Finance: The harsh realities for women, and survivors, in venture capital

This article first appeared in Digital Edge, The Edge Malaysia Weekly, on May 3, 2021 - May 09, 2021.
“We remember being looked up and down as if our bodies held more value than our brains. There’s a lot of abuse within the VC world, beyond just microaggressions.” - Campbell (left, with Vaidya)

“We remember being looked up and down as if our bodies held more value than our brains. There’s a lot of abuse within the VC world, beyond just microaggressions.” - Campbell (left, with Vaidya)

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The venture capital (VC) world is known to be cut-throat. But, it is significantly more cut-throat when it comes to companies founded by women. 

Last year alone, VC-backed companies in the US set a record by raising nearly US$130 billion, according to market intelligence firm CB Insights. This is despite the arduous process of raising VC paired with the grim realities of the restrictions brought about by the Covid-19 pandemic.

But even though VC funding surged last year, it did not leap forward at the same pace for female-founded companies. According to financial data company PitchBook, female-founded companies have only garnered 2.2% of the total capital invested in venture-backed start-ups in the US. This means less than US$3 billion (out of US$130 billion) went to companies helmed by women.

For Madison Campbell, this gender gap is all too familiar. Campbell founded Leda Health, a for-profit start-up run by (sexual violence) survivors for (other sexual violence) survivors that aims to transform the way society handles sexual assault, along with co-founder and chief technology officer Liesel Vaidya.

“Our goal is to widen access to critical resources for survivors so no one has to navigate their healing alone,” Campbell tells Digital Edge.

Leda Health provides its very own patent-pending tamper-proof sexual assault evidence collection toolkit as well as a mobile application to help guide users. Ultimately, “all survivors, regardless of location, class, citizenship or privilege, should be met with a range of options that support their long-term healing,” she says emphatically.

The idea for the company came about through various experiences, such as being a survivor herself. Before co-founding Leda Health, Campbell started her first company, Iyanu, to address the equity gap by connecting people in Nigeria with high-paying jobs and full benefits. “Collaboration is such a powerful resource, and technology really leverages this,” she adds.

“One of my employees [at Iyanu] was sexually assaulted while in a taxi headed to work. She was stuck in traffic for hours and unable to get help. I was horrified and started thinking about why technology had not been used to help survivors. There’s a lack of resources as well as limited options after assault. Why has this space never been innovated?”

Sexual assault is political and the criminal justice system is broken, Campbell explains. She launched Leda Health in 2019 to help build a better system and begin to fill in the gaps.

Campbell notes that on top of the odds being stacked against the two women co-founders, one of whom has a South Asian background, the nature of their business only made matters worse.

Although sexual assault is never easy to talk about, the co-founders were utterly confounded by the responses they met with from venture capitalists.

“Survivors are generally treated with a sheer lack of respect. Those who raise capital from primarily white male venture capitalists for femtech, sextech or anything related to women’s health are attacked in every regard. They are more rigorously scrutinised than any male raising capital for their business-to-business software-as-a-service start-up,” she fumes.

Unbelievable experiences

Campbell and her partner have a few tales to tell in this regard. 

During their Y Combinator interview, “the only white man present spent his time with us explaining the fears of young men [being falsely accused]. I brought up the 2.3 million women sexually assaulted who never receive care.”

Needless to say, they did not get into Y Combinator, the well-known US start-up accelerator that has been used to launch over 2,000 companies including Airbnb, Coinbase, Dropbox, Twitch and Reddit.

This problem was not exclusive to Y Combinator. “The number of times I’ve heard stories about false accusations is incredible. This highlights the way survivors are perceived. Our voices are often silenced, and it’s too much for most to handle. The focus on being ‘falsely accused’ is absurd as an individual is more likely to be struck by lightning twice,” she adds, meaning that the chances to be falsely accused (of sexual assault) is absurdly small.

Besides having to educate potential investors on the realities of sexual violence, the two co-founders were also slut-shamed and objectified. Slut-shaming is the act of stigmatising women for engaging in behaviour typically perceived to be promiscuous.

“My co-founder, Liesel, was slut-shamed by an investor who said her pitch deck photo might inspire sexual assault rather than work to prevent it. A woman’s attitude and appearance have always been used as ammunition against her,” says Campbell. This harmful rhetoric not only blames the survivors but also showcases how the VC world mimics societal biases, she adds. 

Sexual violence was constantly turned into a joke. “One venture capitalist compared getting raped to eating a bad hamburger. We even got asked during a practice pitch interview how often we (the co-founders) have sleepovers,” she adds.

These firms also have a tendency to protect each other, Campbell reveals. “We were going through due diligence with a billionaire investor before he backed out at the last minute. The reason was that one of his employees committed sexual assault, and with the story going public, he deemed us a reputation risk.”

On top of this, Campbell’s co-founder also faces blatant racism, such as questions about how good her English language skills are and whether she was hired “because of the colour of her skin”.

“Liesel and I remember walking out of meetings hearing chuckles as the doors shut. We remember being looked up and down as if our bodies held more value than our brains. There’s a lot of abuse within the VC world, beyond just microaggressions.” 

Campbell says she was lucky harassment-wise, as she mostly fundraised during Covid-19 where there was less of her on camera to be scrutinised.

“I had to constantly relive my experience as a survivor as a cheap ploy to get capital. I was expected to do the dance of a trauma victim in an effort to get people to understand how bad the problem is,” she explains. 

Despite this, the duo persevered. Eventually, they found investors that believed in their endeavour. “But this was after thousands of folks ignored and rejected us. We felt like it was a losing game, with a miniscule chance of getting funded.”

Including minority women at the table

Last year, the average size of a VC deal for all-female teams was US$6.8 million, compared with US$18.7 million for all-male teams, according to PitchBook. This problem is not exclusive to the VC world. 

“Representation is powerful, and it’s lacking in every sphere of our culture. The VC scene just puts a microscope on that reality. With more women in positions of power, and more minority women in leadership, the next generation will be raised with different aspirations,” Campbell explains.

The lack of diversity among investors is also crucial to note. Only 12% of decision makers at US VC funds are women, according to non-profit organisation All Raise.

“It’s rare that a firm will take a meeting or invest without a warm lead. If raising capital comes down to knowing powerful people, then anyone lacking cultural privilege is at a disadvantage. This ‘boy’s club’ model of hiring who you know holds women at a distance, especially women from minority backgrounds.”

A warm lead is someone who has shown interest in a product or service either by following a company on social media, signing up for their email newsletter or through some other way of expressing interest. 

The enormous gender gap has been talked about but urgently requires more attention. Harvard Business Review reported that each step of the VC pitch process is failing female entrepreneurs. With the advent of the pandemic, HBR also adds that women face adverse effects on their careers, disproportionately.

What then should be done to improve the ecosystem for women, specifically? 

There needs to be a structure of accountability in place, Campbell says. “If a woman is treated unfavourably, the fear of retaliation keeps her from speaking out. We need a way to keep venture capitalists accountable for their general demeanour towards female founders.”

More importantly, a shift in capital is needed in order to change current norms. “We need to step away from the view that women are weak and men are strong. These gendered biases perpetuate the funding cycle and the gap it creates. Capital holds power, and in the right hands, it can shift cultural narratives,” she says.

“Less than 3% of funding goes to women. But that number is much smaller for women of colour. We must acknowledge the value of female-run enterprises, and even more so the value of minority-female-run enterprises such as black, indigenous and people of colour (BIPOC) women,” Campbell adds.

“I hope by speaking up [about our experiences,] it increases the voices of other survivors, both of sexual assault and of bad experiences in VC. This is the only way to change the status quo; to speak up and have your voice heard.”