Why 90% of the Investors in This New Silicon Valley Venture Fund Are Women

FORTUNE MPW Next Gen 2019

This article by Michal Lev-Ram was originally published on Fortune.com.

On a recent Wednesday in Woodside, Calif., about a dozen Silicon Valley-based investors gathered to celebrate a new fund. These were some of the region’s top “operators”—the executives who make organizations tick day-to-day—from some of the hottest tech companies around, with many decades of experience (and financial success) represented in the room. But they also had something else in common: Nearly all of them were first-time investors.

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Operator Collective is a diverse group of leaders working together to redistribute access to wealth, help more founders succeed, and disrupt the venture capital ecosystem. Learn more at www.operatorcollective.com or by connecting with us on Twitter and LinkedIn.

The outsiders are coming in: The origin of Operator Collective

For most of my life, I’ve felt like an outsider. Whether it was being raised by immigrant parents who didn’t understand Western social norms, or my years as an awkward kid picked last for everything, or being one of the few women Chief Intellectual Property Counsels in the niche-y field of patent law, I’ve always been most comfortable working quietly in the background.

When you’re an outsider, you spend a lot of time observing. I’m often told I think outside the box, to which I silently respond it’s because I’m not enough of an insider to even know what the confines of the box are. And when you’re an outsider, you sometimes don’t even realize you have skills that would be useful to others.

Here’s an example. In 2008 I helped launch a venture-backed company we took from $0 to $100M and IPO in three years but I was such an outsider to venture that I didn’t realize this was unusual. There were the inevitable and valuable lessons learned during that period, and we ultimately grew the company to $300M.

After we sold the company ten years later, I started to spend more time with founders and VCs, mostly as part of the SaaStr community, which I’d been involved in from the early days (I’m married to the founder). And of course, I spent a lot of time where I’m most comfortable quietly observing. Here’s what I saw:  

  • The venture world revolves around VCs and founders. 
  • Roughly 90% of VCs and founders are white males, higher when you look at enterprise.
  • VCs and founders tend to hang out with other VCs and founders, and their networks don’t overlap much with operators, much less with women operators. 
  • Most b2b startups eventually want to sell their products to enterprise.
  • The majority of VCs and founders have either never worked in enterprise, or haven’t done so in decades.  

As I began to dip my toe in angel investing, I noticed something else: I was often the only woman on the cap table, and homogeneous groups were showing up again and again. I was bothered enough to ask a few founders if they’d noticed. These founders, to their credit, were horrified, and then even more distressed when they realized they hadn’t recognized it prior to my asking the question. They explained that they’d simply gone to their buddies for backing they didn’t know any women who might invest and could I please help.

The Buddy Syndrome strikes again
The fact is, they weren’t wrong. When you’re in the early days of starting a company, you turn to people you know the ones who trust you and are willing to take a chance. And people from your network tend to be people like you. (I call this the buddy syndrome.)

And beyond this, it’s a fact that fewer women invest. Women hold 71% of their assets in cash. They make up just 9% of venture decision makers and 22% of angel investors. And if you focus only on my area enterprise the numbers drop even more.

At the same time, I began asking my women friends: “Why don’t you angel invest?” Never been asked. Never had the opportunity. Didn’t occur to me that it was a possibility. No time to vet and not sure I know how to vet anyway.

Why aren’t more women investing?
I heard this over and over and from some of the most accomplished operators in the world, many of whom happened to be women… leaders who’d built the most successful tech companies in the world. In fact, many of today’s most respected operators are women.

Earlier this year one of our LPs, Reshma Saujani, Founder & CEO of Girls Who Code, released her book Brave, Not Perfect; this is based on the idea that from a young age, boys are praised when they take risks, while girls are expected to be perfect and steer clear of taking chances. Saujani’s experience is in the world of coding, but the translation to enterprise is clear: Women today are conditioned to be perfect at work, at home, and frankly in everything we do. As a result, we give 150% to our day jobs and 150% to our family and friends. We’re not looking to meet VCs and founders in the little time we have left over. Sprinkle in the gender pay equity gap and “gap table,” and the result is that most women don’t have the liquidity, much less the desire, to invest in people they don’t know and in startups they don’t have the time to vet. Yet they’re the very people with the backgrounds the venture world could use. So these women these ultra talented operators were also outsiders with no obvious path to get in.

On the flip side, there’s venture. Now the value of diversity has been well established, yet venture remains homogeneous not because no one wants the change, but because there hasn’t been a natural way for it to happen (birds of a feather, and all that). So what we wanted to do was help both sides of the equation: Give talented operators from diverse backgrounds a safe, comfortable way to join venture + make it easy for founders and VCs to bring in new experience and perspectives.

The origin of Operator Collective
The idea took hold quickly. Operators were thrilled at the idea (just look at the absurd amount of talent we’ve assembled), and they quickly referred their fellow operators. Even universities and foundations signed on as LPs, a rarity for a first-time fund. And of course as we operators have been trained to do, we built this fund to have immediate product-market fit to address that gaping lack of operational expertise in venture.

So here we go. The sidelines are bursting, and the outsiders are coming in.

Say hello to Operator Collective.

We believe culture, diversity, and operational excellence are a key part of building truly great companies. Learn more at www.operatorcollective.com or by connecting with us on Twitter and LinkedIn.

Infographic: The absurd amount of talent in Operator Collective

It’s no secret venture capital is an exclusive and homogeneous group that’s hard for outsiders to crack. Yet VCs and founders don’t build companies — operators do. So why don’t they have a bigger voice to decide which founders get funded and how they’ll be supported?

That’s why we created Operator Collective, a new venture capital fund with a community of ultra-talented operators built right into its DNA. Operator Collective is making venture accessible to exactly the people the ecosystem needs now: leaders from diverse backgrounds with deep experience from building some of today’s most successful companies.

Our limited partners include 100+ respected operators who bring decades of experience growing and running the world’s most admired companies — from Zoom, Stripe, and PagerDuty to Salesforce, Slack, and beyond. They have more than 1500 years of collective operator experience; more than 60 of our LPs have built unicorns, more than 35 have taken their companies public, and more than 80 have steered their companies through acquisitions. The amount of revenue they own and people they lead is staggering.

Learn more in the graphic below. What an incredible team to have on your side.

Operator Collective Infographic

We believe culture, diversity, and operational excellence are a key part of building truly great companies. Learn more at www.operatorcollective.com or by connecting with us on Twitter and LinkedIn.

Learning From Operators: SaaStr Co-founder Mallun Yen’s Next Venture

This article by Gené Teare was originally published on Crunchbase News.

Mallun Yen’s latest endeavor, Operator Collective, launched its first summit bringing together operators of high growth venture backed companies.

As a writer focused on female founders and executives, I was invited to cover the event. Yen noticed that the venture world tends to revolve around founders and VCs. Yet her experience as an early team member at RPX and a co-founder at SaaStr is that COOs and operators are critical but do not spend time connecting.

Continue reading here.

Operator Collective is a diverse group of leaders working together to redistribute access to wealth, help more founders succeed, and disrupt the venture capital ecosystem. Learn more at www.operatorcollective.com or by connecting with us on Twitter and LinkedIn.