Jul 24, 2017 · 10 minutes

In a world without posturing, buzz phrases, and bullshit, here’s what many female entrepreneurs would like a VC to say to them, upon first meeting:

You have kids or lots of other responsibilities? We see that as positive. You can balance a million things at once.
Your office doesn’t have a ping pong table in it? That’s okay, ours doesn’t either.
Worried we are going to hit on you? Don’t. We’ve both been in your shoes. We know.
Your job is hard enough already, and we want to help.

And -- yunno-- actually mean it.

Those words begin a new letter on the homepage of Rethink Impact, the largest female focused fund in the US. The firm closed its first $112 million fund just this past March as the Valley’s wave of gender justice was just starting up. The letter, which took over the homepage last week, is signed not only by the firm’s partners, but many of its LPs and portfolio companies by name, with their pictures attached to those words too.

Clearly, this is the first thing this firm wants you to know about it, its LPs, and the companies it funds. If you don’t agree-- well, don’t apply. The firm also launched office hours for female entrepreneurs last week, whether they are a portfolio fit or not. Across San Francisco, New York, and Washington DC, those office hours are already booked up through December.

Like a lot of women in the industry, Jenny Abramson and her partner Heidi Patel are just sick of this shit. A former startup CEO, one of Abramson’s inspirations in building this firm was that her mother had also founded a female-centric venture firm and things have only gotten worse for women in the intervening decades.

Let that sink in for a moment. Abramson doesn’t just have a sense of wanting to finish what her mother started-- she is starting from a greater deficit when it comes to the percentage of funding female CEOs get.

Men claiming they’ll do better simply hasn’t worked. The only thing that may change venture capital for good is more women investing. There are several seed funds started by prominent women and the formidable Broadway Angels, collection of female investors, but so far there’s less female-centric funds at the A, B and C level. And that may be the greatest need: Those are also the stages where most companies fail, frequently due an inability to raise more capital. As female entrepreneurs reach a stage where investors have to say no more than yes, “pattern recognition” -- a breeding ground for unconscious bias-- can hurt.

I caught up with Abramson to talk about their decision to make such a bold statement about the state of venture, and one so at odds with the “witch hunt” whining coming out of other corners of the venture world.

We started out talking about her mom, Patty Abramson, who started Women’s Growth Capital Fund some 20 years ago.

Jenny Abramson: Back in the 1990s, my mom had always worked with women-owned businesses in various capacities and found there was a big gap in their ability to access funding, so she started Women’s Growth Capital, a fund that invested in female CEOs.

At the time women got 2.5% of venture dollars. I remember seeing her on a magazine cover, it was a picture of her with a cigar superimposed on her mouth. “Woman in a man’s world.” I remember thinking: “This is crazy.” But then I didn’t focus on gender for the next 20 years. I was working on things like healthcare inequality and education inequality.

It wasn’t until I became a female CEO, and I kept being one of the only female CEOs in the room that I thought about it. And now, women get 2.19% of venture dollars.

I thought, “Wait a minute, there is all this data!” There wasn’t all this data when my mom was doing this showing how female entrepreneurs over-perform and gender balanced teams produce better results. It felt like a business opportunity, but also, how could this be? Still?

For me, moving into venture capital and wanting to really make change here I had to bring capital and sizable capital. So we raised a $112 million fund.

Sarah Lacy: When did you start?

JA: A year and a half ago, and we closed in the spring of this year. While we focus on financial returns and all of that, we look for businesses that do good things for the world. Healthcare, education, and environment. I started with partners in New York, added a terrific partner on the West Coast, and closed the fund in March as the largest gender-focused fund in the US.

To be honest, we closed more than we had planned. A lot of the focus was getting a diverse set of LPs. Something that turned out to be really helpful.

Half of our LPs are male and half are female, and while most VC money comes from the coasts-- in particularly Silicon Valley and New York- we have capital from 32 different states, including from the South. You can see the gender and racial diversity in the pictures on the letter on our site. Our LPs include some incredible women like Jennifer Frist from Tennessee and Sheila Johnson. [The co-founder of BET and the first African American woman to get a $1 billion-plus net worth.] It’s an interesting mix of people.

SL: Why should the mix of LPs behind a fund matter to entrepreneurs raising money?

JA: To me -- and I felt this as a CEO-- you want as many perspectives as you can get. Part of the lack of diversity, it’s not all out of an evil place. There is imperfect data in early stages. So pattern recognition is a way to de-risk things. If different people have different patterns, you have more data.

We talk about that from the perspective of a startup’s team, and their investor base, but I think when you take it one step further to the LPs, I have to believe that LPs have an influence. Knowing you are being supported by two levels-- incredible women investing in women who are investing in women. That’s a pretty powerful signal for some companies.

We don’t just invest in female CEOs, by the way, we invest in male and female partnerships and diversity in general. The more diversity you have the better. It makes you value perspectives other than your own.

SL: We are certainly focusing on -- and putting pressure on-- the LPs more and more. Even in the case of Binary Capital, several reporters mentioned that there were some prominent, outspoken women in its LP base. Certainly, mistakes were made during the due diligence of Binary, but I wonder if that perspective is part of what made their LPs act so swiftly.

JA: I think that’s a great point. Venture has been a cowboy environment. When we wrote this letter that took over our homepage, we said to our LPs, "You can sign this and put your faces on it." They are people who aren’t public, but they really wanted to show this was something they are behind. That sends an important signal to other LPs that this is OK. There are great opportunities for other women to be involved in and part of venture capital.

By 2030, two-thirds of the wealth in this country will be women-controlled. We think we can play a powerful role in shifting the LP base, and it’s also just good business.

When we did our annual LP event, we had our investors on stage talking. One thing we heard afterwards from LPs who are invested in other funds was that people got perspectives they don’t usually get in rooms like these.

SL: I think it’s powerful that you’ve focused on racial diversity, not just gender diversity. One reason I think this movement towards inclusion has finally started to have such impact is that it’s not the careerism feminism that we saw several years ago, where white women of privilege were learning to hack the existing system. It’s about realizing the whole system needs to go, and we need more opportunity for everyone.

JA:  I think that’s key. Inclusivity and breaking down these walls, whether in your team or your portfolio and even thinking about companies that address these things. All of the pieces fit together. It’s about so much more than just gender or just race or any one thing.

SL: I think it’s interesting that you guys picked Series A to specialize in, and I know two other powerful women who are raising funds also aimed at that stage. There is comparably more seed and angel money for women, but those later stages is where it gets harder and harder. Also there are more no’s than yes’s at those stages, and that’s going to be harder for any minority.

JA: We lead a lot of deals and they come in at the A, B, and C rounds. We come in, and we lead half the time. A lot of our stuff is series B and even series C. That’s where the gap is.

Really playing at those later stages, the impact can be pretty strong.

SL: Wait, so you just launched in March? That's pretty amazing timing, given everything that’s gone on in the last few months when it comes to gender in Silicon Valley.

JA: We closed on International Women’s Day, for obvious reasons. We were founded for this very reason, but frankly we didn’t necessarily expect to see this much of a backlash in this space. In addition to a $112 million fund, we’ve also opened up office hours in three cities, whether the entrepreneurs are a fit for us or not. Our hope is that people who have been frustrated by traditional VCs feel like they have places to turn. We want to be some beacon of hope.

SL: What are you hearing in conversations with other VCs over the last month or so that all these stories of harassment have been coming out? We just wrote about a survey CB Insights did in which some 300,000 newsletter subscribers were asked whether they thought this time was different, when it comes to change around gender in the Valley. They positioned it as bad news that only 10% of people said yes. I saw it as encouraging that some 48% of people said “Maybe, if more stories come out,” particularly considering it’s likely a heavily male audience. What are you hearing and where do you fall?

JA: It’s a mix. There are some who look at the data, and say there’s been backlash before and stories before. and there’s all this data showing how much it makes a difference to have gender balanced teams, and it hasn’t changed in 20 years. We’ve gone backwards. There were 10% of women in roles like mine and now there are less than 6%. They think people will wait it out, and it will just pass.

I’m hearing other people say, “No, this is different, and it’s different in part because real funds with real money are bringing money to the table now.” It is different because LPs like the ones on our site willing to stand up and say, “This is what we believe in.” That means people who also believe in those things but haven’t been more vocal may be comfortable in being so now.

I fall in the 48%. The last month may encourage more people to come forward.

Once you see a lot of these stories, [one thing you see] is less people covering for bad behavior if it will hurt them. I hope it will move from meaningful change because of fear, to meaningful change, because it’s a business opportunity because that’s when change is cemented.

We have a totally diverse team and partnership and experience, and I hope that if other VCs have that they experience how much better it is. Maybe it takes fear to get us there.

SL: Well, greed hasn’t. There’s plenty of data showing gender balanced teams yield better results. Greed and fear is all you’ve got when it comes to motivators in business.

JA: It’s fascinating to watch. Unprecedented in many ways. It’s a moment for change.