1Mby1M Virtual Accelerator Investor Forum: With Gary Little of Canvas Ventures (Part 5)

Sramana Mitra: I will make a few comments to put it in perspective. We have all kinds of entrepreneurs here. People working on a smaller TAM opportunity have plenty of conviction. If you’re the market leader in a space that is a niche, you can have plenty of conviction and build a great business. You need to do it more capital efficiently and not raise huge amounts of money and hence, if you want to raise money, you need to work with funds that are smaller funds.

The truth is, the venture market is flooded with micro-VCs. There are about 700 micro-VCs. I constantly talk to investors who have raised $15 million to $75 million funds. If you’re trying to do a capital-efficient venture where you’re going to sell this company to a larger player after building it up to a point for $50 million, that’s a different strategy. 

The funding strategy is different. In that case, you should not be raising money from a $300 million fund like Canvas. What I see a lot in the industry is spray and pray. Don’t hit up Andreessen Horowitz because that’s not what they do. There is a body of VCs who would be willing to work with you but you have to go to the right audience and not just chase the big names or the bigger funds.

This is a very poorly understood area of fundraising. It’s understandable. All this stuff is complex. For the entrepreneurs, especially those who are doing it for the first time, it’s a lot of complex perspective.

Gary Little: I think you said it well. There are some opportunities where the TAM is zero because you’re inventing a new market. Those can be the best businesses if you can invent it.

Sramana Mitra: Do you have thoughts on how to close the existing gap between male-led ventures and female-led ventures?

Gary Little: That’s interesting. I mentioned that one of my partners is female. She’s actually our best-performing partner in our fund. We like women entrepreneurs and we actually have an outsized number of female-led entrepreneurs in our portfolio. We don’t really differentiate between a female and a male founder.

From a math standpoint, there’re fewer female entrepreneurs that come in and raise money from us. I think that could be because most of the businesses have less female founders because there’re less females in tech undergraduate programs. One way to improve that would be more females choosing engineering as their majors. That is where the huge correlation is.

Sramana Mitra: I fully agree with this comment, which is why I don’t pound on this topic of why there is so few venture female technology founders. It’s because they’re founding a lot of technology companies. Why is that? Because there are not enough women with computer science backgrounds. That’s a reality. The universities are trying to address that reality.

Until that equation tips, there’s no point pounding on the venture capitalist. We’ll never reach equality because venture capitalists are tasked with making money. The bigger question, which you have answered, is, “Is there a bias against women entrepreneurs?” People have very different perspectives on that question on the topic. It’s a much bigger topic that I don’t want to open up right now.

Gary Little: When we’re talking about a women-led entrepreneur, there’s no discussion about, “Is she going to leave and go have a baby?” The only thing that I would say when I meet with younger female founders is, “Why wait to start a company? Go do it now.” That will be my advice. These days, there’re a lot of mentoring networks. The core strength you need is product orientation and vision. Just go do it.

Sramana Mitra: Great! It was a pleasure to have you.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Gary Little of Canvas Ventures
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