Melissa Cheong
Melissa Cheong.
- Venture capital remains a male-dominated space: Female partners are working to change that.
- Melissa Cheong, a managing partner at Blackhorn Ventures, said VC firms should adapt company policy and create mentorship programs to improve gender diversity.
- Cheong said women who want to break into VC jobs shouldn't sell themselves short and should match their skills to the right specialization.
- She also recommended investing in long-term relationships and finding what you're passionate about to stay in the game.
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Melissa Cheong - managing partner at Blackhorn Ventures, which just this month led a $50 million round for Vecna Robotics, a maker of autonomous warehouse robots - is on a mission to help more women move into the venture capital industry.
It's a significant challenge when you look at the industry's numbers. The latest data from Axios shows that only 9.65% of decision makers - top executives and management - at US VC firms are women. The pace of change over the last few years has been glacier-like, barely inching in the single digits.
What's more, around three-quarters of US VC firms don't have a single female investor, and female-founded companies received only 2.2% of VC money in 2018, TechCrunch reported.
"The adage 'numbers don't lie' holds weight when it comes to women in the VC industry," said Cheong, who received her MBA from Columbia Business School and has over 20 years in the industry. "When you put these numbers against reports showing that women drive 70% to 80% of all consumer purchases, and women-owned business have more than doubled over the past 20 years, there's clearly a disconnect."
The question that Cheong wants answered is, why is this happening?
"It's clear the financial industry as a whole has always been dominated by white males, and it's very easy to point to an 'old boys club' that won't change and will protect itself," Cheong said. "But I don't think that's what's at play."
The managing partner suggested that as a bottom-line industry, people in the business of making money for others should be held accountable.
"In this day and age, turning away ideas or actions that could positively impact that bottom line solely because it came from a woman is obviously nonsensical," she said. "So the real issue clearly isn't one of women not being heard. It's really about women not being in positions to be heard."
Cheong believes in a two-part approach toward shifting this paradigm at both the systemic/organizational and individual level.
"The system itself needs to be adjusted to create more parity, [but] ultimately, it's women themselves who will need to also play a role in breaking down the doors to create a more level playing field," she said.
Systematic changes that can be made to eliminate gender disparity
According to Kauffman Fellows, VC firms with women partners are four times as likely to invest in companies with women CEOs. Cheong said that "the writing is on the wall" when you consider female-founded startups raised more than twice the investment in 2018 ($46 billion) than in 2017 ($21.9 billion).
Making the following systemic changes within VC firms can help continue and escalate these trends:
- Make company policy changes. "It's clear that the wage gap has to be eliminated and more family-friendly leave policies need to be implemented," she said. Competitive industries with long hours - like venture capital - intensify the challenges women face choosing between their careers and families. "There's a legitimate fear that stepping away, even for a short while, will be perceived as a lack of career seriousness and make re-entry even more difficult," she said. "Women should not be penalized for having the ability and desire to have a child."
- Hire for tenacity. "Those female candidates who have achieved success, or are on the brink, have traveled career paths that, more than likely, put them in a minority position," she explained. "They've had no choice but to develop exceptional resilience. I'll always feel more confident in those who have endured the battles and come out the other side stronger and better prepared; it diminishes a big question mark."
- Improve gender diversity up the ladder. VC organizations need to do a better job of representing gender diversity at all levels, from entry level to management. Cheong clarified that this doesn't mean that women should be given special treatment solely because of their gender - "The proof should always be in the pudding," she said.
- Cultivate mentorship opportunities. It's critical to Cheong that the next generation of women in the VC workforce no longer consider glass ceilings an obstacle. To accomplish that vision, she suggested that senior-level women in the industry embrace their role as mentors to help more junior-level women develop leadership skills. Cheong herself was the beneficiary of strong female role models, and it deeply influenced how she saw herself, fueling what she wanted to accomplish. "If it's leading by example or spending time with young women to share insight, I see it as a responsibility of those who have achieved a level of success in the field," she said.
- Apply STEM building blocks for early education to the VC industry. "[O]ne of the most exciting advancements for women over the last decade or two is playing out in STEM fields," Cheong said. Today, more women earn bachelor's degrees in STEM fields than men. "We're now seeing the role that early education and encouragement can have," Cheong said. "I don't see any reason these same types of building blocks can't be applied to the VC and financial industries overall."
What women can do to up their odds of breaking into venture capital
Women who aspire to work in venture capital can employ their own strategies to increase their chances of successfully beating the industry's gender-stacked odds.
1. Don't sell your experience short, even if you come from an untraditional background
Cheong noted that venture firms incorporate professionals with a wide variety of educational and professional backgrounds. Because of this, she advised women to kick their imposter syndrome to the curb.
"Too many women, for too long, have almost been made to feel embarrassed for having the kind of drive and tenacity it takes to succeed in the financial world," she said. "Embrace your tenacity and skill set, and remember that there's no one specific path to becoming a VC."
She explained that while it wouldn't make sense to apply for a job as a chef without knowing how to cook, having a professional background in business management, technology, or sales can serve you well at a VC firm.
"Market insight carries weight," she added. "If you have it, use it."
2. Match your skills with the right firm
According to Cheong, there are many misconceptions about what VC firms actually do - along with a lack of a clear understanding about the need for specialization. As an example, she noted that a VC firm with a focus in biotech or pharmaceuticals will seek a different type of recruit than a firm that targets tech startups.
"It's up to the individual to be proactive about matching their own unique skills and background with the firms that will most benefit," Cheong said. "Candidates should ask themselves, 'Where will I be most successful and why?'"
She advised familiarizing yourself with the firm's investment strategies, portfolios, and overall company mission and culture. More specifically, ask yourself whether the company is currently well represented by women and whether you feel strongly that what you have to offer would benefit them.
"While it's a good sign if a firm is well represented by women at all levels, as they've probably made accommodations for work-life balance decisions, it's not necessarily a dead-end if they're not," Cheong explained. "But it does mean a female candidate would be well-served by asking pointed questions about advancement opportunities and any 'what if' scenarios as it relates to potential family decisions."
3. Build and leverage your relationships
"A big part of early-stage investing is driven by relationship building," Cheong said. "Numbers matter, but it's often the intangibles that make or break a decision."
Creating a network with other women looking to move into the industry - or who are already working and succeeding in it - can pay off in many ways, both in the short and long term.
Since hiring often comes from within a firm's own network of relationships, Cheong recommended that candidates consider contacting successful female VCs to respectfully ask for some quick advice, instead of just sending a resume looking for work.
"I've found that my female colleagues are often all too ready to pass on their knowledge to those who ask," Cheong shared. "The reality is that, as women, we have a shared experience."
She added that the female-led All Raise (a nonprofit that's behind diversity and inclusion efforts to boost how much funding women founders receive) can be an exceptional resource for networking.
4. Give a little to get a little
Since the VC world is one of relationships, Cheong maintained that you can cultivate those relationships even if you're not in a position to invest.
"If you have specific skills that could be beneficial to a startup, consider involving yourself in an unpaid position with an accelerator or incubator," she advised. "Knowing how a startup operates, the hurdles they face, and the periphery players involved will provide a much deeper understanding of the process as a whole."
Cheong added that not only will volunteering your time in this way help you gain insight into what makes a startup successful and the steps it takes to get there, but you'll also be more informed about any red flags that may exist, and you can build relationships that could be beneficial in the future.
5. Lead with passion
"A colleague once told me she'd read there's roughly the same number of professional baseball players in the [US], right around 8,000 including the minor leagues, as there are VCs spread out over 1,000 or so firms," Cheong shared. "Do most of those 8,000 baseball players want to make it to the Big Leagues and feel they have the skill to do so? Yes. Yet only about 1,200 actually see their dream come true. But that doesn't mean they quit."
Similarly, succeeding in the VC space requires motivation that "extends well beyond just earning a paycheck," she shared.
"Seeking out those VC firms that are investing in things you care about, or have the potential to truly enact change, delivers a different type of day-to-day motivation," Cheong said. "This field requires so much more than just the ability to cut a check. But because of the steps required for both founders and funders to not only break in but to succeed, sometimes having a bit more drive and passion for what they do makes them a more valuable presence when they are sitting at the table."