The Silver Lining: Women will thrive in adversity. With or without later stage VC
Lately, it seems like every day we are inundated with bleak news for women founders:
“VC funding to women is at an all-time low”
“Women founders are less likely to secure funding for a second round when their early investors are women”
“Investors backed out of a deal after learning founder was pregnant”
As a women-led VC firm with a majority of portfolio companies led by women, we can get discouraged by news like this. But today, we are not writing this post to complain about “bad actors” and go on a rant. Instead, we aim to shed light on the issue from a different perspective, and propose real solutions to an imbalanced situation that presents a reality in which all women have to operate. Today, we want to bring optimism and hope to all women founders, investors, and those who support us.
There’s no doubt that the system is deeply flawed, and we acknowledge that despite our efforts we too at Crescent Ridge have made mistakes and inadvertently continue to contribute to the problem. Even with the plethora of organizations highlighting and supporting women, the situation has only gotten worse. The root cause of the problem is very complex and has a vast amount of contributing factors, and it will take generations to untangle. The reality is that these statistics are worsening. And, it’s not because people don't want women to be successful. Most investors and executives genuinely want to see more women in leadership positions, we believe.
What’s the silver lining in all of this?
It breaks our heart when we see women founders not being able to raise capital past their early stage rounds, even when their metrics are impressive. What encourages us is seeing these same women continuing to grow their companies without later stage funding. We are in awe of how resilient and capable these founders are despite having it exponentially harder than more traditional startup founders. Women entrepreneurs are warriors, leading the charge towards a brighter future with their determination, resilience, and unwavering spirit. The silver lining is that in today’s market where everyone is struggling to raise capital, women can use their capital efficiency skills to their advantage.
One of many examples in our portfolio is a founder who built a high-growth, FDA-cleared, revenue generating health tech company, with less than $3M in seed funding. She hit and over-delivered every single milestone that VCs asked for, but still had trouble finding a series A lead investor, despite her significantly de-risking her business, an MBA from a top business-school, and having participated in a brand-name accelerator program. Instead, she raised a small internal round and now has a healthy, rapidly growing company with very high chances of being acquired in the next couple of years. We have several other founders with similar stories of creative growth.
Because we have a small fund; we have also used our capital efficiency skills to our advantage. We partner with our sister organization, Ad Astra, which provides founders with the tools they need to build a company with strong business fundamentals. We are committed to funding founders throughout the early stages and helping them maximize their options down the road, reducing their dependence on later stage VC. With 9 exits under our belt and over 75% of our portfolio companies growing and thriving, our strategy to increase optionality has worked well. It's a win-win strategy with a high success rate for both founders and us
Are you an early stage investor or founder interested in hearing more about our approach and how the founders we work with get things done? Stay tuned to our next blog post!
Allison and Maria
