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A few years ago, I was invited to attend an investor lounge. It was a private event hosted by a founder and a handful of her current investors, and she told us about her company’s mission in the hope that the guests would also like to become investors. I loved the product, the brand the founder was building, and her growth plans.
Photograph by Tory Williams
However, he was hesitant to invest. I came and went, doubts and questions spinning in my head. Should I do it? Is it worth the gamble? What happens if I lose my entire investment? In the end, I didn’t write the check. When I recently saw the news that this founder had raised another successful round of funding, I was excited for her and kicking myself at the same time. Should I have written that check?
“Women are much more inclined than men to use their wealth to change the world for the better,” says Linnea Roberts, founder and CEO of GingerBread Capital. “They will easily write a check in support of their favorite charity, but will struggle with the decision to write a check in support of a company run by women.”
Today, in the US alone, there are 12.3 million women-owned businesses. Compare this to just 402,000 women-owned businesses in 1972. According to the National Council of Women’s Entrepreneurship, businesses run by women produce $ 1.8 trillion a year. Unfortunately, that $ 1.8 trillion is only 4.3% of total private sector revenue.
Roberts founded GingerBread Capital because he saw not only a lack of female decision makers in traditional funds, but also a lack of female check-writing. “When we looked at the landscape, we didn’t see a shortage of founding women. We saw a shortage of women funders”Says Roberts.
The impetus for Roberts to start GingerBread Capital, named after his mother, Ginger, who was also an entrepreneur, was a lightbulb moment. One night, Roberts and her husband were having dinner with Bertha González Nieves, a founder who was making a name for herself in a male-dominated industry as the first female tequila teacher. He had founded a company called Casa Dragones, which makes exquisite drinking tequilas.
“I wanted to make an investment in his company and was surprised to learn that he had NO female investors,” says Roberts. “Meanwhile, my husband was able to gather a group of his friends to invest in it, but I fought so that my friends, who had the means and the means, did the same. I could feel the worry and the discomfort with this ‘type’ of investment ”.
So she launched GingerBread Capital, a venture capital fund that invests in the next generation of female founders and entrepreneurs who lead high-growth businesses. In 2020, startups led by women received just 2.3% of venture capital funding. Roberts and her team are on a mission to close that gap in the marketplace by helping women gain access to the knowledge, networks, and capital they need to build and scale successful companies. Carbon38, Hop Skip Drive, Sweeten, The Second Shift and Tia are just some of their investments in industries and sectors.
Here are three lessons Roberts has learned from building GingerBread Capital:
1. Recognition of breakout patterns
Venture capital investment can be a powerful vehicle that fuels innovation, allowing great ideas to come to life and scale to their full potential. And yet, as Roberts points out, one of the things the venture capital industry prides itself on is “pattern recognition,” which can result in the perpetuation of systemic bias: White men write checks for men. white. Pattern recognition occurs when an investor uses past experiences or patterns to make decisions about current investment opportunities. This could lead to investing only in certain markets, in certain problems that are being solved, or in certain types of founders.
Historically, products and solutions for women and their lives have been created by men. However, women control decisions in more than 80% of purchases related to home and lifestyle. “We see more women creating new products and solutions every day. And yet it is not surprising that women-led businesses that address the needs of women do not resonate with men who are investors, ”says Roberts. “The ‘let me ask my wife’ comment is still the norm.”
Roberts says she does see a change as both men and women increasingly recognize the importance of women’s voices at the table. “We are on a mission to break pattern recognition in the venture capital world,” he says, “because we know that the diversity of founders, employees, and board members is a competitive advantage. And we need more women to have a seat at the table when it comes to investment decisions. “
2. Remember that the perfect is the enemy of the good.
“I think women in general are more cautious and risk-averse than men,” says Roberts, reflecting on her own experience with Casa Dragones and other investment opportunities where female investors were reluctant to write a check. Her comment echoes my own experience and my reluctance to invest in a women-owned business.
According to a recent study, the gender difference when it comes to taking risks is a product of socialization. How we raise our girls and boys differently is directly related to why women might be willing to take less risk than men, even when it comes to investing. “The environment is extremely important in shaping risk aversion,” says Elaine Liu, associate professor of economics at the University of Houston and author of the study. “If we can teach girls to be more risk-loving, maybe that will shape their future decision-making.”
The pursuit of perfection can also prevent some women from investing. “The perfect is the enemy of the good, and risk investing lacks perfection. It’s high risk and your first loss can be devastating, ”says Roberts. “Women are often trained to believe that perfection is the end goal and that making a mistake equals failure. And we don’t talk enough about our failures. “
One of GingerBread Capital’s goals is to help women feel more comfortable investing in the private company asset class. Each woman can decide how she wants to allocate her own investment portfolio, and putting her money and res to work behind other women should be part of the equation. For women looking to start with smaller checks, Roberts recommends crowdsourcing platforms as a vehicle to start supporting founding women, such as IFundWomen.
“The good news is that more women are realizing their own economic power and using it,” says Roberts. “More women are actively looking for opportunities to invest with women. The secret sauce is that women are highly motivated behind purpose and passion. “
3. Don’t apologize
Roberts’ unique approach to getting more women to write checks for other women-owned businesses includes continuing to seek female founders who are building scalable businesses that need investment. Roberts and her team are currently developing an informal network of high-net-worth women who can pool their res and support startups led by women with high growth potential that they would not normally be exposed to or would not have access to on their own. Additionally, Roberts wants to create opportunities where women can enter the early angel stage and pre-seed levels, with smaller check sizes than typical in traditional venture capital investments.
Roberts is unwavering in her commitment to making venture capital more accessible to more female founders. You remember being once asked, “Aren’t you afraid of missing out on a great opportunity if you don’t invest in a business started by a man?”
Roberts’ response was simple: “Sure, I may miss something, but I’m getting a lot out of investing in women-led businesses. Without apologies, I’m focused on women. “