Trish Costello is recognized globally for her pioneering work in preparing general partners in venture capital, through the prestigious Kauffman Fellows Program which she co-founded in 1995 at the Kauffman Foundation and led for over a decade. Now with 550+ Kauffman Fellows in 50 countries, Kauffman Fellows hold some of the most prestigious leadership positions in venture capital and collectively deploy over $200B. From its inception, over 25% of Kauffman Fellows have been women and represent many of the women leaders of the venture world, including such luminaries as Jennifer Fonstad, Adele Oliva, Rise Stack, Trae Vassalo, Karen Kerr, Jodie Jahic, Bedy Yang, Lisa Skeete Tatum and Susan Mason. Trish went on to lead CVE Capital Corp, the holding company of the first Venture Capital Fund of Funds ($1B under management) created to endow an educational institute, and to found Portfolia, an innovative national platform of Venture Capital Funds Focused in Women’s Markets.
Trish was on the start-up team of the Kauffman Foundation’s entrepreneurial efforts, leading the Foundation’s efforts in eco-system, venture capital and resources. She also led its programs for women entrepreneurs and investors. She was an advisor to the Clinton and Bush administrations and led the National Science Foundation’s SBIR Commercialization Task Force.
What I Believe Is The Root Of This Problem
We all know the obvious reasons why so FEW women founders get funding: 1) Women entrepreneurs don’t have the rich referral networks into small world of (mostly male) venture capitals. 2) There are very few women investing partners in venture capital — fewer than one in 10 — and they’re rarely senior partners or founders who focus final investment strategies. 3) The few women-led funds have fewer resources than those run by men. 4) And probably most important, women don’t fit the VC’s mental model of what a venture-backable CEO looks or sounds like. No matter the mantel of ‘disruptor’ that VCs hold, in their own work they too often look for the familiar — the type of person that has made them money in the past
There is another, deeper issue. Much of muscular, Silicon Valley-style venture capital has turned into a form of bigger than life performance. The series Silicon Valley is funny and popular because it holds truth. Hyperbolic entrepreneurs too often create outrageous revenue projections from thin air and push solutions full of puffery. VCs compete with ever-higher valuations to ‘win’ the deal and support growth strategies without revenue or sustainable models. And nothing short of possible prison time seems to catch the attention of often preening Boards of Directors. Venture capital is going to a very tiny number of participants, who have been groomed to act in the play.
But change is coming to the industry.
What We Can Do To Solve This Problem
Two approaches are now being used to change the system: One is a measured ‘insider’ effort that for the first time is being used by prominent women in traditional venture capital to change the system over time. The other is a more radical approach that redesigns and disrupts the current Venture capital system with a new model, new money and new power players. Think of it as the AirBnB of Venture Capital — redefining and redesigning early stage investing.
The best example of the former ‘insider’ change is the newly announced All Raise effort, launched by 35 Women General Partners in Venture Capital, with a goals of doubling the number of women partners within 10 years. These powerhouse women VCs are strategically stepping up to lead the charge for change. This is wildly new and important as earlier generation of women leaders were unable to do.
Many early Women VCs, like Kate Mitchell and Magdalena Yesil, tell a version of the same story: It was only after I left VC that I could ‘come out’ as a woman. The only way to be in the industry was to be one of the guys, to fit into the system.’ And part of that ‘fit’ ensured they not be pigeon-holed as doing women’s deals.
These women are making a difference and aggressively moving to impact with gender balance. They’re aggressively coaching women founders and networking and preparing NextGen women VCs in traditional venture capital. They were also instrumental in creating Founders for Change, activating successful founders to select their funders based on an inclusive team. These efforts are smart and strategic, but they’re not enough. The VC system, still reliant on old models built by and for men, is ripe for disruption. Even doubling the number of women VCs in 10 years, means that only 1 out of 4 VCs will be women in 2028.
The second approach, which can result in a radical change in venture is disruptive new systems, like Portfolia. Much of venture capital still operates like the original cottage industry of the 1960s and 70s — tightly-held and opaque partnership with homogenous leaders hailing from the same Ivy League schools, depending on personal introductions for business, and investing within a 60-mile radius. While the world has become wildly diverse — women own the majority of investable assets, and people of color set the cultural trends of America — venture capital still acts out a Mad Men script. We are activating the capital of thousands of highly affluent and highly networked woman nationally in venture funds focused where women make markets, such as FemTech, Active Aging, ConsumerTech, Enterprise, and Food and AgTech. Funds are advised through ‘agent investors’ across the country, mostly women, will highly successful track records.
We remove the system’s structural inefficiencies and misalignment with the opinion leaders in emerging markets.
Change comes when we take the success fundamentals of venture capital and replace old cultures and practices with those of the emerging market-makers, in much the same way as we did in the early 90’s when venture capital moved from older east-coast generalist financiers to younger, tech-specialist west coast investors. Today, we integrate how women organize, make decisions, communicate and value to successful investment fundamentals. We focus The value-add exclusion — too much capital and entrepreneurial talent is left untapped. Our investment model is simple and puts woman-owned capital to work: 1) Lower the cost of investing; 2) Enable women to invest together, delivering a more meaningful experience; 3) Identify high-quality, high-potential solutions and teams; 4) Invest nationwide where markets are shifting to create opportunity.
Disruptive models, like Portfolia’s, have shifted the storyline. Women are the first-buyers and influencers of 65% of all venture backed companies, yet their dollars remain underutilized as investors in the market. Women are well-positioned to recognize potential breakthrough solutions, yet remain wildly underrepresented in deciding what receives funding. That’s the gap. That’s the opportunity.