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A graphic with portraits of Promise Phelon, Miriam Rivera, and Erin Harkless Moore

Photos by Tony Rican, Jane Garrino, and Jenny Jimenez

Bridging the Gap: Women-led Funds Are Seizing Opportunities Others Have Missed

By Erin Harkless Moore, Managing Director, Investments, Pivotal Ventures
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This article originally appeared in PitchBook.

In last year’s All In report, I wrote that the conversation in venture capital circles had started to change for the better, with more inclusive practices finally climbing the industry’s priority list. Important voices in VC were at last acknowledging that the old ways of doing things were keeping out women and people of color—and especially women of color—and that it was time for a new approach. “The challenge now,” I said, “is to transition from believing in diversity and equity as principles to operationalizing them.”

As it turned out, though, other challenges loomed as well. One year later, with efforts to promote diversity under attack across sectors, the conversation I’d hoped would continue to change has chilled instead. The industry is no longer talking about inclusion with the same ambition. Venture capital still has a diversity and equity problem, and my fear is that we aren’t being bold enough about addressing it.

But there is another way to tell the story of 2023, one that is arguably even more important. Instead of a demoralizing story about stalled progress, we can and should tell a story about the women of color across the industry who have pushed ahead. That is a story that we, the diverse investment team at Pivotal Ventures, are proud to play a role in by betting big on funds led by women.

To celebrate the progress they are making every day, I invited two Pivotal-backed fund managers who have long been walking the walk to write about what they do, how they do it, and why. I’m inspired by the way they are seizing the opportunities that others have systematically missed and by the track records they are establishing to prove their theses. The thoughtful approach they take to their work, in my opinion, exemplifies the impact that meaningful diversity and inclusivity at leadership levels can have on our industry.

"Instead of a demoralizing story about stalled progress, we can and should tell a story about the women of color across the industry who have pushed ahead."

Portrait of Erin Harkless Moore, Senior Director of Investments at Pivotal Ventures
Erin Harkless Moore
Managing Director, Investments
Portrait of Miriam Rivera, Co-founder and Managing Director of Ulu Ventures

Photo by Jane Garrino

Miriam Rivera

Co-founder and Managing Director of Ulu Ventures

When I worked at Google, one of the first questions we asked job candidates was which languages they could speak, read, and write. We needed trust to make deals around the world, and we built trust by being able to communicate authentically with everyone. The business case for diversity was obvious.

But I noticed that when immigrants on our team left to start their own companies, they’d go back to Brazil or China or India or Mexico to get the financing. Because they weren’t getting it on Sand Hill Road. Biases in the VC industry were preventing visionary founders from other countries from getting support.

Founders from outside the United States no longer have as much difficulty raising money, but biases are still very much at play when it comes to who gets funding. Women and minorities with terrific business ideas aren’t getting the chance to see how far those ideas can go. According to McKinsey, for example, Black and Latina women founders received just 0.1% of VC funding in 2022. We started Ulu Ventures to help fill that massive gap.

At Ulu, we focus on seed-stage companies because that’s when bias can have the greatest impact. If a company is already generating revenue and the trajectory is clearly up and to the right, it doesn’t matter which color or gender the founders are; they’ll get investment from their choice of funds.

But in the earliest period of a company’s development, when the data is lacking, venture capitalists are much more likely to make bets based on affinity. Whom do they feel most comfortable with? Whose pitch makes the most sense to them? When it’s a room full of white men asking those questions, it doesn’t usually turn out well for women and minorities.

At Ulu, we specialize in taking affinity out of the equation. We strive to be data driven even before there is data for the traditional metrics. Our goal is to replace the shortcut of shared assumptions with the rigor of evidence for all the decisions we make. And the evidence shows that there are plenty of women and minority founders whose companies can change the world.

The customer and employee base in the United States is seismically shifting. For example, about 25% of Generation Z kids in the US are at least part Latino. That is not the world that fostered the patterns that currently rule venture capital, but it is the world today’s startups will need to serve. Ulu Ventures is trying to bridge that gap.

A graphic shows that Black and Latina women founders received just 0.1% of VC funding in 2022.

Source: McKinsey

Portrait of Promise Phelon, Founder and Managing Partner at Growth Warrior Capital

Photo by Tony Rican

Promise Phelon

Founder and Managing Partner at Growth Warrior Capital

At Growth Warrior Capital, we are on a hunt for transformational ideas led by “dangerous founders.”

Dangerous founders are underrated because they don’t match an archetype. These rock stars are solving big problems, but due to their backgrounds, where they live, or the types of market they’re attacking, they are not on the radar of traditional investors. They are characteristically obsessive, unapologetic, and relentless about exceeding customer expectations. They are dangerous because, despite how they are viewed, they are growing a material, venture-backable company.

We like when founders fly under the radar because we believe alpha lives in opportunities others cannot see. Dangerous founders have experiences and perspectives that most founders don’t have. They’ve adapted to what it means to win because they simply had to.

I spent over 15 years as an operator in Silicon Valley. My first role was leading product at a company that was led by three seemingly incompatible founders attacking an unsexy problem. It went on to exit via IPO and create billions of dollars in enterprise value. Later, I was a C-level executive at a software-as-a-service (SaaS) human resources (HR) company started by a dangerous founder: Black, from Pittsburgh, and bringing a game-changing business model and tech to small- and middle-market HR. With few resources, he built a company that, even today, remains one of the most capital-effective I’ve seen. When raising financing, we pried open those doors and secured growth financing from discerning investors, and the company eventually sold for nine figures. There are plenty of dangerous founders out there, flying under the radar. I’ve built the Growth Warrior Capital team with the right combination of experiences to pursue these unique individuals.

These untapped opportunities are going to come from women, people of color, LGBTQ+ individuals, and those in markets and solving problems that are seemingly lower profile—that is, people from the kind of network we’re building at Growth Warrior Capital. The companies they build, backed by an operator-led venture investor, can be massively successful.

People tend to fall in with others who share their history or their outlook. We want to bolster our founders with resources, relationships, and experience that will take what they’ve started and turn it into a company that not only changes the game but has a generational impact.

We fight for dangerous founders—there’s a reason “warrior” is in our name.

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