies. The majority of which are women led.
Melinda Wittstock:         That's wonderful. There weren't very many women. You know all these VC meetings that we would pitch our companies to and it was really rare that there was ever a woman in the room on the investment side. Let alone being on the investment committee or making the decision. There's a lot of change in this area now.
Lauren Flanagan:             Yeah, it's exciting. I think it's a global awakening. It's happening in many levels of society that women are stepping up and we're taking our power in many ways. Right? So the wealth of … is concentrated in women's hands in the United States and it's going to increasingly be so over the next 20 years. You know a huge amount of wealth will be concentrated in women's hands. And we've been a little slow to do this kind of early stage investing. But once we step up and do it, we have quite a bit of power in numbers and in capital. And then on a global basis we're seeing more activity happening in Asia and other areas where women are stepping up as well. So it's exciting, it's still not enough but it's moving in the right direction. And of course we're seeing in business, many more companies are being started by women; it's one of the fastest growing sectors. And we're seeing, you know more women run for office and women speaking out on all kinds of issues. So I do think it's a global awakening, a very exciting time for women. And I think that we're going to see real transformation in the next ten years. So I'm glad that I've been doing this now for, you know a number of years. I feel like a real pioneer. But it's helpful, it's not enough and we need more. But we're on the right track.
Melinda Wittstock:         And so all … of all the companies that you've invested in, you know as they start to have exits, are those female founders likely to give back or actually I prefer give forward by investing in other women?
Lauren Flanagan:             Yeah, well I'm pretty excited that that's actually happened in my fund. So a couple of the companies that I invested in in Phenomenelle Angels, those female founders in turn became limited partners Belle Capital, which was you know … exciting. That's really my vision of how it works. And then they've gone on and made individual angel investments as well. And many of the ones that we invest in, they're very excited. I mean we just had a meeting with our LPs in our nine companies last month and all our CEOs were so excited about the fund and what the other CEOs were doing. They all said you know “Their dream is if they are successful enough that they can do the same thing. Pay it forward and invest in these kinds of companies.” ‘Cause it's really powerful when your on a call and you have all these intelligent women investors asking questions, of all these brilliant and committed and passionate female entrepreneurs. And it's just like one amazing woman after the other are on the phone or in person, and it's mind blowing. It's really, really exciting. And there's a lot of power in that. And so I think it will create it's own forward momentum and further expand the eco system.
Melinda Wittstock:         I really hear what you're saying though about having a group of women all performing … you know all performing at their peak. And just having these conversations, hearing the voices because I think we've been succeeding in silence for a long time. And so as I do the podcast interviews for instance, I'm blown away by the stories, by the achievements by … you know how women, you know are succeeding sometimes despite, not because of. It is so inspiring. And the more you hear other women doing it, the more of a … I don't know. It lifts us all up.
Lauren Flanagan:             Absolutely. I mean that's what inspires me is work … I work with entrepreneurs in a lot of ways. First through my investment effort and then of course helping the companies after the investment as that's where the real work begins, right? Providing whatever help and guidance we can give them or connections we can make or sometimes just giving them confidence. I mean one of my favorite investments is … it's a company called Vital Vio and they're in upstate New York, and they make disinfecting lights. So imagine if your airplane light was killing all the germs in your seat or in a doctor's office or hospital. It's safe for humans but it kills pretty much every pathogen.
Well the founder is this young woman, she was a Kairos fellow. So she's … Right out of college she invented the tech and formed this company. And initially when she founded it, her original investors wanted to have … you know a gray haired CEO. So they brought this guy in who was CEO and he was for the beginning, but he really … you know, the company's needs outgrew him. And sometimes we just had to work with Colleen to inspire her to feel confident that she could be the CEO. And she did and she stepped up and she's amazing. She's just like doing deal after deal and leading. And you know she's still only in her … I don't know, 26 or seven or something like that. But she's just … She invented it, she can sell it, she can run the company. She can tell you every aspect about it, every aspect of the financials. I mean you work with people like that, they're doing really important work to change the world. And it's just so inspiring that you can help them with capital, with connections and with confidence, which are kinda your three Cs around the way you can inspire business.
Melinda Wittstock:         … So Lauren with all the women that come to you, to pitch you for investment, is there anything that you notice that's different about their business models? Or is it simply that they're doing the same thing that guys are doing; it's just that the notable thing is that they're women?
Lauren Flanagan:             Well I think it's really the latter. They're doing the same kinds of things that men running companies are. But a lot of times their financial projections are more conservative, which I'm not sure if that's … You know they're never really conservative enough from an investor perspective. You know you always look at it and go nobody has any idea how much money they're really going to make until you're into it. It's all guesswork. The men will have you know massive numbers and the women rarely start out with massive numbers. Occasionally, but it's not that common. And so I don't think it's a lack of thinking big, I think it's just an approach that's a little more cautious, which is … you know one of the reasons why women businesses tend to fail less as well. They're a little more cautious as they go forward. But we don't see much difference.
I do see some difference in the confidence of some of the women. You know it's much more likely … you know a male would say, “Oh, I did this and this.” When he was really on a team and team did it and he may or may not have had a big role. Whereas the woman who might have been the one who invented it and did it will say, “Oh, I was on a team that did this.” So those are some … you know differences in how people present themselves. And I do think that is one of the challenges, women have to learn to talk to investors in a way where they express confidence and … you know clearly state their ability and qualifications up front to win investor confidence. That's … something that needs to be learned because women are not socialized and taught that. You know we're taught to be modest and not brag. And so that's one of the things we do at Springboard Enterprises, is we do work with building … you know confidence. And teaching women how to talk about themselves in a way that they're comfortable with but which clearly outlines their skills and achievements. And why they're perfect person to execute on the plan. I mean that's the fundamental thing that needs to happen to make somebody successful at you know raising capital and doing the road shows.
Melinda Wittstock:         Yes. I mean I remember at Springboard boot camp, I'm an alumna from 2011. And we all got put through our paces doing our two-minute pitch and our two-minute personal pitch. And I remember being struck by one woman who'd had a massive exit. And she had forgotten to mention her exit and that's when it all came home to us. Like wow, we're not actually being very specific about our achievements. And when you walk into a room of male investors, they're going to take you at face value. So if your numbers are really conservative, they're going to assume that they've got a discount maybe by the same amounts. And maybe it's not as good an opportunity because we didn't do the big hockey stick perhaps or we don't as you say, we don't say I did this and … this was me. Right? And so have you seen an improvement with all the work with Springboard over the years, with the new cohorts that come through that women are getting better at being able to kinda sing our own praises?
Lauren Flanagan:             I think it's still a problem. I mean I was just at one recently last month and some great women and they were … They all had to be taught a few times how to talk about themselves. But once they did, they got it and they did a great job of it. You know these are some very skilled and experienced people who just … you know blow their own horn. So they have to learn to do that. So that's … You know I work with women in a lot of different ways. I mean I do my funds, obviously I invest and work with companies. I'm on the board with Springboard, which I'm very proud of that work. And I also have a strategic advisory company CO that works with some select companies. And we help them learn all these things and be prepared for raising capital and figuring out the strategies they need to be successful.
So I'm constantly working with … you know women entrepreneurs. I do see more of them reaching out to get help and understanding they need to. And we're getting a little more into the media, but that's still a problem. I mean we need much more stories about successful women entrepreneurs. And … you know life stories about them and things that people can understand and relate to, because I think that's probably … And that's why I like this podcast. I mean I think these are the things that are … really can create momentum and get more women signing up to do businesses. And more women feeling confident that they can do it when they see people like themselves and what they went through, and then they were able to create a successful business.
Melinda Wittstock:         Well you think of the Stitch Fix IPO for instance.
Lauren Flanagan:             Right and that's a great story, right? There are lots of them but they're just starting to get into the media.
Melinda Wittstock:         Yeah. So I mean still the stereotype is … you know? The kind of guy in the hoodie and the running shoes and his garage… And that tends-
Lauren Flanagan:             Which actually is funny because that's not the majority of the good startups. They're often more mature individuals, male and female. And who've been around done a few deals, right? And they're increasingly immigrant entrepreneurs who are actually some of the most interesting. You know statistically … there are higher percentages of immigrants who come to the country, who become entrepreneurs and many of them are very, very successful. So the image that we have, its kind of the Silicon Valley white male … you know business school. Likes to invest in somebody else that looks like him with better … or the hoodie … Mark Zuckerberg, they're looking for the next one. But the reality is, that's not the majority of … you know who the most talented entrepreneurs are out there.
Melinda Wittstock:         Interesting, there is some research and that suggests that the risk profile is different for men and women; that women tend to really excel in entrepreneurship a little bit later in life. Perhaps because once they've had their children, once they feel that they have a lot of experience. They go out and they create companies a little bit later in life, whereas like dudes in their 20's feel like they have kinda nothing to lose. So they're more likely to go for entrepreneurship then before they have the … kind of the weight of … You know wow I've got to provide for a family. Do you find that women are coming into it a little bit later in life?
Lauren Flanagan:             Well I think that's been true historically but we're seeing more and more young female entrepreneurs, which is exciting. I think there's a … you know it's … The world has changed so much in terms of thinking oh, the safe conservative job is the big company. That's not necessarily true anymore. And a lot of young women want flexibility in their life and the idea of having their own business seems appealing. So we're seeing more and more of that, so I do think that trend is changing. But statistically it's the more seasoned mature individuals who create successful businesses even if they're not … you know necessarily unicorns or home runs. But they can still be a very successful business. And make good returns for everybody and create … you know some modest wealth for employees and the owners and … you know all contribute to society. I mean we kind of chase after these unicorns and that's great. But entrepreneurism can be so contributional to a community in many, many ways from small businesses to main street type of businesses. In fact one of our latest investments at Belle is we just invested in … it's an impact investment in Alice, Hello Alice.
Melinda Wittstock:         Ah.
Lauren Flanagan:             And Hello Alice is a platform with artificial intelligence and machine learning that's kinda putting together all the resources for women entrepreneurs… Whether they have a bakery or a coffee shop or … you know whatever kind of business they have. They don't necessarily have to be … you know, scalable software companies; they address those too. But they address all of them and they're looking to do that on a global basis because it's a huge segment. And so they're providing the help that's going to help women of all ages and in all locations. They might be in … you know South Dakota. Some place where there's not necessarily as much help as you would find in San Francisco or New York. So they're trying to put together all the local resources and make them known. All the federal and national and then other people like them … that you know? What are the best practices of a bakery? Right? So you can talk to other bakers and create cohorts by segment. So I think it's really an interesting idea, but it's tapping into the fact that more and more women are creating companies and they're increasingly doing it at a younger age.
Melinda Wittstock:         It's so exciting and we know of course at very big predictor of success. Of the people you surround yourself with … I mean your networks, your resources. And so I think women for a long time and you know where a little bit isolated. But I think also … You know you look at how much the entrepreneurial eco system has changed over the years. And how many resources there are available to people now compared to … I don't know, just even a few years ago. It's really … it's very encouraging that those resources are available for women. I … And so with that, I want to go back to your early days, as an entrepreneur Lauren… Because you mentioned earlier in the interview …  you are a pioneer. You've really seen ahead of the game and you were one of the first female entrepreneurs in Silicon Valley. Talk to me about how you started that first company.
Lauren Flanagan:             Sure. So you know I was a geek always. I made my first computer out of a kit. I soldered it and put it together. It had 16K of ram and taught myself to do … you know a little bit of programming. I had take basic and FORTRAN in college but I taught myself Pascal and learned a little bit of coding. And I thought … you know it was really interesting, but it was sort of wizardry at that day. And I realized that people needed help if they were going to be able to access this new world. So I formed a little company that our first thing that we did was work with all the computer companies to have that openly first experience. Whether it was a book or you know there were discs or exercises or simulations. We did a variety of things. Animations, explaining it, how you could use it and how to do it. And that turned out to be a nice little business. And that sort of got me started on entrepreneurism and you know, after simulating enough of these things we realized, gee we could actually be writing our own software. And so I formed other companies that did that.
So yeah, I just saw a need, an unmet need, which is this stuff is hard. Most people aren't going to go to the trouble I went to of putting a computer together, and teaching themselves how to do it. And even the applications that first came out where you know it wasn't clear how to use them and why you would need them. And so you know trying to solve that problem was an interesting one. And you know, bootstrapped companies. So my first few were bootstrap. But I would be going to these conferences and I'm the only woman in the room right? There were a few others, there was Heidi Roizen at T/Maker and there were a handful of us. But we'd go to a conference and literally there's not wait in the ladies room, right? And the men are … you know, they're around the corner. So it was a time of … But I never felt that was a disadvantage, I felt it was an advantage because knew me and recognized me so I just sort of took advantage of it.
And because I wasn't raising capital, I hadn't had those problems, we just self-funded. But when I did go out and raise capital, I did recognize that there was a different standard for women raising money. You'd go in the room and you'd look at all these VCs and they're all looking you up and down like okay, she's a woman, am I going to have to replace her? And you know that's in their mind, they're not saying it but you can feel it. You just felt it viscerally. And then I would walk out and think, I don't even want their money. I mean forget it… I'm just going to find another way till I at least find investors that I feel are compatible. Who get me and get the company or I'm not going to do it. I'll just do what … I've done other companies without capital, I'll find a way. So that was … you know? But understanding how it feels to be that … to have worked … And even once I did have some VCs, one was just terrible. They did every … To me they were like … taught me everything that I would never do as an investor.
And so I had that really strong lesson that once I became an investor, I was going to behave in a different way. And had a classic conversation with one guy, where we really disagreed and I think he was completely wrong and actually even potentially unethical. But he basically said to me “You know it's the golden rule and what's the gold makes the rule.” And I was thinking you know what, that is so wrong. My golden rule is you treat other people the way you want to be treated. And that became a cornerstone for me in making my own investment decisions, of how I would treat entrepreneurs. And I really come since most of our fund; we're all former executives or entrepreneurs. We really have the back of our CEO and the management team because we've been there, we know what that's like. We invested in them because we believe in them. And so what we want to do is help them to succeed and not look at okay, first time there's a problem let's get rid of them. You know, so that was a different feeling and I know a lot of women investors have shared a similar experience.
Melinda Wittstock:         Well it's so interesting you shared that story because I think a lot of founders, when they go for capital there's something that suggests that success is getting the check. But it's not. Success is growing the business. And if you're already in some sort of adversarial situation with your investors or they don't really have your back, I mean what a terrible way … to try and grow a company. So like women when they're going for funding, really do need to qualify their investors. And what are some of the questions that they should be asking potential angel or VC investors to figure out whether … fit.
Lauren Flanagan:             Yeah, they need to … Oh, sorry. Go ahead.
Melinda Wittstock:         Oh, no. To just be able to figure out whether it is a good fit.
Lauren Flanagan:             Absolutely. They … They should be doing as much diligence on their investors as their investors are doing on them. And really understand that this is a long-term relationship, it's like a marriage right? So you're going to be working with this very closely and they're going to have a lot of say about your company and your exit. And you got to make sure that they share the vision, the amount of capital, they understand what the risks are. And you got to talk to some of the other companies that they've invested in. And you know sometimes you will see news reports when you search that they're in a company and then that company is no longer on their website … well probably failed. But it's always good to talk to somebody who's gone through failure with what it was like to work with that investor. So you really got to talk to the other people they invest with. And also the benefit of that is if you find a company of which there could be some synergy of your company and you've talked to that CEO. You have something you can bring back to the investor to say “Look, you know here's a way we can create some additional synergy with another company you're already in with. And I've talked with XYZ CEO. And you know we think we can work together.”
[tweet_box design=”default” float=”none”]Companies that are highly ethical; they're wildly successful. #WingsPodcast #WomenInBiz @LFlanagan[/tweet_box]
So that's a plus to bring as … to an investor that you are looking at what they're doing and you understand how you might fit into their portfolio. But it's also a way to find out what it's really like to work someone. Because the most important thing and I tell this to … you know entrepreneurs all the time that I advise, is you know once you take an investor's money, it's not your company anymore. You know you … You have a real obligation to these investors for information and … you know meeting their expectations. They have a lot of legal rights. And so you have to very clear, like do you really need it and is that what you want? And how much should you take and are these the kind of people that you really want to work with? Do they share your values? And it's the same as any relationship. I think successful relationships are built by shared values. And you know really believing in a lot of the same things are what make long … good marriages. Would make long friendships and they make for successful investment relationships.
Melinda Wittstock:         … I rarely see a company really succeed unless the founder and the founding teams are really in alignment in their actions, with their values.
Lauren Flanagan:             Yeah. I think that you see companies that are highly ethical; they're wildly successful. I mean I think Michael Dell is wonderful example. I've had the privilege to serve on advisory council for him for entrepreneurship and … You know he's got a lot of women in leadership, amazing women that are in the senior management team. He's hugely philanthropic. He also funds the Dell Women's Entrepreneurs Network, which has created a great forum for women led companies on a global basis. And provided all kinds of access to capital and help for these companies. I mean this is a man who has good values, lives his values. Has fantastic management that's been there for … you know, decades some of them. They're extremely loyal because it was very clear what that company was about and that it was a company of high integrity.
And so you see these companies that are like that and I think it really comes from the founder's core values, mission and ability to hire people like … To fill the need that they need, that have those like values and the like mission. And they're very passionate about it at Dell, they really are. They want to help and lift up the women around the world from emerging markets. They want to help those entrepreneurs have extra resources to be successful in business. Of course, they've helped all the male entrepreneurs too, I mean they want to be a successful company. But they've really made a huge commitment. And they also are quite charitable to their communities. I mean after Harvey, Michael Dell made a huge contribution. So I do think it goes hand in hand, the companies that have the good solid values. They are able to recruit and retain good teams and those companies go on to be successful. I think just as anything in life, it starts with doing the right thing, the right values and right mission. And treating other people with respect and that's how you build a great culture in great management teams. But it really starts with respect.
Melinda Wittstock:         We see just culturally the impact that Millenials and the generation below Millenials are having on the marketplace. Like companies that don't walk their talk with integrity or with authenticity, some degree of transparency. Companies that don't have good supply … clean supply chains or sustainable or diverse practices, often just are passed over by this group of consumers. And so the game of business is really being changed by the consumer in that sense, that they expect the company to show up in a more evolved way.
Lauren Flanagan:             Oh, I totally agree. I'm … You know there are times when I'm in despair about the problems in our world but then I'm so hopeful about these young people. I mean I've got … you know close relatives, nephews and nieces and they care so much about our planet. And they're going to make the choices that are going to be difference that hopefully will help turn it around, 'cause we're not doing enough right now. It's just horrifying. But you see the youngest generation will be voting soon and they really have a very different view. And you're right; they're not going to tolerate companies that aren't doing the right thing in all the ways that that might mean. And that's a good thing for all of us, so I'm very, very hopeful for … the youth solving the problems that we face today.
Melinda Wittstock:         Exactly and there are these massive moonshots that we can go for, when you think of sort of the latest … you know, climate change reports. Or just these big, huge … These global intractable issues that it seems governments can't solve, can't get around. Whereas entrepreneurs can. Isn't-
Lauren Flanagan:             Oh, absolutely. I just was at the Web Summit in Lisbon last … oh about a week or so ago. And they had Al Gore up there talking to … you know a packed arena. There were some 60,000 people there and a lot of them were in that arena. And he was like a rock star, right? And all these young entrepreneurs from around the world, they're so excited and motivated and looking their different ways they can contribute. It was a very uplifting moment; I was truly inspired. You know first of all he … Al gave this passionate wonderful speech, about how you know we have to do it. We can do it, we will do it, right? That was basically his three things. And you know he had people up there on their feet and just clapping and going crazy and you could just feel it. It was just one of those moments and … and most of them are pretty young people there. And entrepreneurs from everywhere in the world and it was a real exciting moment. ‘Cause I do feel that technology and the will of the young, we can the problems. We really can.
Melinda Wittstock:         Yeah, like one of my networks, Maverick. Putting our entrepreneurial brainpower together collectively to help non-profits, but also kind of social enterprise companies. Really do good for the world, whether it's protecting the Amazon rainforest or in a week or so, we all go down to Puerto Rico, where only 17% of the country has power. You see folks like Elon Musk providing solar panels … I mean really … it's an interesting time with these problems that present such opportunity. You know if you're thinking like an entrepreneur, you're seeing opportunity in those moments to go kind of solve those things. And there's tremendous opportunity for women.
Lauren Flanagan:             Oh, absolutely and Puerto Rico is a tragic example. I mean months after the hurricane and the majority of people are without power. And there's still shortages of food and water, it's just horrific. In fact President Bill Clinton's there today. And he's down talking with … I mean I just met with some people from disaster relief Friday. And they're down there as well looking at what can they do to provide solar powered back ups to hospitals. And one of my companies I'm invested in is working with some resellers there to try to do that. They have a solution that provides solar power in a box, that really is easy to implement without a lot installation … No installation and very little labor, it's set up in a few minutes.
But this is an opportunity to rethink their whole power system because it's a very bad grid there, which even if you fixed it, it's susceptible to the next hurricane. But if instead they were to recreate it micro-grids of solar power throughout the island to replace the traditional grid, they'd be able to have a more effective and resilient network. And so it's the opportunity to transform the entire energy system after the crisis. And that's why hopeful that even though we have all these problems, technology really can solve them if there's a will of entrepreneurs, and there's the will of governments and the young people to do it. You know and some of the resellers we're working are very young people and they're willing to put in those extra efforts to try to help their fellow citizens. But it's a time that actually can turn to tremendous positive change for Puerto Rico, but at the moment it's a really dire situation.
Melinda Wittstock:         It really is. I want to go back to something you said a little bit earlier though about building great teams and great cultures. So back in the day when you were building your company and you were bootstrapping. So it's not like you had a lot of capital to attract some of the top tier … you know engineers and talent … say in the Valley where they're expensive. And so for a start up that's in a situation of bootstrapping and really is only as good as the people that walk through the door. I mean they are the assets. How did you manage to do that so successfully? What kind of tips can you give women who are in a similar situation?
Lauren Flanagan:             Well it's cultural and values are key. So when we would interview, we couldn't compete. If they wanted to go to Apple or Adobe or whatever, we couldn't … you know even remotely touch the salary. And you'd have people right out of … you know UC Berkeley that … you know, thought they should be making top dollars and they'd never worked, right? It was crazy. So we started recruiting from some of the smaller colleges. We went to San Francisco State, which had a good department there. And as we began recruiting, we ended up getting a number of Asian engineers. We sponsored some of them with H1B visas and we paid a very strong referral fee for them getting other people they knew who would be great team members. So we had this fantastic team, very cohesive. And we were able to bring … That was in one of my first companies. And then later when we were adding our team, we really strived to have a diverse team. Culturally diverse, that that would be an asset. Because we believed that if you really liked the people you were working with and it was interesting to talk to them about a lot of topics, and that you could create a good fellowship, then we would be able to offset the salary.
First of all we were doing interesting work, very hard and challenging. So it was hard problem that's attractive to a certain kind of engineer. And second the culture was interesting and this was different from … You know in those days people were like oh, you had your t-shirt and your Aeron chair before you had a product. And we were not like that, we were a bootstrap so we were in an old boat factory with funky used furniture and you know nothing like those extras. But we … You know we would … we had fun potlucks and people from around the world. And we'd have a theme and we'd talk about culture and history. And we did a lot of art projects and we'd go out sailing and do athletic things together. We did a lot of group things and we just created an environment that was fun. I mean I still have people telling me … you know 20 years later that WebWare was the favorite place they ever worked. Because they loved the team so much, that it was so interesting and they were lifelong friendships made there. And that was done by really seeking out interesting people. So you know instead of just saying oh, they had to be the MBA from one of these big schools, it was more well like have they traveled? Do you know what other interest do they have?
You know we were all foodies so that was a fun thing, you know everybody liked food. And some of them made beer. And yeah, it was just like a lot of kinships that were formed around that. And so there were just … an environment that was very fun to be in. And if you can create that, you can attract top people. And more importantly you can retain them. And we never cared about the university they went, we cared about who they were and how they worked and that they respected everyone. And we really sought out as many women as we could and as many persons of color and people from around the world, 'cause we wanted a diverse perspective. We felt if we're going to be a global company with solutions for global companies, we have to come all around the world. And not just be this little enclave in Silicon Valley.
[tweet_box design=”box_12_at” float=”none” author=”Lauren Flanagan” pic_url=”http://wingspodcast.com/wp-content/uploads/2017/12/Lauren-Flanagan.png”]The most common mistakes women or any entrepreneur make, is they just pitch you without thinking, are you the right fit? #WomeninBiz @LFlanagan[/tweet_box]
Melinda Wittstock:         So true. I mean you mentioned the world retention. And when people feel a part of something bigger than themselves or feel connected, when invariably on the entrepreneurial rollercoaster things go wrong. As they do, you've got a team that's going to … you know, stick with it and kind of find a way or make one. So it's one of the most-
Lauren Flanagan:             Absolutely. They worked around the clock when it was time for product releases. I mean it was 60, 70, 80 hours a week, you know people working. And they wanted to because they were so committed to it. So you've just got to create that everybody's in it and everybody's compensated. I mean really is that it's team, I can't say that enough. Team and the true meaning of that. Then everybody has to carry their weight and be accountable for their part and feel responsible. And everybody's rewarded and gets … you know, some of the stock options or whatever are the benefits or profits of the company. Those things keep people there along with praise and recognition. We had every quarter … you know big meetings and everybody was recognized who had made a significant … Who'd either gone the distance for a client or for the team. And so it was … a very important piece of that is … you know recognition by their peers. And being recognized in a … It wasn't so much the money or the prize; they would get that. But you know … it was just being seeing and they're appreciated for what they did.
Melinda Wittstock:         You know so when we're talking about team, this is really interesting to me. ‘Cause often on this show we talk about what are the areas where women bring kind of inherent strengths to entrepreneurship that … say their male colleagues may not have as naturally and other areas where, you know we may have some weaknesses. But on the team building side, do you think we have this kind of inherent strength there, that we're kind of more suited to really build these great cohesive teams that make all the difference for our companies?
Lauren Flanagan:             I do. I think it's a real advantage women entrepreneurs bring. They do understand team and recruiting and respect and paying attention to those details. Paying attention to the relationship details, right? So I think that's a strength. And there are many strengths that women bring. I actually think … You know when you sit around in a boardroom, which I'm on many boards. You rarely have the mostly male members of the board asking the question when they're faced with some tough choices “Well what's the right thing to do?” But I almost always hear that when there are women around the board. You know, so I think that's another thing that those values again and questioning is this the right thing to do? And that's in part even during financial crisis where many of the women-led public companies did better. There were a lot of discussions about what was the right thing to do. And I think that's something that should be asked in every boardroom. And you know we're seeing the terrible results when people didn't that … You know, the brilliant company Uber, right?
Melinda Wittstock:         Right.
Lauren Flanagan:             I mean what they've done is amazing and great vision, but such a lack of focus on what's the right thing to do, that may ultimately bring them down. You know? So it's just … That has to be part of the culture of every board and every management team. And that's something that women bring as well.
Melinda Wittstock:         So if you were to narrow it down to three things overall and I know it's tough to generalize. But three things that women entrepreneurs could do better based on how many people pitch you and what you see in this ecosystem. What are those three things?
Lauren Flanagan:             Well the most common mistakes women or any entrepreneur makes, is they just pitch you without thinking are you the right fit? So you know, are you investing in this kind of company or this stage or this geography or this industry. And you know not looking at what your other investments are and how you might fit with them, as I said seeing if there … are there any synergies. That's like not having done your homework, just a waste of time.
Melinda Wittstock:         Right.
Lauren Flanagan:             You're calling on people that aren't a fit. So the first thing is, is it's not you know shotgun, it should be rifle shot. You know you want to really filter and aim at targets that are appropriate.
Melinda Wittstock:         So do your-
Lauren Flanagan:             So that's the number one-
Melinda Wittstock:         Yeah.
Lauren Flanagan:             And that's across all genders.
Melinda Wittstock:         So do your research. I mean I've seen a lot of people pitch, men and women. And the investor looks … has this kind of haunted like look in their eye. Where they've literally been pigeonholed or buttonholed up against the wall with someone talking at them. Not with them.
Lauren Flanagan:             Exactly. Exactly. And the second thing would be, you have to realize when an investor looks at your company, you know typically the entrepreneurs talk about their products and service at [inaudible [spp-timestamp time="00:42:20"], but that's not what the investor's looking at. I mean we start out assuming the product is the greatest thing since sliced bread. I mean we'll go in and later decide if that's true or not. But we start with saying “Okay, let's assume it's the greatest thing and they're wildly successful. The question is how are we going to make money? What is the business model? Who's going to buy them and why?” And if you don't understand how to talk to investors realizing that the company is the product, not the product.
Melinda Wittstock:         Mm-hmm (affirmative).
[tweet_box design=”box_08″ float=”none”]We all invest because we want to make money but there's always another reason, there's that personal hook. #AngelInvesting @LFlanagan[/tweet_box]
Lauren Flanagan:             And what are the perks to that investor besides money? So we all invest because we want to make money but there's always another reason, there's that personal hook. And if you don't understand what that might be, you're not going to be as successful with that investor than if you do understand that personal hook.
Melinda Wittstock:         Mm-hmm (affirmative).
Lauren Flanagan:             So that's a key thing. And then the third is to really understand the financials of their business in every single aspect. I mean that's critical to investors. You have to understand the business model, what the risks are, what the addressable market is. You know how much total capital you're really going to require.
Melinda Wittstock:         Mm-hmm (affirmative).
Lauren Flanagan:             And most entrepreneurs can't answer those questions. But if you can answer those questions and you usually need help, you know there are accelerators. There are places like Springboard; there are advisors. But you really need to be able to be coached and helped so you can answer that and then you're going to be more successful with investors.
Melinda Wittstock:         That's true. I mean I see a little women asking for too little money. Like the million dollar deal, where … Because I think a lot of women think “Oh, look I can do so much more with less.” But a million dollar deal isn't necessarily attractive to an investor.
Lauren Flanagan:             Yeah, it depends on stage and type of business. If you’re software as a service, you can get a long ways on a million dollars. Obviously if you're … you know, medical device or a manufactured product, that's not going to do much at all for you. So it really depends, type of business and stage. But it's certainly much easier today. I mean I remember when we were building one of the first software as a service company's on AT&T, won hop off the backbone and spent twenty million dollars on our data center. Which today you can buy from AWS for … you know, a thousand dollars a month.
Melinda Wittstock:         Exactly.
Lauren Flanagan:             So … you know, so it's a different world. So there's a lot of things that are tools that are available now that weren't and you can go a long ways with them. And I always encourage companies to get their product or service to market as quickly as possible. Get real customers using it, feedback, iterate. And you can do that on a small amount of capital if you do it in a limited way. And so it doesn't necessarily have to be a lot of capital but you have to know the total amount of capital. I do see people underestimating the total. So it might be appropriate, a million for a seed. But it might be that they're going to really 10 or 15 million, but they don't understand it and they haven't thought that through for the capital strategy. And the bites of the apple that for the investors in a seed preferred, a series A, a B, maybe a C. How much financing is will be required and what that stack of preferences will look like. If you don't understand that before you start the capital gain, you or as an entrepreneur are likely going to get washed out. And that's a really important part of the capital strategy. It's not how much you raise, it's what you keep.
Melinda Wittstock:         Yeah. Oh, my goodness. That's so true. And there seems to be this kind of valley of death between the seed round or angel … friends, family, that kind of area and series A. But they're so many slots-
Lauren Flanagan:             Yeah, there's a lot of early money and there's a lot of later money. And in between it's hard. So that's why it's so important to get revenues going as quickly as possible. Because the quicker you can get to … you know, close to break even, the more options you're going to have for sustainability of the company. And the different kinds of capital options will be available to you. But if you're taking too long to get a product to market and you got … you know maybe a proof of concept, but you now need to do a huge round and you don't have any revenues and you can't find the capital, you can be done.
Melinda Wittstock:         This is so true. And so do you see … You know the fabled … you know deal on a napkin.
Lauren Flanagan:             Richard Branson does those.
Melinda Wittstock:         Yeah, like they can happen. But not so often for women. I mean there's this idea that women tend to be funded more on proof and men more on potential. Do you think that is changing? And if not what does it take to change that or … I mean … At which end of the kinda teeter tottering away should it change? Should I be men more on proof and women more on potential … How does that get evened out?
Lauren Flanagan:             Well, there's potential and there are some people who really get it and make some early bets and you know … it's always a risk. I mean no matter how good the business plan is and how good the team see … seems to be, it's just always a risk. You can't count on any of these things succeeding and that's why portfolio approach is so important. But I think that the more that you've de-risked it with a plan, the more likely you're going to get funding and more likely you are to be successful. And I think for women, thinking big is something that I would challenge them to do. Think bigger. What if you're wildly successful? What does world domination look like if you were to truly succeed in your category? Understand what that is and what are strategic drivers that could make that happen. So in most every case that's about distribution or go-to-market partners.
And so if you already can have relationships with those distribution or go-to-market partners, and think that through, that's like … could be a chess game that you could do in one page business plan. That could be wildly successful and highly fundable. But most of those cases where people back you with hardly anything is because they've already made money with you before. So if you're … if you've backed an entrepreneur that you know is great and you've worked with them through good and bad and now they have a new venture, you can be highly likely to want to back them. You know, even if you don't know much about the venture it's still very early. And so that's where most of those deals come from, is that they're known parties. It's very rare that the untested entrepreneur who's never done anything, who has the back of the envelope idea gets tons of money. It does happen but it's the rare exception.
Melinda Wittstock:         Well I love what you said about think world domination. Because sometimes I think we do think too small and it'd be awesome for women to be talking in terms of … you know, unicorns, moonshots. I mean you know, really big stuff. You know like, why not? So as we wrap up the interview Lauren, I want to ask you one thing about what it takes for women to get a little bit more aggressive about funding other women? What ends up holding women back? we were talking about how there's tremendous amount of wealth and a growing amount of wealth in women's hands. And women … you know give a lot of money to charity and they do a lot of things with their wealth. But they don't necessarily invest it in other women or in startups or in angel funds or whatever. So what is it that holds wealthy women back from being a bit more aggressive in investing in other women and how do you think that that will change?
Lauren Flanagan:             Yeah. So I think it's really about education and examples. Hearing stories of women investing in other women is what people need to read. I mean it's a … many women are philanthropic who have wealth; they tend to be very large donors. And they're real comfortable writing a $100,000 to a charitable cause but not making … comfortable making a $100,000 investment, right?
Melinda Wittstock:         Mm-hmm (affirmative).
Lauren Flanagan:             But really if you start understanding the impact that you can have and particularly in investing in companies that they may have an affinity for or that might be local that can really impact the community. That's really education and understanding and many are just … not knowledgeable. So joining a group or a fund is a good thing to do because you don't have to do it on your own. You can do it in the power of numbers. That's again why we Belle Capital so that … you know, the work is done by the investment committee, the tech committee and the general partner. And the partners can be active if they choose to be involved or they can just be passive and write a check and get to meet the company. But they can get involved. So I think increasingly you're seeing some funds started by women. You're seeing angel groups, there's some crowd funding sites. That's a good way to get started to try out something like a portfolio for example, that Trish Costello has. There's some … you know, organizations that you can join that will help. But it's really about education and it's stories of success. Those two things; the two bookends. You've got to know about it and you've got to hear about how it's worked successfully to try to get more people to put a toe in the water.
Melinda Wittstock:         I've started just by putting it out there as my own moonshot that I want to invest in 100 female founded and led companies in the next ten years. And the beginning of my investment is essentially doing this podcast and helping … you know, really throw business to the companies of the women that I interview. Do you think though when you make that point about the philanthropic aspect, where women can write a check for $100,000 easily to a social cause. As more companies come into the fray with an evolved enterprise or conscious capitalism or what were talking about before. Solving a lot of the world's intractable problems, that more women will come to the table? Because I know those are the sorts of companies that I want to invest in.
Lauren Flanagan:             Yeah, absolutely. I think the big problems of the world that have social impact are increasingly going to get women involved in investing. And then once you start, the good thing to do is a portfolio approach, so starting to spread the risk. And it's education, a lot of women have money in things they call alternative investments. Most … Nobody knows what that is in their portfolio. But they could shift monies that already are doing there into things that they can see and be involved in more tangibly. And see the impact in their local community or in a sector they're interested in. And that's a very painless way for women to get started. And once they have success, they can decide to invest an additional portion of capital if it seems to be working for them.
Melinda Wittstock:         I'm thinking of maybe there are women out there listening who actually want to invest and invest alongside you. Or there are female entrepreneurs out there with awesome businesses that may want to talk to you about possibly you investing in them. So how can people best find you?
Lauren Flanagan:             So if they're looking to either be an investor or want to ask for money, they can go to Belle VC. B-E-L-L-E-VC.com. As in Belle Capital, venture capital, Belle VC. They can write me at Lauren Flanagan@bellevc.com. If they want strategic advice that's separate from my fund then they can reach me there and I'll send them over to my other company. But I do also strategic advice working. And if they're interested in being in Springboard, they should say that and I will help get them the information for Springboard, which is sb.co. A very, very successful venture catalyst that really has done a tremendous amount to help women entrepreneurs over the years, with an incredible track record.
Melinda Wittstock:         And Springboard I should say too, is one of the sponsors of this podcast.
Lauren Flanagan:             Wonderful and how we met, you know? The relationships that keep on giving. You know, that's when you field the right team of people and the right … associate yourself with the right people in the network, these are the gifts that keep giving. And they're unknown how they will turn but they're almost always very positive.
Melinda Wittstock:         I agree. Thank you so much for putting on your wings and flying with us today.
Lauren Flanagan:             Thanks, it's been great. I loved talking with you. And I look forward to hearing it.
Melinda Wittstock:         Thanks Lauren
 

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