The startup world is known for being dominated by men. With The Billion Dollar Fund for Women, entrepreneur and investor Sarah Chen wants to change this by channeling $1 billion towards women-led and gender-diverse projects.
Chen, 29, born in Malaysia, hosted her own television show from the age of nine. Today, she is the chief strategy officer of the startup Bloxed and lives in Washington D.C. In October 2018, she founded The Billion Dollar Fund for Women with four other women. Shelly Porges, an American investor who worked with Hillary Clinton for years in the State Department, is co-managing partner of the fund.
According to Fortune, $85 billion in venture capital was invested in startups in 2017, but only 2 percent of that was invested in companies founded or run by women. If money is opportunistic, why doesn't it automatically flow towards success?
Chen: Because decisions made about the use of money are never black and white. And those who control where the money goes are still subject to the law of familiarity, at least when we talk about venture capital. Unfortunately, not all venture decisions are made based only on statistics. Otherwise investors would always favor diverse teams. Studies show that such teams are more successful and generate around 50 percent higher revenues.
But investors want to see returns. How is it possible that this investment gap exists at all?
Chen: A key underlying issue is the unconscious bias we each naturally have. When a venture fund invests in a company at a very early stage, even without any proven repeatable revenue, what do they invest in? They invest in the judgment of the founder's track record and potential success -- and yes, the law of familiarity means that an old white man might back a younger white male entrepreneur who reminds him of himself when he was an entrepreneur, who may have accessed him through a Harvard old boys network or so. This means that by looking different, we may not fit the bill of a safe bet.
www.spiegel.de
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