Lisa Elliott, Lizelle Van Vuuren, Jen Gee Photography, Katika Roy and Jacqueline Fu
investment, which was made and publicly shared The new company from WeWork co-founder Adam Neumann is in Flow, by venture capital powerhouse Andreessen Horowitz.
Newman’s suspicious business practices and his sudden exit from WeWork full initial public offering In 2019, this new investment reflects the huge gap that exists in comparison to how much money Venture-funded companies founded only by women Garner, experts say.
The investment is a prime example of how the venture capital (VC) ecosystem has “always been unequal,” said Rebekah Bastian, CEO and co-founder ontrailA startup that helps people achieve their next personal and professional milestones, told NPR.
“When 16% investment partner In VC Firms Are Women, 3% Are Black and 4% Are Latinx, It’s Not Shocking That Female Founders Have Gotten 1.9% of Venture Dollars so far in 2022Bastian told NPR over email. “Black-founded startups in the US raised overall less in Q2 2022 ($324 million) received in the same check from Andreessen Horowitz than from Adam Neumann.”
Andreessen Horowitz did not respond to requests for comment.
Why venture funding got such an intermittent backlash for Newman
To understand why Newman, Flo, and the millions of dollars raised caused condemnation among women, August 14, 2019 is a place to start.
This is the day WeWork first released its paperwork to go public and revealed to the world How Newman embezzled millions of dollars for himself, restructured the company to exempt himself from tax, and rented out his assets to WeWork.
one month later, wall street journal informed of On Newman’s party and “unusual enthusiasm and excess”. One of the more puzzling aspects of Newman’s tenure was how an entity he controlled “we sold the rights to the ‘V’ word to the company for approximately $6 million – before public pressure forced him to call off the deal.” inspired to open magazine informed of.
Katika Roy, a gender economist and CEO and founder, said that seeing Newman raise hundreds of millions of dollars almost three years after exiting WeWork is a sign of “how Adam Newman will be but Abigail Newman will not be”. line pipe, an award-winning startup that uses artificial intelligence and cloud computing to close the gender equality gap in the workplace. Roy is also the daughter of a refugee who was brought to the US on Air Force One after being passed over by President Dwight Eisenhower.
Roy told NPR over email, “Flow funding shows perhaps the most high-profile example of ‘prove it again’ bias, or the fact that women work harder than men to prove their mettle. Is.” “These biases lead to smaller and less scrutiny for women entrepreneurs and entrepreneurs of color.”
Newman and Flow also reveal a double standard that exists around other opportunities in business, said Amy Nelson, Co-CEO RiverWhich has created group work and venues for working women across the United States.
“I think the outrage is about the fact that a lot of black and brown founders, a lot of women don’t even get a chance to fail. You can’t show the world a comeback if you can’t even join in. Arena,” Nelson told NPR.
How bias is woven into the world of venture capital
Despite a banner year that brought in a record $330 billion in venture capital funding in the US, only 2% fund in 2021 Went to women-founded teams, Roy said.
Part of this disparity stems from how investors question founders who are more women than men.
A 2018 Journal article, “We tell men to win and women not to lose: closing the gender gap in startup funding,” revealed how women receive more withholding questions from potential investors. Withholding questions focus on safety, responsibility, safety, and alertness; for example, “How predictable are your future cash flows?”
Meanwhile, men receive more promotional questions from potential investors, according to the article, published Academy of Management Journal, Promotion questions focus on hopes, achievements, advancement and ideals; For example, “What major milestones are you targeting this year?”
“These biases also reflect the entrepreneurial ecosystem in the US as a whole. 65% VC firms have zero female partners or GPs [general partners]and women only represent 4.9% “Of all the VC partners in America,” Nelson said. “We call ourselves the Land of Opportunity. However, as we see time and again, opportunities are not evenly distributed.”
These issues are among the many issues that explain why entrepreneurs like Jacqueline Fu did not seek out venture funding when starting their companies.
Fu and his co-founders, a woman of color, launched a 470% successfully funded Kickstarter campaign that helped achieve their business, pepperGrounded off, a direct-to-consumer bra brand for small-breasted women.
The venture capital Newman has raised is just another sign that the industry hasn’t moved on, Fu told NPR.
“I was enraged at the time and again and again that VCs invest in the same patterns that reward toxic, growth-at-value behavior and ineffective leadership of capital,” Fu said. “It’s wild that the safe bets for VCs look like Newman’s hypothetical ‘vision’ versus founders who can actually prove product-market fit and real customer opportunities.”
Change is slow but coming in the venture capital industry
Nelson said Andreessen Horowitz and its co-founder Marc Andreessen don’t care what the world thinks about their investments.
“No white person cares,” Nelson said. “Blonde people account for almost all venture capital investors and almost all venture-backed founders, and I believe their money flows in a circle.”
That circle must be broken, said Lizelle van Vuuren, a US-based South African who co-founded undock and founder of startup women, a learning community for women entrepreneurs. Van Vuuren is also OnTrail’s Chief Development Officer.
Van Vuuren was the first of several women to respond to Neumann’s VC rise on Twitter. When it comes to the world of venture capital, women not only have to “change the game, the rules and the playing field, we have to do it with a smile,” she tweeted,
“I think more women are going to win. I think more Black and Brown, Asian immigrants and disabled founders will continue to win, because we’re not going to keep quiet,” Van Vuuren told NPR. “Every generation yearns for improvement. That’s the beauty of human evolution. We always hope that the focus will be on improving the way we got things, especially the younger generation. So does Adam constantly in the spotlight. What remains or isn’t is irrelevant to anyone. Right now, at his desk, four team members are trying to build a startup with about $400,000 in the bank. They’ll run out of money in several months. and She has to figure out how to raise the money. She’s focused on that.”