1Mby1M Virtual Accelerator Investor Forum: With Deb Kemper of Golden Seeds (Part 4)

Sramana Mitra: I am completely in agreement with you. I really think that there should be a large pool of investors that are not unicorn hunters but who operate within the equity investing framework that we use in our ecosystem and may have successful investments. We need more of those. It’s unfortunate to see this mania. It makes me feel that we’re going to see lots of unnecessary failures where some of this money could have been channeled better.

Deb Kemper: It’s also a function of fund economics. If you have a $30 million fund and you get a $60 million exit, you’ve paid back your fund. If I have a billion dollar fund, I need a billion dollar plus exit to return.

Sramana Mitra: That is a different business. That’s almost private equity. If you have a billion dollar fund, you have to write very large checks. If you force entrepreneurs to take that level of capital, you’re just setting the exit bar so high. There are fewer acquirers. Not everybody can go public. It often gets into very unhealthy dynamics.

Deb Kemper: There’s another piece of it to it. Lately, I’ve been having conversations with entrepreneurs. There is something about running lean early and really finding product-market fit. You don’t want to starve a company, but there is something to having the right amount of cash at the right time versus building something out big. Then, you end up with nothing.

Sramana Mitra: We don’t believe at all in go big or go home.

Deb Kemper: Right. Do some foundational work that’s needed. If you try to scale quickly, a lot of times it’s on an unstable foundation.

Sramana Mitra: A slightly different line of questioning since you are working with female founders. What is your take on the ecosystem? Do you believe there is a bias against women entrepreneurs?

Deb Kemper: I do but I don’t think it’s conscious. That’s what makes it so difficult to try and change. There is a lot of research that has been coming out recently. What’s been fascinating for me in chatting with them and learning about their research is, it’s not just men who have biases. It’s women too.

As investors at Golden Seeds, we’re trying to educate ourselves on how to ask questions. We ask women entrepreneurs questions differently than we ask male entrepreneurs. We’re trying to educate ourselves and our male colleagues in other groups on how to shift this.

This isn’t a pipeline problem. There are enough companies out there with women in leadership positions. It’s how we’re getting them into the process. It’s really fascinating research that’s being done that we’re trying to internalize and broadcast out more broadly. There’s an important message in there for entrepreneurs. Some of the research says that women get asked more prevention questions versus promotion questions.

Sramana Mitra: What does that mean?

Deb Kemper: Promotion would be, “What’s your aspiration?” Prevention would be, “When do you hit breakeven?” They’re more about risk mitigation. When those questions get asked early on in the process, the companies that get more preventive questions get less money than those that are able to talk about their aspirations.

What was fascinating was, “How do I coach entrepreneurs to take a prevention question and flip it to a promotion answer?” That’s key thing that we have to work with entrepreneurs. All of these companies are risky. It’s all about understanding the risk.

Sramana Mitra: That’s a great point. Can you give an example of prevention question and how you turn that into a promotion answer?

Deb Kemper: To a question like “When do you breakeven?”, you could answer that and say, “Our target to breakeven is 18 months.” I would then switch it to say, “It’s amazing because at that point, we’re just half a percent market penetration. If we do our vision, that market is wide.” You want to address the question that gets asked, but then make sure you’re taking it back to your aspiration.

Sramana Mitra: Interesting. You’re saying that the research shows that women get more of these? I haven’t heard that before.

Deb Kemper: I’m happy to send you the links on that because it’s incredibly fascinating. Since I learned all of this, how do I change my questions now when someone is pitching to me the first time? I always tell entrepreneurs that every conversation is to get you to the next conversation.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Deb Kemper of Golden Seeds
1 2 3 4 5