Women Start Ups Venture or No Capital At All Global Interdependence Center Women & Risk Conference Federal Reserve Philadelphia
Susan Kalla Partner, KHX Investments November 14, 2013
Case Study Hypothesis: Women with venture funding outperform self‐funders. Finding: Self‐funders outperform and are happier ‐‐ more control, more money, more respect.
Should Women Follow the Money? Men Lots of Funding
Less Funding
Women
Tech Pharma Finance Energy Consumer Goods Media & Entertainment Publishing Health Care Education
Elite Preferences McKinsey’s MBA Applicants by Practice Media Consumer Goods Health Care Finance Tech 0
10
20 Women
30 Men
40
50
Stages of Capital Self‐Funded
Angel Financing
Venture Capital
Capital
$0‐200K
$500K‐2M
$5M +
Majority Owner
Founder
Angel
VC
Capital Sources And Structure
Founder Friends & Family Lines of Credit
Preferred Common Debt
Preferred Common
Exit Strategy
Sale Liquidation
Sale or VC Restart
Sale or IPO Liquidation
Women Returns from Venture Funding Angel
Venture Capital
Crowd Sourcing
Av Annual Returns
30‐40%
6%
‐‐
Women Returns
95%
20%
Deals Funded
2.5%
1.3%
‐‐
Women Portion
5‐20%
<1%
50%
VC Partner Expense Holding Period
2% mgt fee 20% carry fee 3‐7 years
7‐10 years
Sources: David Teton, ffvc; Andressen Horowitz; Ashton Kutcher; and Phoebe Woods
Financial Performance 45 40 35 30 25 20 15 10 5 0
Funding ($M) Revenues ($M) Profit ($M)
DataGravity Julep Beauty
Catalyst Learning
Ballet Petite
Happiest Founders Internally Funded
Externally Funded
Catalyst Learning Ballet Petite
DataGravity Julep Beauty
Planning for Perpetuity
Yes
No
Majority Ownership
Yes
No
Comp >$500K
Yes
No
Monetize in Exit
Yes
Yes
Kalla Happiness Points 4 1
Advice from DataGravity & Julep Focus on the Context Sell an Amazing Concept Resist Perfectionism Pedigree & Networking Sound Confident Prove the Business Plan Validate sales Pro forma 75% right Articulate a 5‐year vision Go Global Photo copyright: Susan Kalla
Advice from Ballet Petite Keep Costs Low Product Sells Itself Differentiate Technology Snapshot
No rent No marketing Dance, costumes classical music & literature Tablets, apps, BaseCamp 3000 students 40 employees $10 M Revs Founded 1996 Nancy Parenti President & Founder
Advice from Catalyst Learning If it doesn’t work, pivot… Started in High‐Tech Overhead Too High
Angel & Debt $6M Scrapped Satellite Network
Restarted in Low Tech
Training Classes Teamed with Hospitals
Snapshot
Self‐funded since 1998 12 employees Owns 60% of company $2 M Equity $4 M Revs Far left: Lynn Fischer, Founder
Conclusion “There is some comfort in being master of your own fate, albeit maddening at times.” Lynn Fischer, Founder & CEO Catalyst Learning