Women & VC Funding: Questions Beyond the Headline
Over the last week or so there has been a flurry of articles about the announcement from PitchBook and Fortune that female founders got 2% of Venture Capital in 2017. The article points out the silver lining that dollars invested was up by a whopping (note the sarcasm here) $500,000 from last year. Read that again: Female founders got TWO PERCENT of VC in 2017. This is nowhere close to the almost 70% of capital given to male-founded companies. While an attention-getting headline, I don’t think this actually tells me anything other than people can add.
Now before you start going there, this is not a rant (yet) about the lack of funding for female lead startups. This particular rant is about the math and the metrics behind the story and the headlines it created.
In my former career, one of my key responsibilities was to understand the mathematics of the business of sales. There are several metrics involved, but I want to focus on one today: the mathematics of pipeline.
I was first introduced to the concepts of pipeline management when I was cutting my teeth as a salesperson at Citysearch/Ticketmaster back in the mid 90’s. As what can only be described as a door-to-door salesperson, I learned pretty quickly the importance of managing my sales funnel. Starting, I had to research my prospects. From there determine my “close” rate in getting to the decision maker. From the decision maker to deal, knowing how many meetings it took to move from presentation to close. Reviewing the various locations/industries/genders (yes, I knew my close rate by gender even then) in relation to the numbers. And finally, as I moved into management, calculating how lucrative those customers were over the long term. Understanding the mathematics of both acquisition and retention of customers are critically essential metrics.
Yes, as a salesperson my close-rate was what paid my bills in the short-term. But it was the additional activity, getting better at all the other metrics that helped me make consistent and continuous improvements. Just knocking on more doors might close more deals, but it didn’t make me more efficient.
More importantly, as a sales manager, understanding the entire picture of a sales person’s pipeline metrics helped me figure out where he might need help. A high number of meetings but no decision makers? Let’s have a conversation about creating internal advocates. A high number of deals but high customer churn? Maybe we have an expectations problem.
The math nearly always will tell you a story that leads to impactful action.
So I come back to the article and why I have more questions. It all comes down to the math.
- How many women-founded companies pitched vs. men founded?
- How many times did they pitch?
- How far through the process did they get?
- What industries were pitched?
- How many times did the business model match the venture firm’s investment model?
My list of questions goes on.
Just telling me the close-rate tells me nothing.
And why do I care? I think we should ask more about the mathematics of funding - and yes my ladybadass friends I’m looking at you. I care because I want to make sure all our efforts, all our work to help our fellow Ladybadasses manifest their dreams not only have an impact but are efficient in their effectiveness. I see so many women killing it every single day to help other women. I want to make sure we’re providing the right help, not just help.
So Hi PitchBook and Fortune, can you share clearer data? I want to be a better helper, and my guess is others would too.
And before I go, I want to plant another little seed about the mathematics of sales. You buy and sell your time each and every day. I know, it makes us all uncomfortable when I say things like You are the product, but if you agree with me, about your time, even just a little then maybe you should think about the metrics of your pipeline. Are you efficient in selling you? Where might you need some help? Curious.