Money matters: why women founders struggle in Silicon Valley, featuring The Muse, by The Verge
Adam Rifkin stashed this in Women
In a tough environment for fundraising, it's even tougher for women founders:
Last spring and summer, Kathryn Minshew, co-founder of The Muse and one of Inc's “15 Women to Watch in Tech”, was trying to raise money for the female-focused job site that was growing 30 percent a month and reaching 250,000 dedicated active users every month by June of 2012. She pitched herself, her co-founders — whom she met while working at McKinsey & Company — and the Muse to any and every venture capitalist, angel investor, acquaintance, and friend she could find. The company had solid fundamentals, a strong story, and a passionate community, but the raise wasn’t going well.
At one point, the founder was introduced via email to the head of a VC firm and got a reply from one of his associates. “We were given explicit advice that if we were introduced to a venture partner in a certain way and they passed us off to an associate, we were supposed to respond with, ‘Thanks so much. I’d love to talk, but I’m heads down on a product right now and I’m only able to talk to people with decision-making ability,’” she says. She composed a reply saying as much. Before sending, she showed it to five different male friends who were also founders and they thought the tone was fine. But the response she got from the associate at the firm was shocking. “I got a massive slap on the wrist,” she says. “The tone of the response I received was, ‘Don’t get too big for your britches, little girl.’ And it happened a second time as well.” When she showed the reply to the male founders, they were amazed by the brazenness of the email. They had never received anything similar in tone and couldn’t understand why the response was so cold and angry.
In search of cashAfter reaching out to more than 200 VCs, The Muse eventually raised $1.2 million with contributions from Y Combinator — where it was part of the Winter 2012 class — 500 Startups, Great Oaks Ventures, and others. But it was a long, arduous, and disenchanting process even compared to the struggles other companies have raising seed rounds. At every turn, Minshew found herself confronted by the unavoidable fact that she was a woman and, like so many of her fellow female founders, had to overcome additional obstacles to raise money. "When it's hard, you think it's hard for everybody. But going through it last year, there were a couple of situations where it was impossible to ignore that it would have been very different if I had been a guy," Minshew told me in a meeting space at General Assembly where The Muse has its office.
Ugh. Not good.
How tough is the current funding environment?
Fred Wilson told The Verge’s Adrianne Jeffries that, "we are seeing fundraising challenges everywhere, even in our very best portfolio companies." While the overall amount invested in early stage deals is the highest it has been since the first quarter of 2001, according to a PricewaterhouseCoopers LLP and NVCA study, the competition for that money has never been greater. A Dow Jones VentureSource study reported that funding for consumer Internet companies was down 42 percent in 2012. High profile failures — hey, Color — are hurting the market as well.
Three years later, TheMuse has raised $26 million:
Co-founder and CEO Kathryn Minshew says the platform’s users are largely women — 65 percent of them, in fact — with 50 percent of users below age 30, another quarter of them in their 30s, and the rest age 40 and over. That’s apparently been good for business. “When women find The Muse,” says Minshew, “they’ll come back and tell us, ‘We told 15 people,'” about the platform