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The Funding Divide Is Real

Watch a fireside chat with Russ Heddleston, Co-founder and CEO of DocSend, and Kelley Steven-Waiss, CEO of Hitch, as we review DocSend’s data-driven research report on the gender funding divide. The report analyzes VC-founder interactions through DocSend’s platform and explores factors that impact a founder’s ability to fundraise. DocSend launched this project to better understand how bias manifests in the fundraising process and highlight the challenges faced by underrepresented founders.

Read below for a full transcript of the conversation.

Nathalie Miller - Hi, welcome. My name is Nathalie Miller. I'm a Director at the Palo Alto Tech Banking team. Thank you all for joining us today for the first part of the two part series, on Women in Venture and Tech. In today's webinar, The Funding Divide is Real, we're going to discuss the findings of DocSend's recent research report involving bias in early stage funding. We've invited Kelley Steven-Waiss, the CEO of Hitch, and Russ Heddleston, the co-founder and CEO of DocSend, to talk us through the data. Kelley is the founder and CEO of Hitch. It's a talent mobility platform that uses AI and machine learning to match project-based opportunities to internal employee skills profiles. Russ Heddleston, runs a digital platform to securely share documents with real time control and insights. Russ is now the Head of Commercial at Dropbox which, congratulations Russ, was recently acquired DocSend in March of this year. Before we jump into the discussion, just a quick housekeeping note, we'll be monitoring the Q&A. So feel free to submit your questions using the Q&A, not the chat, but the Q&A below. And we'll do our best to answer questions during the discussion. So now let me turn it over to Kelley.

Kelley Steven-Waiss - Thank you so much Nathalie. I'm excited to have Russ share his data. And I really want to encourage you to ask your questions as we go throughout. And certainly I'm going to have questions for Russ. But this isn't a dialogue. So I want to make it lively and interactive in the best way we can. So Russ I will let you kick it off with some pretty interesting findings.

Russ Heddleston - Yeah, thank you, Kelley. And thank you, Nathalie. It's great to be here. This is interesting stuff to run through. And yeah, I think this would be more of a discussion between you and me, as we kind of take a look at the data and talk about what it means and even in your own experience where it might or might not be relevant. And then also like, what to do about it too, like if you're in founder shoes, and you're raising money for your company, like does this change anything or not? So with that, I'll skip my background. But yeah, started DocSend and we sold it to Dropbox, in March. But they are very interested in allowing us to continue to do this sort of research. And just so you know like where it comes from, this is all opt in on the part of founders. So we've got 20,000 plus companies that are customers at DocSend and we have tens of thousands of CEOs use DocSend for fundraising. And when you sign up for the product, you say what you use it for, if you say fundraising, it will ask you like six months later, "How'd that go." And people opt in. And then they take a survey. And they also let us like look at their kind of deck in aggregate anonymous fashion. And so we can pull out some really interesting insights from that. And so this is all self-reported. And we can probably share the lifestyle afterwards. And there's a whole bunch more in the methodology. There's also just one report of a few that we do throughout the year. So we report on pre-seed, series A, and even venture capital fundraising. And Funding Divide data specifically focuses on pre-seed and seed stage companies just because as Kelley, like later stage, A's and B's like the number of like, like female founding teams is just much smaller. So we're looking at the early parts to see like, what is happening there. And what can the data tell us about, is there bias? Is there not? And then that the discussion is like, how can we change this? And then, we'll certainly keep tracking it for DocSend because if you can't track it, then it's possible to know if it's improving or not. Before we get into that, though, we also track real time fundraising, interest in general, like DocSend is used for fundraising enough that we can kind of like track the fundraising market.

And so here we're looking at Pitch Deck Interest on the part of investors. And we're looking at it for 2018, 2019, 2020, and 2021. And what you can see is that in the last like year, this has just gone crazy, like even during the pandemic, there was a lot more investor interest, but investors are still sitting at home. They're starting to get on planes now, but they're not going to big conferences yet and they're just looking at way more decks than they ever have in the past.

Kelley - And Russ, I'll ask you a question to back up data, very interesting even from my own experience, cause I actually raised money in the pandemic was, I would talk to VCs who said early on in the pandemic, we only meet our founders in-person. So the whole idea of we're going to do a deal over virtual is just not going to happen. Now, interestingly enough, if you look at the data, that doesn't suggest that that happened, because we all knew people weren't meeting in-person. So there had to be an adjustment. So I'm just curious as we go through the data, if you saw any differences, certainly between, adjustments being made by venture capital, any biases towards or having to change as a result of everyone being remote?

Russ - Yeah, that's a great question. And investors were honest about that. And you can actually see it in the data here. 2020, this is kind of in March, when the pandemic started, and investors just stopped looking at stuff, like they were taking stock of their portfolio companies, they like weren't sure what to do, because they didn't have a process to make investments not meeting in person, but they figured it out in basically six weeks, so and then it kind of went, and then it was kind of a all time high for the rest of the year. And then coming into this year, even more activity. We don't show it here. But in another piece of data we have, we show the average interaction length, and we have that coming up here, too. But year over year, what has happened is that there's tons of interest, so an investor likely to look at your deck, but the view time is down significantly over what it was in past years. And there are a lot more 20 and 32nd visits where the investor just bounces, or like I got slide four and whatever. So it is kind of a double-edged sword. And it is still a tough world out there to raise money in but it is, there are certainly a lot of money chasing, the founders and good deals. So that should be very encouraging as like just a backdrop overall to this discussion on kind of the divide. Any other thoughts on this one is just how to match up with you when you were out in the market was?

Kelley - Yeah, definitely. I was certainly afraid, as being a woman raising money, a woman, a first time founder raising money, adding the pandemic and back to your point about pitch decks, right, I would have been nice to know about your product, which I think makes a difference, right? If you are a novice, you're trying to grab all the information you can. And there just weren't honestly, there weren't a lot of female founders to go chase at that time. So I think now there are a lot more networks to go chase. So this is very, very interesting. And I would say, one question about your findings was, that mixed gender teams and minority members raise more capital. So I'd like you to talk about that, because that I find interesting, and then I have some comments about that.

Russ - Yeah, so let's look at the all female teams in 2020. And this is unfortunately not good news. The all female team has raised significantly less than all male teams, mixed gender teams actually raised the most. So that's something worth noting here is that you see a big difference in general in 2019 and 2020 numbers. And what's likely driving that because this is pre-seed and seed, there're just a lot more pre-seed deals happening during the pandemic, like relative to 2019. So that's good. I mean, there's like more top of funnel there, like more people out there starting things. But what's really bad is this difference between all female and all male teams. And I'd love to get your take on this. Kelley, like, if this matches up with like some networks you've talked to or why might that be the case? Yeah, anyway, reactions to?

Kelley - Yeah, I definitely got feedback along the way of my journey is, all things from you must have somebody with fundraising experience, it's good that you have a lot of females at the top, a lot of VCs will be looking for diversity. But actually even, the data from organizations like already suggested that only 14% of US VC funds go to teams with at least one female and it actually is lower, even with Latinx and women of color. So I find this fascinating. I do think from my experience, I don't think that all female teams raise more money. I think my team was a mixture of male and female, but it was also a mixture of diverse cultural backgrounds. And so I think that as venture capital is looking to, for more diverse teams, having some set of diversity on your team is helpful. And it's not just gender, right? It goes beyond that.

Russ - Oh, totally. There's so many types of diversity. I mean, gender, ethnic but also cultural backgrounds, technical versus business backgrounds, all sorts of things. But this is something that we'll continue to track. I mean, some of the things I've heard, kind of anecdotally have been, like women are just harder hit by the pandemic, if you've got kids, and you're expected to, kind of bear more of the brunt of child rearing. And so they were about 10%. In this dataset, about 10% of the successful teams that raised were all female. So I mean, that's good. But there is a question around why were they raising less, were they choosing to raise less or it wasn't the case, that's all that they could raise. And unfortunately, we don't have answers to that. But again, another anecdotal point has been, we've heard this in a variety of instances where if you're self-identify as a minority founder whenever you fund a team, it's easier to go approach the groups that market themselves as being, friendly to all women. Those funds currently are typically smaller, though, than the traditional ones. And so at least anecdotally, we met a few teams where they basically got the first term sheet, for a pre-seed round, and they took it. And because congrats, you got it, you don't really know you don't like, they didn't like stop to like, shop around and be like, I just raised 200k, I wonder if I could have raised 700k.

Kelley - I think there's Russ a lack of confidence, I think that women have this is a real issue. I think there's been a lot of fodder about what, a lot of myths too, some of it myths about what it's going to be like to pitch venture capital. People who don't have the networks, maybe to go out and find, I had to do that, I had to go find networks of other people who new venture capital investors to ask them what they'd be looking for, and do a little deep dive knowledge search, so that I went into their knowledgeable about their model and what I could raise, and what kind of data would be most important for them to look at. And I think generally women just have not been very confident to be able to go in and pitch. Because, it might be easier to pitch female VCs cause that's what the fodder is out there. You'll be better off if you go and pitch a more friendly venture capitalists like VCs, who fund women. And I think that's a bit of the unfortunate is I think it's also a myth, in some respects is that, it is about understanding the models they're working with so you're pitching the right venture capital. Not just anyone willing to listen to you.

Russ - Yeah, you definitely cast too wide of a net, I think. And this is also to your point about hesitancy. And for first time founders in general that have seen, and that happened to me the first time I raised money was I didn't, it felt scary to go set up a ton of meetings. So I kind of did things in series rather than in parallel, versus for DocSend, as my second company, we raised a seed round, I scheduled meetings a month out, I put 30 meetings scheduled in a two week period, it was some pre-seed, it was some seed, some angels. And I just had a ton of meetings in two weeks. So I got a lot of no's, a lot of maybe's. But the nice thing about that is I ended up raising a seed round versus a pre-seed round. So if you're, an all female team, as opposed to kind of going to the female ones, and then scheduling kind of going as you go, like, batching up as many meetings as you can in a two week period, because then you're actually going to get a better signal on what is your market value? Are you more in the seed bucket? Are you more in the pre-seed bucket, and you just don't really know until you go to market. This is the other research the DocSend has though, on the pre-seed and seed rounds, because they are different, right? If you're raising, 400k, or 300k, from Charles Hudson, at Precursor that's very different than raising 2 million from Jeff at Uncork. They're different size funds, they have different characteristics. And if you're getting in between each one, it's easier to ask for pre-seed, but you're deluding yourself for the same amount of money. So it's good to go. You're not going to go to pitch series aid firms.

Kelley - Right. Because the bar, the bar between pre-seed and seed is not as high as what expectations there are for momentum and traction that you have to show at series A. And those are all things you learn, which is the other piece I would say about pitching during that process like you did Russ is that you can learn and iterate. In fact, having a strategy to book all those meetings, take your notes, iterate your deck, and now have a strategy by which what are you going to change about your talk track, the metrics you're showing, so that you're more successful on that next rung. But absolutely the learn and iterate and keep going makes a huge difference.

Russ - Yeah, and to your point about iterating, getting better at pitching, often the difference between a pre-seed and a seed round is really just your ability as a founder to be clear about what you're building. So my hope would be that for all female teams, raising less than all male or mixed gender teams, that some of that is something that can be overcome, just with education, and competence. And hopefully, it's more of a short term thing, just from last year, hopefully, when the pandemic is kind of behind us all female teams won't be as much of a disadvantage because schools will be opening, like, daycares and that sort of thing. I just want to make sure if there are any, all female teams listening to this, that it, we don't know why this is the case, it's just good to know that this is the case so that you can arm yourself with everything at your disposal to make sure that you can give yourself a fair valuation and raise like an appropriate amount of money for your business. So, one piece of good news that we saw from this past year in 2020, was racially diverse teams raised more successfully than they did previously. But female teams, still were kind of struggling. And so what you had broken out here is all male no minority, all female, no minority, mixed gender, no minority. And then there is, a minority on the team and the way DocSend track this is just it was self-identification. In the survey founders filled out, they asked, "Do you or any of your co-founders self-identify as a minority?" And we just kind of like left it at that. So we can't break it out by ethnicity, or kind of other things, the founder that self-identifies is trans, probably check that box too, depending on how much that shows up for them and the way they work. But what you can see here is that, they're being a minority, like these numbers actually got better, from 2019 to 2020, which is good. Well, at least did in the mix gender, and there was a minority here. And we did have more venture capitalists say they did invest in a team that had someone on it, that was a minority versus 2019. So it does appear that investors are changing some of their behavior in the sense that they are trying to be more proactive about investing in teams with a minority component. But to your point, it's interesting that that's not quite the same as all female teams.

Kelley - Yeah, interesting. I'd like to understand more about why we're focusing on teams instead of founders. And can you talk about what roles women and that minorities have in the data set? Because I think it's interesting that obviously, in the US our social consciousness has been raised, there were clearly issues about and pressure coming down to ensure that, there was more funding going into minority owned businesses, which could have driven this up, but why the focus on teams versus founders, cause, often, as a founder, you would hear when you're raising. Well, they're going to like you, they're going to like the product, they're going to like, not like you, but like the product. They're going, and so you get that kind of feedback. But why teams versus founders?

Russ - I should clarify myself, we mean founding teams, so they're in the data set are relatively few solo founders. And so think of it as you when you have a team slide. What are the faces on that team slide? You're not putting your employees on that team slide typically, it's like, who are the founders, and it's like, typically one to four people involved. So we just call that the founding team. And that's what we focus on. So as you're right, we are ignoring kind of like subsequent employees that have been hired. So we don't know how that may or may not play a role into it anecdotally, though, it seems that investors aren't as concerned with the makeup of your early team. They want to know that you're good at hiring and that you have good people to the extent you've already been hiring but many of these founding teams don't have employees yet, at the pre-seed and the seed stage. For DocSend, we didn't have any employees until after we raised our seed round of funding from Uncork. And our thought process was like we can skip the pre-seed because like we can fund ourselves and like we're all engineers, my two co-founders and I, but then we're like, okay, as soon as we start hiring up a team, then we need outside capital for that. So when we went on raise, it was just, the three of us. Kelley, how many founders do you have for your business?

Kelley - So I was the founder, but I had brought in, I think about within the first year brought the CTO in. And so I would consider him a part of the founding team. And he's an Indian gentleman raised in Bangalore, and then came to this country, in high school or just after high school. So, and I had, of course, a fractional CFO. So it was really, myself and Jay who really started and then branched out from there. So we didn't have, I didn't really have another senior female on my team. Now, as I, what we know is that generally female founders, female leaders tend to hire more females into their company. So we know that from the data that's out there, and certainly that is true. As I expanded the company, I continued to hire great female talent and diverse talent. So one thing I'm interested in Russ too is the methods by which you did this data, how did you control for gender of the venture capital? So in other words, are women VCs? Because you say females still struggled, right? Were female VCs, likely the judge founder founding teams in the same way as male VCs?

Russ - That's a great question. And it's not something we controlled before here. So we have done research on venture capitalists, how they raised their money. But in this data set, we weren't asking these founders, of the people you pitched, how many of them like were women, or of the investors you chose in your round because, we have founders who were not able to raise as well as founders were able to raise, but for the ones were able to raise, like, we weren't asking them, what is the gender mix of your investor pool? That would be super interesting to tease out. Yeah cause I agree with you like, that would be a big question around our, venture capital firms, maybe even venture capital firms they just have like, one, partner, even if the entrepreneurs are pitching the female partner, like then in that partner meeting, you've got that different perspective, that could play a big role in it, but it's a great idea for something we can look at in the future.

Kelley - And I was funded on my seed round, funded by a male, venture very, very long standing venture capitalists and then brought all women fund into my investment, 220 LPs through how women invest and abroad way angel. So I felt like I had, access to both, I think that I had to learn a lot along the way. And did I feel more comfortable pitching to an all female venture capital team? Sure. If I'm honest, I was, but I will tell you, they were just as just discerning, and deep in due diligence as, maybe more than anyone else.

Russ - Yeah, as a founder, it always feels like there's like, the due diligence is a lot. But sure is there. The more successful your company that never goes away. The diligence just becomes more in the future. But it's a good problem to have.

Kelley - And one more question, Russ, about? Why is it do you think women might be judged more on product and traction in particular? And have you seen that in the data? Like, so what is your view on that?

Russ - Yeah, great question. So that is something we looked at here. And so for successful, like founding teams that raised money, looking, because we have all the aggregate anonymous viewing stats on these decks as well, because the entrepreneurs are sending their deck out and seeing how long they read each page where they forward them to. But then we take the decks and code them so that we know this is a business model page. This is a problem page. This is a traction page inside the deck. And then we can look at well, for how long were these investors looking at these different categories of pages. And so you can actually see that, like a couple of the areas where things really stand out are, the purple is all female teams, the green is all male teams. The all female teams had more time spent on the business model and significantly more time spent on the problem statement. Whereas all male teams had a lot more time while not a lot more about quite a bit more time on the traction, as well as the financials and the financials also include kind of the well, you don't have a lot early on. But yeah, the fundraising goal is different than the financials. All male teams have a lot more than the fundraising goal, which, for me, I interpret that is not a great thing because the fundraising goal is to ask, let's say I'm raising a million dollars. If someone is spending more time reading that page, it probably means they're more seriously considering it, versus if someone's spending more time on the business part of the problem, they might be scrutinizing that section more, controlling for is it all female or all male founding team? So I mean, as you now look through some of these things, do they some of them, like hit home? And or did you have suspicions?

Kelley - Yeah, I think my reaction to that is twofold. Right, having been in an executive for many years, and being a CHRO in technology for 13 years, I certainly saw a little bit of a bias towards, she needs to show me she can do it before I give her the promotion. So it's the prove it, prove it, prove it first, where I saw a lot of battlefield promotions for men pretty quickly. And I was always battling that issue. I think, and by the way, it went into also minority or underrepresented categories as well, feeling like the hurdle was higher, for some reason and trying to figure out why the bias and we have human beings in organization. So that's likely why. But I think when it gets into demonstration of product market fit, and the key metrics to show there are obviously different metrics, you have milestones that you have to prove at different points in funding, and we're talking about pre-seed and seed, that bar is slightly lower than what you need in series A, but if we think about this combination of the fact that the women weren't raising as much or taking smaller checks, might be a little bit back to this education too about understanding where to spend your time, relative to what the investor needs to hear. So if you spend too much time on mission and vision, but you will not demonstrate it, you're not spending enough time on the metrics, because that's what they're evaluating you on, you might miss the boat, and that would go across both genders. But I do think and I'm interested, even from the the audience there might be some comments or questions is there the bar just higher overall, all things being equal to approve it first, before you can get that big check. And I think that that is something I certainly have to deal with also. As a female founder, I feel like demonstration of traction and product market fit is at very high bar. So I'm curious to how other people might feel about that.

Russ - Yeah, and again, anyone who's listening, we'd love to have you post in the Q&A section. Although one thing Kelley just to kind of point out, or come back to, was the difference in because your team would, because Jay would probably self-identify as a minority, like moving from India. So in a mixed gender, no minority in 2020 raised significantly less than a mixed gender with a minority founding team, which is the inverse of what you saw in 2019. So that's actually like an interesting reversal there, but you did not see that reversal for all female, like, all female teams, unfortunately, but so that there is one bright spot there. But in terms of, yeah, we're scrutinizing. So this is the pre-seed deck stats that we're looking at here. And then we also broke it out by seed deck. And this is where you start to see what you're talking about. Because at the seed stage, you'll often have some traction, pre-seed can be just kind of minimum viable PowerPoint, maybe you got like some something built in like a beta. But for many teams by the seed stage, they've got something in market and some traction. And so you see some pretty stark differences here, where all female teams are getting kind of more scrutiny around the market size that they're going after, as well as the traction. And so as well as problem and competition. So those are kind of lining up with what you're saying, which would be or suspecting perhaps that is there a different bar for you, all things being equal, is the same amount of traction from all female team, like looked at in the same light is the same amount of traction for all male team. So, like these--

Kelley - What do you think Russ on that? What could be done differently to help venture capital in evaluating these decks, in evaluating female or minorities as they are presenting to venture capital to check their own bias at the door? Could it be because it might be a dual problem. One, it might be that the pitching team might need more education in understanding how to present the data correctly. But I would think there's maybe more of an onus for venture capital to understand how their bias might be playing out in these pitch sessions, or as they're evaluating the documents. What are your thoughts on that?

Russ - Yeah, I mean, that's much bigger than a million dollar question. And it's one that I care a lot about, I have two younger sisters who are also software engineers. And one of them went through Y Combinator and raised the seed round and upselling your business to shift the used car company, as you went through the whole thing end to end. But yeah, it was frustrating watching her go through the fundraising process, because as a technical female founder. And again, these things are tough, because it's, you can't ever prove anything, right, you can kind of see some stuff in the aggregate. And then, even like, going back years ago, I'd heard from a number of people that their hope was that market dynamics of this, the investors who are able to like see the real value that's created there are going to have higher returns. And so you would just see capitalism take effect, but it seems to be a very persistent and consistent issue over the years, in terms of like all female founding teams, getting as much capital, because when you look at some of the later stage companies with, like either a solo woman founder, like some of them are so successful, but they did have a headwind talking and sell their business was so strong, that it didn't really matter who they are, you just look at the business. And you're like, wow! So seeds can be tough, because there is a lot of interpretation to whatever data or traction you might have. Coming back to your question around, how do we educate investors on, any biases they might have? Or how they can overcome those? At least we can just start, like keep an eye on it and track it, and celebrate the wins. It's like, if investor is thinking, it's always better from a founders perspective, if an investor is motivated by greed, not fear. They're looking at your pitch deck and your business, and they're being like, oh, well, what about this? What about that, versus like, If don't do this deal, I'm going to regret it, like, this thing is going to be huge. And so you do want to get them motivated by greed. And so the more examples we can celebrate, like all female founding teams, or like minority, teams that are successful, whether we can start to like, as investors always say, their pattern matches in many ways. So, like, what are the patterns and the examples of wins that this might look like? And so, I mean, yeah.

Kelley - You're trained on patterns, as you say, and so if your pattern has been, you're biased by default on your pattern, maybe it's a pattern that has to slightly shift. And so I do think that it's, there'll be happy to have education on both sides. Because I know a lot of the female founders that I know, have said, "Hey, I want to be invested in, not because I'm a woman, but because I have a great idea that will make my investors 10x their money or and that I'm going to be a billion dollar company. And I can show that." So I think that there has to be patterns that are broken on the other side, for female founders to think bigger, to make sure they also understand what opportunities they have, what models, again, will be looked at. and I think it's gotta come from both sides, it can be one or the other. Because we're inherently biased on both sides. So we might be biased that no one will ever fund us. So we must ask for a smaller amount. And that's not good, either, right?

Russ - No, yeah. It's not like saying that, we're only okay. So when we raise less is better, like, I coach a lot of founders on just, how do you represent what you're doing as being venture scale, potentially venture scale? It's not like you're saying, you're for sure going to be a $10 billion company. But is there a world in which what you're working on could be a billion plus dollar thing, and you have to represent it that way, because that's the way the game is played. And so, this advice goes for all founders, especially first time founders, like, independent of, gender or ethnicity. But yeah, there's certainly like some level of audacity. As the founder, you need to be able to say like, I've got some insight and I think this insight could end up being huge, but do that in like an easy to explain sort of way. And a lot of what you mentioned earlier is like really useful here, where you're getting, you're going out and getting feedback from later stage investors. So you don't want to go pitch a series A investor, but if you get a couple of interest to them, they can't invest anyway. So they're not feeling pressure to like judge if they're going to invest in you or not, what they would like to have happen is that they give you some good advice on how you're representing your business, you take it, you are very thankful, you go off and raise your seed, your pre-seed, you end up doing really well. And when you raise your A, they have an unfair advantage, because you already know each other, and they've been helpful, and you're more likely to take their term sheet. So oftentimes, you can get some feedback from a later stage investor, which can be really good. Because if you try to get feedback, like you're raising a seed round, and you go try to get feedback from seed investors, they can't really give you feedback. When they see your pitch, you're asking them for money. That's it, and so like, and then there's not really any incentive for them to give you harsh feedback, because their answers just like, oh, no, or a lot of times people will say, like, oh, they said, they need to see more traction. But that's just a really convenient out. Like, sometimes it's true, but more often than not, it's just like, that's kind of a blanket statement to mean you or the entrepreneur did not make me excited enough that I'm like, I'm going to miss out on this deal.

Kelley - I think you're getting to, obviously, I would love to hear even more of your recommendations, but you're getting to a really good point, which is, I think it's important that other founders give back to other founders. And I think that that is the way we take this data, this very valuable data as learning. And how do we give it back? There's so much that I've learned as a founder by being in the frying pan, right, because it's, on the battlefield learning, getting rejected, and walking back and going, what I learned from that experience, what could I have done better. And I think that it's helpful for us to understand what could be the biases in the process so we can overcome them, but also how we can learn, that's learning for the venture capital side, there's learning for us. So we don't over-rotate, we don't lose authenticity, of why we're so passionate about what we're doing, why we have vision for it, to become something else in the pitch meeting than we are. But also just to make sure that we're learning as we go, cause so much of this is that, and by the time you get to the show, which in early stage would be series A, the bar is now much higher. So I'm interested too how much of that in the data you see, does the funding, pendulum swing worse for women and minorities as you shift to series A and I know you didn't do the data, but just from your own experience?

Russ - Well, one thing we do know is that in the data, there are just fewer companies at the series A that are all women or minorities. So there's some drop off there, which is not good. So it is pretty hard to get, we actually do have a lot of founders, like who like if they were unable to raise successfully, they still fill out the survey and participate in the research because that is so helpful to us. But it's really uncomfortable and embarrassing, and you just don't want to talk about it if you aren't able to raise successfully. So I'm thankful for those people, that series A at the end gets smaller. So, I think your question are those teams judged more harshly at the series A on their traction, I don't know, the pure kind of anecdotally, the thing to combat that is kind of the same for all founders, though, which is get feedback, like have a very clear narrative in your deck and have supporting evidence that is compelling and ties to like where you'd like to go. Because whatever traction you've got, the way you represent it kind of depends on what your business is. And one of the most common mistakes I see for founders, like email and mail is that they want what they're doing to seem really smart and defensible. So they make it sound more complicated. But making it sound more complicated doesn't do the founder a service. Like it needs to be just a real clear narrative. Like if it's a lot of buzzwords, or I'm not able to represent what you do to someone else, like the good bar for me is to be able to like tell your parents what you're working on, and then they can tell their friends. That music can't be too mathy or blockchain or I mean, it could have those things but it's like, what's the clear narrative because you actually need that later stages as well, like for series A where we talk to the partners going back to their partner meeting. And they're going to verbally tell their partners like, oh, I met this great company. And here's what they do, versus them being like, well, it's kind of complicated, I'm going to go back and read the deck again. And so, yeah-

Kelley - I don't like sales compensations plans, they can be too difficult or they're not going to--

Russ - Which is kind of universal advice. But it would be even more relevant if you're an all female founding team, because you kind of know, some of these things are going to be different for you.

Kelley - I'm curious, from your data too Russ, about this notion between potential and track record, and potential's kind of a loaded word, because there's potential that you have in the business because of its scalability, or its market size. There's also potential of the team, right. So you think about as you move in the stages, like what patterns change as companies progress and startups that are raising capital have more traction in the market? What do you see as patterns that shift? And certainly maybe there's KPIs, but what else do you see shifts?

Russ - Well, a lot of that is anecdotal. But I kind of think of it there being two axis here. One is how much like you have to show for what you're working on, like, and then. So it's like, oh, we have a hockey stick of revenue, the best one. And then the other axis being the kind of signal on the founder. And so like, if you've built and sold in $100 billion dollar company before, that's a pretty good signal on you as a founder, you probably don't need as much traction. You as a founder, maybe first time founder or like non-technical, but you've got a hockey stick of revenue growth, or like crazy user cohorts. It's so sticky, it's viral. And you're like, well, that's pretty awesome. And then, what you're talking about is like, well, what if you have neither, and that's kind of the hardest bucket. But there are investors like Charles at Precurser, that's what they specialize at because as soon as you have a ton of signal on the founder, or a ton of signal on the business, and especially if you have both, that's where like everyone wants to invest in that, right, it's a no brainer.

Kelley - And that's a high bar, though, Russ, because if you're a woman of color, or a Latino woman who had a great idea, but you've not exited three other businesses before so your signal is going to be low on, hey, this is a no brainer, this is that my risk profile on this person is low. so it would see that the bar is a lot higher for them to show their potential as maybe a CEO, or to scale this business. So I would think maybe, do you think the KPI, like the hockey stick needs to be very clear, or the way that they communicate that that hockey stick is possible, there might be more of a higher bar on that--

Russ - Narrative can only be helpful there. I mean, it's one of the things that and again, this isn't about DocSend, it does beg the question. Okay, well, what does someone do about this, like, so one of the things we did for DocSend, and we don't make any money off this, is just in service of the startup community, we have a fundraising network where we have a bunch of our own internal KPIs. And we'll run a pitch deck through a whole bunch of tests. And then there is a human review cycle. And we and this is only for pre-seed and seed. And then if only about 10 to 20% of the decks, we get will pass our bar. So it's a pretty stringent bar. And, we're sure that we don't have any bias in this, like people getting through it. And for the ones that don't make it, we still give them detailed feedback on their deck, which is something you don't get from an investor, because we don't charge for it. We're not like in the deck consulting service, though. So we only let people submit once. So we kind of ask people to have it either kind of like final thing. But for the ones that do pass, like we have a list of investors who are really high quality that can lead around for seed or pre-seed. And they've all been like personally vetted by us, I think they're like 70, or 80, lead investors on that, and we'll send it to them. And we actually got a bunch of companies funded because, if you have to, as an investor sift through, 1000s of cold pitch decks, like, yeah, you're kind of pattern matching for things that look safe or familiar, which can be bad if there is a different profile that you're going to miss out on, because it doesn't look like the stuff you've investing in for.

And if it's already gone through a filter. So this is also why, if you're an African American woman, and founding a company going through YC, like the more gold stars you can put on yourself to like, have people be like, I should pay attention here. Let me take a look at that. And so this is just, a real easy gold star for a lot of founders to be able to try to overcome, maybe they would have gotten skipped over otherwise when they passed a bar. And so it's been very gratifying to help companies get funded through this. So it's been gratifying to help venture capitalists like kind of cut through the clutter cause a lot of founders have difficulty getting warm intros, or it's just really time consuming. And so this is helpful on both sides, right. And there have been a bunch of companies that have tried to do this and make money off of it. But we're not trying to make any money out of it, we just want it to be like a useful service that will hopefully cut down on some of the kind of subconscious biases that might be preventing pre-seed and seed stage companies from like, having, good investors take a real hard look at them and make a decision on it or not.

Kelley - I think that that's fantastic. I think that democratizing this a bit and allowing people to have someone have a fresh start on, how to do a pitch deck, cause I will tell you, I learned just by the sweat equity of, talking to friends and looking at pitch book and looking online and buying books in the bookstore and trying to figure crack the code of what a pitch deck needed to look like, and then iterate, fail, succeed, change, do it again, I mean, the pitch deck that I have now, because I am in arrays, again, a pitch deck that I have now versus the one I started with, are just diabolically opposed from each other in terms of professionalism. And now granted, I have more, more KP, I've met more milestones, but it's, if you could shorten that learning curve, if you could make it more equal, like everybody saw was able to see how to do a great pitch deck. That would certainly shorten the cycle, because not everybody has in that work, as I said, to go find people that can say, you know what, that's not good. You're missing this and this and this. So I love that you have that. Given the insights in the report? What other recommendations do you have for women founders who are trying to raise capital, because we talked about some great lessons, but is there anything we didn't talk about, something that you think would be really, really valuable for women trying to raise right now?

Russ - Yeah, they're well, there's no silver bullet here. So there're only things that would be smart. But if you're having to go through the rank ordering of them, it's having a good narrative, being aware of like, what stage you're at, like, how much progress have you made, and then, like getting advice and thoughts and help from people who have done it before, or who are a little bit further along, like, all of these are very smart things to do for anybody. And then, if you're a founder, and you there's not a lot of signal, you haven't like sold a company before anything, and you're an all female team, just you're being aware that you might need to like maybe let's wait another three months, let's get a little more traction, let's get a little more buttoned up on this and then go raise versus today, if we can afford to do that. Which also might just be a smart thing in general. And if you're even earlier on, like, as a founder, and you're thinking about like, do I want a co-founder or not, I always think it's better to have a co-founder, because it's a really long journey. And it is really nice to have a partner in that. And if you're a woman, and it's like the perfect co-founders, also women like, obviously do that. To the extent that you are, you have some choice, and we bring on board, it's in one way to just invest in diversity early on is to find a co-founder who's dissimilar from you. So in your case, finding a man, even though even if you're like, well is more tempting to find, a strong female engineer, it's like, that's great. That is diversity early on on your team. And the data that we have suggests that that actually performs best of any of any mixture, which is encouraging. So it really depends on the team and the kind of the state that they're in, I think, as a founder, like your path forward is usually just gotta charge through walls and make progress and try to be clear eyed about, like, how do I prioritize this versus that? I think time spent fundraising, you don't get any credit for as a founder, like, do you usually be like off building your company. So you just really want to minimize the amount of time you have to spend.

Kelley - That's why you gotta ask for a bigger check so that you're not fundraising every day, because I will tell you as just I'm going to exit the seed stage soon. And I will say that the percentage of time, how you spend your time is critical. And I'll just offer my own advice to pack on to you Russ is that you need to be able to I think, growing up as a woman, starting off being a little girl, you have to ask for the sale, you have to ask for the check and you have to close an investor and sometimes that is a very, it feels, maybe counter to everything that you learned, show them that you're great and wait and they'll anoint you with a check. That's kind of not not how it works. It does take some strategy how to put demand out there, how to make sure that you close that investor, you're aggressive enough to do it because it gets harder. They've got a lot of investments they can make. And I think they're also judging whether you're lost for the sale too, which also takes a level of aggressiveness, as particularly in when you're in a market, I'm in a really hot market now. So it's very competitive. And it's okay to go to be bullish with data back it up. But what to ask for has to close. And so you also, I would say, must deal with a lot of rejection, but it has nothing to do necessarily with you, you don't have the right business model or you're not going to be successful. I think that rejection is par for the course. It's actually if you can ingest it as feedback to think about what might need to be adjusted, you might say nothing needs to be adjusted, I just didn't have the right model for them, or I didn't fit their portfolio or I'm at the wrong stage or session to talk to a growth investor. I'm not at that stage yet. But it is about learning and adjusting. And, Russ, I'm sure you're an entrepreneur, how many times did you get rejected?

Russ - So many times.

Kelley - A lot.

Russ - Yeah, it is definitely par for the course. I think we're at about time. But Kelley, thank you for taking time for all your insights and commentary in all this. I hope it was helpful for those in the audience.

Kelley - I didn't see any Q&A. So Nathalie, did I miss anything?

Nathalie - No, you didn't miss anything, you covered it. Thank you both so much. Thanks to all the attendees who joined the online event. And we're going to follow up with an email that's going to include a link to DocSend full research report so everyone can dig in a little bit more. And you'll also be able to access a replay of today's webinar, you can visit our innovators toolkit for DocSend's latest offer for First Republic clients. And we hope everyone enjoyed the first part of our two part series. And we hope everyone will join us for the next webinar on The Art of Persuasion on May 25th. Thanks again to everyone for spending time with us and we look forward to seeing you all.

Kelley - Russ thank you.

Nathalie - Thank you.

Russ - Thank you.

The guest speaker(s) is neither an employee nor affiliated with First Republic. Opinions expressed by the guest speaker(s) are solely their own and do not necessarily reflect those of First Republic. This information is governed by our Terms and Conditions of Use.

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