104 Investing In Female Founders: June Manley on Boosting Women’s Share of Venture Capital to 20% by 2020
June is a entrepreneur and industry thought leader with over 15 years of high-tech experience at companies like HP, Citrix, Riverbed, and NetApp. She founded Phala Data, an enterprise software startup at the intersection of Big Data Analytics, Artificial Intelligence and Machine Learning – and innovated her way to six patents.
Melinda Wittstock: June, welcome to WINGS.
June Manley: Thank you Melinda; thanks for having me.
Melinda Wittstock: I am so excited to talk to you because you are really changing the game on this funding issue. I mean, you like me, have struggled to raise money from venture capitalists and women are only getting three percent of the capital and you have a big moon shot goal to change that.
June Manley: Yes and so we're trying to, as you mentioned, less than three percent of the $84 billion that was spent in venture capital funding in 2017, only 2.4 percent of that went to female founders. What they're trying to do is One, fundamentally change the start up investment tool and Two, is to have a really strategic goal in getting from less than 3 percent to 20 percent by 2020.
Melinda Wittstock: I love that, 20 percent by 2020. That's a big leap from where we're at right now. What's it going to take to make that goal?
June Manley: You have to fundamentally change the start-up model or the start-up investment model, and as you and I have been through the journey Melinda, you know that unless you have the right education, unless you have the right social economic background or unless you have the right circles of friends and family. It's really hard to penetrate that boy's club of venture capital funding. And so when you look at it, you could easily change human behavior, which is very, very hard to do or you can change the investment mold that really kind of creates an even playing field. Make it about the start-ups, so understand what makes a start-up successful. What makes a start-ups milestones achievable so measure the start-up, not the founders background or the founders economic status but does that [inaudible [spp-timestamp time="00:01:54"] of start-up have a viable investment. Does it have an idea? Does it have a market? Does it have products? Does it have customers?
Those are the things that shouldn't be measured and many measurers start it based on its milestones. You start taking away the bias and prejudice and this old boys network of do I know you and does your social economic background warrant me funding you. So it's all about the start-up and that's what we're measuring and that's what we're developing and that really transcends the 3 percent of start-up funding to 20 percent by 2020.
Melinda Wittstock: It's so interesting because so many VC's say that they invest based on pattern recognition, so that is what has come before. So when women are now entering into entrepreneurship in numbers greater than before, I mean, we're not what came before and I think to myself, let's see we're not wearing hoodies, we're not generally in our garages. We didn't[crosstalk [spp-timestamp time="00:02:56"]
June Manley: No.
Melinda Wittstock: Drop out of Stanford, MIT or Harvard. Most of us have run companies, divisions, you know, innovated within hired, fired. We have domain expertise. We come to it a little bit older, generally and we're not eating ramen noodles because there are too many carbs.
June Manley: Okay
Melinda Wittstock: So how do we? So we don't fit the pattern, so you have to change the pattern.
June Manley: You don't and usually I ask. The questions I ask is, can you name a female founder that has transformed our lives in the last 25 years and you're challenged to name a female founder because you automatically go to the Steve Jobs and you go to the Zuckerberg’s and you go to the Elon Musk because those are the people who fit that mold. Every time a VC tries to fit within that mold, guess what, 98 percent of women fall under that and the 2 percent that do fall within that gets funded and we actually have to break that mold and that's what they're trying to do with the start-up investment model, to say look, you've got measure a start-ups investments viability based on that start-up. Based on that idea, regardless of whether the founder is female or male. Whether the founder is black, white or blue. Whether a founder is an Ivy League grad who's just dropped out with a gray hoodie or it's you and I whose spent 15 years in technology or 20 years in technology.
We've seen a problem. We've seen the mock-up. We understand how to bring a product to market and yet we're the ones that are pushed to the wayside because we don't fit that pattern matching that goes on in the VC community today.
Melinda Wittstock: You know what's interesting is the rule that age plays in this, because women tend to come into start-ups a little bit later in life. Probably for lots of reasons and there seems to be a correlation with having kids and then making the leap around that time into entrepreneurship. Perhaps it's because we're so hardwired to really want to be very kind of confident that we know what we're doing. We work hard, we get all these credentials, we do all these things before we take the leap and I think sometimes VC's look at as “oh, well you're too old for this.”
June Manley: Very true. If you look at your typical female founder, if you look at yourself and myself, we spend, like I said, we enter the work force we kind of are product geeks or tech geeks or data geeks. We kind of work through our career and then we kind of find that niche of a problem that we are able to solve and we kind of work through the “do I have a product, do I have a viable product, do I have customers?” Again, we worked to those milestones and then we kind of go seek funding and we still get turned away only because One, because of our age. The Two is, the experience we bring, sometimes believe it or not, VC's are more afraid of women who have experience and who can kind of push back when they need to than a 22 year old whose just dropped out of MIT or is just graduated MIT. They think that they can mold them better than they can [inaudible [spp-timestamp time="00:06:14"] female founders who are really kind of again, cast off of making an innovative change, yet they push through and find one.
Melinda Wittstock: I think that's really and important point that you're making there because for the VC, yes, you have so much more control over the founder if the founder has no business experience. I mean perhaps, they've invented a cool new product or you know, technology or whatever but have no idea about the marketing or to go to market or any of the business or any of the other aspects of what makes a business grow and scale and get to exit. So those young dudes in their hoodies aren't necessarily going to know that kind of stuff and they can be controlled perhaps a little bit easier.
June Manley: Exactly, you're very right and you've hit the nail on the head because when I gone through these VC meetings and every time I took on their push back with something like “look, I've walked this walk before so I know how to put a business strategy together. I've walked the walk on launching products. I've walked the walk on executing on a level that even you haven't done.” They don't like that. One, they don't like that confidence and Two, they know that they can't mold me. You're not fighting back but you're stepping into an arena that they're not comfortable in. That's also a reason why again, you get pushed to the wayside. People have come in much more mature and you come in with experience that they don't like or they can't match. Those are some of the reasons why you only have 2 percent of female founders that are getting funded.
Melinda Wittstock: You know or serving a market that they don't understand. Women are often coming up with businesses that have tremendous potential to change or disrupt a lot of industries that are dominated by women. I'm thinking of say, fashion tech and some of the wearables. There a number of different areas, right, where women gravitates, perhaps even consumer products or areas like that. So many founders that I know have been told by VC's that “oh I'm sorry, I don't understand the market.” Which is odd to me because you would think the VC would be interested in finding an opportunity to make money and the female founder is showing him that.
June Manley: Yeah, and definitely you have that, right? Where because again, the VC world is dominated by men and that's why the pattern matching makes sense when they kind of invest more in men. They tend to kind of be uncomfortable in what women are really good at. Particularly in fashion tech, particularly in e-commerce, ed-tech and others. On the flip side, when you do come in the company you're familiar with, like Biotech, like technology, like artificial intelligence and everything else. When you do penetrate that market, they look at you and they go “no, this is a boys place. This is a big boys world, you don't belong here.” So One, they don't understand the market that you do come in with and on the flip side, when you do come into the market they just kind of kick you out as much because you don't belong in their big boys club.
Melinda Wittstock: One of the things that was interesting and you've probably came across this research. I think it was the Harvard Business School, that I think they filmed a lot of VC pitches, both with female founders and male founders and they found that the VC's asked different questions. That there was a question bias. The men were asked questions like “how are you going to maximize the opportunity?” Where as the women were asked questions like “how are you going to minimize risk?” Which automatically put women on the back foot or on the defensive, right, just psychologically. How do women get around that kind of scenario?
[tweet_box design=”default” float=”none”]Female founders need to be empowered to know it's a joint opportunity and it's a joint adventure, I would say joint venture and the power is within both teams and both teams need to take control of it. #WingsPodcast #WomeninBusiness @f4capital[/tweet_box]
June Manley: This is what we kind of do with the start-up investment model, is to change the conversation and even change the questions. So basically, if you're measuring a start-ups maturity well and you're looking at the financials. You're looking at customers. You're looking at time to market product. It gives the founder, regardless of whether it's female or male founder, the power to take control of the conversation and actually kind of talk through the milestones that they achieved. So when the VC kind of starts doing a risk or verse kind of questions and kind of tailors the questions rather differently, the founder then has the power to say “look, let me bring you back to the topic at hand. Let me talk to you about how we're executing on the time to market. Let me talk to you about the market opportunity. Let me talk to you how we're going to bring a product to market exceeds the market opportunity and actually is a win-win for both the investor and for what they're trying to do.”
So I think it gives the female founder a little bit more power, a little bit more empowerment to really kind of take the conversation back to the VC's, rather than the VC's controlling that entire environment. It's a joint effort, it's a joint opportunity and female founders need to be empowered to know it's a joint opportunity and it's a joint adventure, I would say joint venture and the power is within both teams and both teams need to take control of it. Hoping that as the new investment model is brought to market, the female founders have the power to have that conversation with the investors and have that empowerment that goes with it.
Melinda Wittstock: Yes, I mean so much of it is, somewhat psychological too, so when we, often on this podcast, we talk about these three things that are integrally linked, mindset, mojo, and money.
June Manley: Agreed.
Melinda Wittstock: How can women go in there with the mojo, the confidence, the right mind set, right? To really understand what's going on and really kind of change the game, psychologically, I guess, in those meetings.
June Manley: I think one: you've got to go into it with a swagger, right? You got to go in walking with a swagger like you own the room and Two, you've got to know that you're willing to walk away if this is not the right option for you. At the end of the day you're not just getting money from them. You are entering a partnership. Is this a right partnership for you? Do you envision working with this VC or this group of VCs for the next 5 to 6 years because that's what you're going to have. You're going to have to have daily conversations with these VCs. Are they the right partners that you want? You should go into these meetings with that level of confidence and that level of swagger and own it. Own the start-up. Own the invention. Own the milestones and if it's right for you make the decision based on what's right for you and the company and walk away when it isn't. Don't ever feel that you have compromise both your integrity and the start-up or the success of the start-up only because you're winning vote check from those VCs.
I would say own it, have that swagger, have that confidence to know that you're going into a partnership and if it's not right for you, you can and should walk away from it.
Melinda Wittstock: That's right, not all money is free. It's kind of like getting married, you know, like you're going to be with this person for a while, right? You better make sure that you are aligned, like you have the same mission and how is that…
June Manley: Exactly.
Melinda Wittstock: …VC going to treat you when the proverbial hits the fan. I mean it always does with every start-up. There's always something that goes wrong and so how do you recommend June, that women really get better I guess at qualifying the investors as much as the investors are qualifying them?
June Manley: Do your research, so that's the one thing that I learned during my post on searching for funding and again, one of the things that helps with the product they're going to build, is you kind of do some matching on which VCs are investing in certain industries or certain[inaudible [spp-timestamp time="00:14:50"] of a start-up. Understand the ground of investment you're seeking. Understand who is investing in the segment that you're in or in the start-up stage that you're in. Pick your five VCs that you want to reach and look at them and understand who are they investing in. So if you look at their portfolio, don't look at what they talk about because a lot of VCs talk about social impact and a lot of VCs have a microphone that what they talk and what they say is very different than who they're investing in. Look at the portfolios of companies. Look at who they're investing in.
Do you feel comfortable in being part of that portfolio and if you do, aggressively go and engage with the VCs. I would say understand the portfolio of companies that the VCs are investing in and if the VC seems like the right partner you want to go with then do whatever you can to get in front of that VC and again, own the meeting. Your invention, your start-up is part of the agreement and part of the partnership you're willing to make with the VC and don't you are the second hand citizen. You have to own it. You have to be confident in yourself and you have to come up knowing you're going to walk away if it's not the right opportunity for you and your start-up.
Melinda Wittstock: Yeah, the walk away is absolutely important. I mean that's true in any negotiation and any aspect of your business. Whether you're negotiation a deal with a strategic partner or just pricing your services or product correctly. Knowing your walk away point is absolutely vital.
June Manley: Exactly.
Melinda Wittstock: I mean the other part of it too, I think, is just having the confidence around knowing your numbers. Being able to speak to your numbers. Being able to speak to the opportunity, like whether it's the market size.
June Manley: Exactly.
Melinda Wittstock: What it will be like if all goes well. What will it be like if it doesn't. What you will do, having that kind of bottom up organic, I guess, financial model where you know your numbers and you can talk confidently about them and also potentially know your exit.
June Manley: Exactly. I think sometimes it may be unfair or whatever it is, right? The questions that go to male founders are very different than females. Acknowledge that, know that and go in prepared that you have your bottoms up number and your top down numbers. You know your market. You know your customers. You know, again, how you're going to succeed if you do obtain this funding but also understand that what you're … The reason why I say this and the reason why I think women kind of come out of the meeting or feelings they have that they've got a check but don't realize they're given more equity for a lesser amount, so even though 3 percent of female founders get funded on average we're getting one third of what a male founder gets for the same equity. So understand what is being funded. So that's why I say look at portfolio of companies that they're investing in. Look at what they invested in it at what equity.
So don't go in thinking if I walk out with a check I won. Understand what are you giving up and if it doesn't make sense for your start-up, walk away because at the end of the day you need to know that your start-up has value and understanding that value and that partnership should be based on the value of your start-up. If it doesn't value your start-up and it doesn't value you, then walk away from it.
Melinda Wittstock: Right, I mean, because the devil is in the detail on the terms. I've seen a lot of women be ecstatic to get the check but then end up losing their companies.
June Manley: Because they've lost the amount of equity they're given, yes. Again, for my advice to any founder, particularly female founders, your end result is not having a check in your hand. The end result is did you make the best decisions for yourself and for your start-up and when you do, that's when you have won.
Melinda Wittstock: So June, what was it like for you when you were out there raising money for your current company, Phala Data.
June Manley: I would say Melinda, kind of what we talked about the conversations we just had. Understanding the value of the start-up that I had, I knew going in literally everything that I had to on the market. Who the product was tailored to. Who the target market was. Who the customer's were going to be. I had products that were in a twenty-one billion dollar market that had over thirty[inaudible [spp-timestamp time="00:19:56"]competitors and I still was able to bring a product that had six patents. As I was seeking funding and again, the experience that I talked about was, the more I came into these meetings as confident as I was, the more intimidated the VCs got. The more they put different criteria in front of me, so I was walking out of these meetings saying you have to interrupt one paying customer in an enterprise world, as you and I know that, again one customer as a start-up in an enterprise software is really difficult. Getting ten would mean I would be looking for start-up funding and so they would give me these milestones that were unachievable.
I knew that they were giving me these milestones only because they didn't believe I belonged in a man's world because big data analytics is very much a man's world. While I was seeking funding and getting cut down, 290 start-ups in that period of nine months were funded and over 6 billion dollars went to those 290 start-ups. Not one of those start-ups were led by female founders. They were all groups of male or single male founders.[crosstalk [spp-timestamp time="00:21:05"] So he's really challenging me to walk away from it, but I knew that I wasn't willing to One, sell my start-up with walking away with a low ball check and so I decided I wanted to change that environment and so that's how female founders got funded.
Melinda Wittstock: That's great and so where are you now? You're three years in with Phala Data and so did you get the money in the end?
June Manley: I didn't get the money the end. What happened while I was … I'd boot strapped all the way through product development, through six patents, to the customers and I walked away from it once I realized that unless I had a male founder or a male CTO or a male CEO as I was being asked. Some of these VCs suggested that my husband take over the company so I would get funded. Some of them just plain told me that because I was a female in a tech world or a male's world I would never get funded and that's kind of when I walked away saying “you know what, if I can't make it as a start-up founder then I'm going to change how start-ups get funded.” I founded the non-profit and I'm building a product that would really kind of take out the bias and prejudice out of start-up funding and really kind of measure the start-up. The risk, the opportunity, and the viability of the investment.
Melinda Wittstock: We have so much in common, because I struggled in the same way with Verifeed, a big data platform, really with innovative technology like very early at the intersection of artificial intelligence, predictives and natural language processing. It was impossible to get VC funding. I don't know how many meetings. It was the same thing, you know boot strapping, you know growing it. Making all kinds of compromises in terms of … that took you off your road map because you had to fund your growth and that's the most frustrating place to be. I found anyways because the markets changing so quickly and if you're going that way and you don't have the fuel to really move fast enough or seize market share fast enough, it's really difficult to succeed in the way that you wanted.
Also again, big data company and then the other parallel of course, is coming to the same conclusion as you and saying “okay, right, that's it” and my solution was starting this Podcast because so many women are succeeding in silence are not being able to scale, either because of you know, kind of blocks in our own mind set or these very real ones. Like not being able to get the funding that we need.
June Manley: Exactly and the question we have to ask ourselves both as female founders and your audience listening is, look at the innovation that if you just look at us and what we've been able to bring to the market because it didn't get funded, it's sitting on a shelf. So how many innovations are we going to have sit on shelves because it was founded by women or invented by women and we couldn't get funded. You can imagine our society, we're kind of losing out on innovation and just technology. Only because it's sitting on shelves because it's founded by female founders and it didn't get funded and we need to stop that. Every person who is part of your Podcast, who's listening to this Podcast, needs to understand that if we go another day or another year with only 3 percent of female founders getting funded. We will go generations before we actually are at a point where innovations, regardless of whether it's founded by females or males, should be considered on its merit, regardless of the gender.
I think unless we fundamentally do something today, that's not going to happen in generations to come so we fundamentally need to change how we look at start-ups. Look at it for its merit, not because who the gender or the color of the founder.
Melinda Wittstock: Yes. I'm encouraged though by the fact that more and more women who've had exits or have the wherewithal are stepping up to fund other women. So I put my intention out there that I was going to invest 10 million dollars in the next 10 years in at least 100 female founded businesses. Hopefully I can do better than that, actually, like I'm a big believer that women should take big moon shots cause why launch a small business if you can launch a big one? It takes kind of the same effort, right? I want to be[crosstalk [spp-timestamp time="00:26:00"]
June Manley: Exactly.
Melinda Wittstock: Able to do that and I see so much happening, right? Coming out of #MeToo and #TIMESUP, the same time all these Angel funds and Venture funds founded by women, whether it's built by girls or female founders fund or ElleVest, I mean there are a series of these now kind of coming up. So is that the answer really, that we show up for each other and invest in each other?
June Manley: I think we do, we have to, right? I think for so long we've looked at our male counterparts as One, they are the problem and Two, they're the solution fixers and the answer is they may be the problem but they can't solve it for us, we have to solve it for each other. If you look at the number of businesses that women hold, it's over 60 percent. If you look at the investors and the empowerment that we have, there is absolutely no reason why we shouldn't get to 20 percent by 2020. If the female founders and the female investors really collectively said they're going to make a change and they're going to invest in female founders and we're going to ensure that an innovative idea that is going to transform the way we live and communicate shouldn't be sitting on a shelf only because it's founded by female founders.
We're going to actively do something about it. That 20 percent could happen, I mean it could happen next year if we have that kind of cohesiveness in kind of solving the problem. I think that's what we have to start looking at. Look at it how females can empower females to make change. I think we have to step up as females and we have to step up as female leaders and we have to step up as female investors to make the change. I think we need to start looking at our male counterparts to solve it for us. We have the power to solve it for ourselves.
Melinda Wittstock: So June, you're in Silicon Valley where all these scandals have come to light around sexual harassment and whereas a female founder seeking funding. You know where meetings happen in a bar or this sort of thing. What sort of advice do you have for women to navigate that particular part of it and have you noticed any kind of backlash from men? That they're afraid to take meetings even, from female founders?
June Manley: I think it's tough but female founders again, do your research on who you're seeking funding from and investment from. My career advice, regardless of whether you're seeking venture capital funding or looking for a job, don't accept a meeting that says lets meet up in a bar or lets meet up after 8 o'clock at night. It's never a good idea to do something or accept a meeting, again, professionally and whether your a start-up investor or a start-up founder. There are some things that you should not do. Some of back lash perspective, I think generally there is and[inaudible [spp-timestamp time="00:29:52"]. You hear the stories while men are not at ease to take a meeting with a female founder. Men are not at ease to mentor females any longer so I think we need to kind of reset the stage on. There are things that should never happen, like sexual harassment. There are things that women need to understand that they should never accept. Meetings outside a work environment. Meetings after 8 o'clock. Understand who your investor is in.
Do your research before accepting a meeting with anybody. As a female founder, just again, your safety comes first and integrity is just as important. Those are the two things, safety and integrity. If you don't compromise on both of those, you should be very successful, at least if you don't get funded you're still successful.
Melinda Wittstock: That's such wonderful advice. So June, how can women find you and work with you and get in touch around helping you out with the Female Founders Faster Forward?
June Manley: Perfect, so thank you Melinda. Again, the purpose of what we're trying to do is get more female founders funded. The key magic word is, 20 percent by 2020 and again, like I said, if everybody pulls together that is so achievable. You can find us at f4capital.org. We are a non-profit organization, again, fighting for more female founders to get funded. 20 percent by 2020 so come visit us there and we're actually leveraging technology to kind of drive the bias and prejudice out. So if you want to be part of that innovation, you could be part of that innovation as a founder, as an investor or as a supporter. We're looking for advocates. We're looking for partners, please join us and together we can make that 20 percent absolutely achievable.
Melinda Wittstock: June, well thank you so much for putting on your wings and flying with us today.
June Manley: Thank you so much.