The 2011 Forbes Midas List ranked the top 100 venture capitalists based on M&A and IPO exits.
As one of the two women included on this year’s list, it was disappointing to see that only two had made the cut.
This begs the question: Why so few women on the list, and why so few women in venture capital in general?
Why is it important for more women to enter venture capital? The career possibilities are terrific and I believe that more women in venture capital will contribute to growing better, stronger, more sustainable companies.
Venture capitalists must be good at two things: choosing great investments and being effective leaders at the board level in their portfolio companies. My experience shows that women often evaluate business issues with a broader, top down perspective and lead by forging a consensus, two qualities that benefit the portfolio company. Women also contribute differently at the board level.
They are oriented to providing meaningful assistance by mentoring and teaching others as partners, not preachers. These traits are valuable to VC-backed companies as they seek advice and mentorship from their investors to guide their growing businesses.
While it’s clear that women can provide special resources to VC-backed companies, how can they become more involved?
1. Go Into The Field
Not many women ever enter the venture business, so the first recommendation is simple: get into it! Interview at a VC firm, start working at a VC-backed company or start up, go into a related space (like finance or technology), get operating experience. There is not one path, and many different approaches can work. If you excel at what you do and focus those experiences on honing your abilities to understand what makes a great investment and to lead in the board room, then you can get on the partnership track.
While I came from finance, Mary Meeker was a Wall Street analyst and Meg Whitman was an entrepreneur and CEO. Mary and Meg are now partners at Kleiner Perkins Caulfield & Byers. Both are exceptional women who followed different paths to venture capital. There are also more women in senior management positions or founders in eCommerce and social media. This rising level of entrepreneurship will fuel a new generation of women VCs at historically unprecedented levels.
2. Get Prepared With Relevant Experience
No matter what path you choose to take, experience counts.
Finance teaches you how to analyse financial statements and business models. At our firm, which focuses on expansion stage investments, we like to hire people who have an analytical or financial background because they are trained to delve into issues, take apart problems and analyse business models. We want them to figure out how things work.
Technology is a great focus. Since much of venture capital is technology-related, an engineering background or operating experience, such as business development or product management at a tech company, is also a good background. Deep domain expertise can help venture capitalists understand the value of a new company or idea in a particular space. Focus on a specialised sector you are passionate about and can excel in. Your experiences and knowledge will add value when portfolio companies look for advice.
Don’t discount the value of relevant education. There are exceptions, but in my opinion, a great background for venture capital is an engineering, economics or computer science undergraduate degree and an MBA.
3. Develop Your Network And Find A Mentor
Finding compelling investments is the job of a venture capitalist, and this involves looking for the next outstanding entrepreneur or CEO and interacting with fellow VCs, since a lot of deals are co-investments. Relationships are critical to the process, and women will benefit from establishing meaningful, strategic connections in the industry. Reach out, set up informational interviews, begin an online conversation and make sure you get out there. Work on relationship building and turn a predilection into part of your power!
Finding a good mentor is also helpful. Identify and befriend someone, man or woman, in the field who has been successful and can advise you—they probably will be delighted to share their experiences and assist you along the way.
4. Hone Your Analytical And Risk-Taking Abilities
Venture investing is about taking calculated risks, so you must be comfortable with risk-taking. Calculated risk-taking is based on identifying, analysing, and weighing costs and benefits and, ultimately, pulling the trigger and making a decision based on limited or unknown information. You must be able to make a decision. Think hard about this process and get comfortable with being decisive. It is a must.
5. Speak Up And Make Yourself Heard
Successful venture capitalists are opinion makers and know how to wield influence. At the board level, where a lot of value creation happens, the ability to exert influence is critical in charting the course of a company.
Too often in business situations, women prepare more but speak less. Don’t let that be you. Get used to thinking through your ideas, articulating them in an organised fashion and speaking up. Do the work and contribute at every meeting. I love the expression “lean forward.” I make sure to speak at every meeting, often first, so I can set the tone of the discussion and shape the decision-making process. Your voice is important. Make it heard.
While these five tips can help women chart their course toward a successful career as a venture capitalist, success in any field is not by formula. Venture capital is an apprenticeship business. Digging in and learning by trial and error is important, as not every investment will be successful and you also learn by failure in this business. In conclusion, as with any business, having a broader talent pool of great talent will benefit the field and everyone in it!