Pocket Sun, the 27-year-old co-founder of multi-million dollar VC firm SoGal, wants to better gender dynamics.
Yiqing “Pocket” Sun became a venture capitalist by accident. A Chinese national who arrived in the US in 2009 to study at Virginia’s William & Mary College, Sun was enjoying her job at an American corporate marketing firm when suddenly she had to quit because of work visa issues.
Determined to stay in the country, she signed up for a master’s degree in entrepreneurship and innovation at the University of Southern California (USC). While there she realized “entrepreneurship is the only way to make a real impact on the world.” But there was a problem.
She felt lonely as an aspirational entrepreneur. The venture capital industry is male-dominated and Sun felt many female entrepreneurs were undervalued and undercapitalized. The biggest problem she found was lack of access to capital, which was hurting the chances of women entrepreneurs.
So Sun decided to start SoGal (inspired from Southern California’s university SoCal acronym + Gal) as a student organization at USC in 2014, which quickly grew into a global community of entrepreneurs and investors.
Today, SoGal Ventures is a multimillion-dollar, female-led, millennial venture capital firm. Sun and co-founder Elizabeth Galbut (whom she met in a venture capital course at Stanford University) take care of over 50 companies. The SoGal community is now called SoGal Foundation (a US nonprofit organization), reaching over 100,000 entrepreneurs in more than 30 countries.
Besides this, 27-year-old Sun has given TEDx talks, is a regular speaker at conferences and summits across the world, and has been on the cover of Forbes Asia as one of their 30 Under 30. We spoke with Sun to learn more about SoGal’s journey and how it is trying to empower women entrepreneurs. Edited excerpts:
What was the first investment SoGal made?
It was in January 2017 to Function of Beauty, a New York-based startup that creates 100 percent customized hair care products. We thought it represented the new way of buying personal care and the power of advanced manufacturing.
How much money have you invested so far?
Over three million has been invested in 19 companies since January 2017.
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Why are women increasingly funding women entrepreneurs?
Given all the data showing otherwise, it’s hard to believe that institutional funders don’t know that women entrepreneurs have a harder time raising money. For example, investors ask male founders questions related to promotion or gain and female founders questions related to prevention or loss, according to Dana Kanze’s research among TechCrunch Disrupt competitors. The different focus resulted in men raising five times as much as women.
Yet, institutional investors (79%) and bank loan officers (91%) still believe that women entrepreneurs get the right amount of funding or more, according to The Growing Market Investors Are Missing, a report by Morgan Stanley.
Data also show that women entrepreneurs outperform their male counterparts, yet their performance hasn’t attracted the funding they need. So women are using their money and wits in five ways to ensure that women entrepreneurs get funded.
1. Women are becoming angel investors: Between 2004 — the year the Center of Venture Research started tracking angel investors by gender — and 2017, the number of women angels has increased five fold. Of angels who started investing within the last two years, 30% are women, according to The American Angel, commissioned by the Angel Capital Association. “They’re committing a significant amount of early capital to fund women-led businesses,” said Kay Koplovitz, cofounder and chairman of Springboard Enterprises, and managing partner of Springboard Growth Capital. Springboard, an accelerator for high-potential women entrepreneurs, has partnered with Dell Women’s Entrepreneur Network (DWEN) to do a series of Women Funding Women events.
Alicia Robb is an author, academic researcher, and managing partner of several early-stage venture funds through Next Wave Impact. Investors in her funds are mostly executive women plus some exited female founders and scaling founders who intend, when they exit, to become active angel investors. When asked why women join women angel groups and funds, she said “because it’s fun. It also offers a return on your investment and a way to get involved in the entrepreneurial ecosystem.”
2. Venture capitalists get with the program: According to Pitchbook, the percentage of dollars going to companies with at least one female founder decreased over the past five years: from 13.4% in 2013 to 9.8% in 2018. (The percentages differ from the often cited 2% which refers only to all-female founder teams.) Don’t sound the alarm! Shortly, a few trends should make a gradual upward impact on those numbers.
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“When someone tells you that something can’t be done, all it really means is that it hasn’t been done before.” ~ Lori Greiner
The digital age has transformed how business is conducted in powerful ways. Thanks to new technology, more educational resources, and alternative fundraising options, it’s now easier than ever to start a business. With so many people launching new startups, savvy business investors like Shark Tank’s Lori Greiner are speaking out and advising entrepreneurs on how to be successful in this digital age.
I had the unique opportunity to interview the “Queen of QVC” about how entrepreneurship has evolved, mistakes to avoid when pitching investors, and her surprising advice for women entrepreneurs.
Lori Greiner's rise in the digital ageGreiner took advantage of the digital stage early on when she launched “Lori Greiner’s Clever and Unique Creations” on QVC in 2000. “There are so many venues that can play a role in your selling strategy, but in my opinion, there is simply no better selling medium for a new inventor than a shopping channel like QVC,” Greiner told me. “Once you know how to market something out of a certain medium, then it becomes easier to continue marketing other products out of that same medium.”
Using her flair to communicate and present well on air, Greiner leveraged her QVC success into becoming a Shark Tank investor and a mentor and role model for entrepreneurs worldwide.
“The emphasis on entrepreneurship has grown tremendously over the last five years,” says Greiner. “Everybody can relate to having an idea they think could be worth millions, but several years ago people probably never seriously considered that it would be possible to get it off the ground, but now we’re showing that it can happen.”
What makes a great Shark Tank pitch?
Having witnessed hundreds of pitches on Shark Tank and thousands personally, Greiner concisely revealed what constitutes a great pitch. “Be energetic, captivating, honest and informative, but brief. A great pitch is when a person can describe what their business or product is within two sentences,” Greiner advised. “Draw the investors in with enthusiasm and passion. Remember that whoever you’re pitching has spent either little or no time thinking about your product, which you may think is the greatest on the market. Be succinct and to the point, but make it exciting and informative.”
When I asked Greiner if she felt that investing in the entrepreneur was more important than investing in the product, she responded, “I look at both the product being pitched as well as the entrepreneur pitching it, as they are equally important to me. For the product or business, I look for several different things…
“For the entrepreneur, I love to see someone who is energetic, passionate, honest and driven. I want to feel that they will do whatever it takes to make their business a success,” Greiner said.
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Last year, the largest VC deal for a female team was $165 million -- a stark contrast to that for males, which was $3 billion. 98 Percent of VC Funding Goes to Men. Can Women Entrepreneurs Change a Sexist System?
Last year, the largest VC deal for a female team was $165 million -- a stark contrast to that for males, which was $3 billion.
It was January 2017. A 26-year-old Nadia Genevieve Masri made her way up to the second floor office of a venture capital fund in San Francisco. She was there to ask for $500,000.
Masri already had four startups under her belt, and she was raising her first round of VC funding for Perksy, a market research company targeting millennial and Gen-Z audiences. She knew market research was a $45 billion industry and that there was no leading mobile solution -- meaning companies like Pepsi were spending well over $50 million per year without certainty of directly reaching younger generations. Masri’s idea: an app where, in exchange for rewards at companies like Nordstrom, Sephora, Delta and Netflix, users would answer stacks of focused questions from brands on their likes, dislikes and views on current events.
Masri had done the research: She knew her service was unique, that companies would pay for it and that, with the right capital, she could deliver promising results. But the men sitting across the table weren’t sold, telling Masri she was too early -- that they wanted to “see how this goes.”
Self-doubt lingered in the back of Masri’s mind: It’s probably just me. It’s probably just the way I’m communicating this. Nevertheless, she kept plugging away, raising $250,000 in a friends and family funding round, then pitching her idea to Marcy Simon, an angel investor in New York. Simon was the first angel to cut Masri a check, and she helped rally other investors behind the idea -- leading to another $250,000 in funding and Perksy’s January 2018 launch. Within six months, that initial $500,000 in funding brought in $3 million in the pipeline.
Masri still thinks back to those VC rejections and the insecurity that accompanied them, but she has a new outlook now. She says if you’re second-guessing your company, remember the rejection may have nothing to do with your idea itself. Throughout the fundraising process, Masri doesn’t remember meeting with a single female venture capitalist. And even after her company’s seminal success, she still gets eyebrow raises from male investors when she talks about next steps.
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It's no surprise that more funding for women entrepreneurs coincides with an increase in the number of women angel investors.
In 2004, there were about 225,000 angel investors in the United States, and 5 percent of them -- about 11,000 -- were women. Fast forward to 2016, the latest year for which data is available, and you'll see an incredible change. There were approximately 300,000 self-described angel investors in the U.S. that year, and 26 percent of them -- about 78,000 -- were women. In the span of a dozen years, women stepped up in unprecedented numbers to become investors. The seven-fold increase in their ranks coincides with another upswing: a growing number of funded women entrepreneurs.