The below is an excerpt from Changing Tides: Powerful Strategies for Female Founders.

Women receive less than 2% of venture funding and make up 8% of VC partners, yet research shows that companies with female leaders and board members outperform all-male companies. Changing Tides brings together experienced female venture capitalists, entrepreneurs and thought leaders who share their expertise and tactical guidance through a collection of essays. This book is intended as a resource for anyone wanting to win — or support a woman to win — at the heavily stacked entrepreneur and funding game.

---

Things have changed a lot since I started my career as an investor in Silicon Valley. When I came to Canaan Partners 17 years ago, I was the first and only woman on the Canaan investment team. Now the team is 40 percent female and three of the eight general partners are women. This is highly unusual in the venture capital world. This also means that each person on the Canaan team has invested in a female-founded company, another extremely rare and unusual situation.

At this time, 25 percent of our portfolio companies are founded by women. This compares to the current industry average of 11 percent of investments in female-led startups.

At Canaan Partners, we focus on early-stage, series A investments. Our current fund – Canaan 11 – is an $800 million fund which will be invested over a three-year period. The investment strategy we apply is to go early and get high ownership, ensuring that Canaan is the first large institutional capital to be invested.

Our team has a disciplined investment strategy and our portfolio reflects an investment ratio of 40 percent healthcare and 60 percent technology. We go deeply over a long period of time to embed ourselves in the sector and the community, so that we are able to see when something new comes up and act quickly.

Our newest investment sector is Frontier Tech (aerospace), which offers us the opportunities to invest in the “next big thing.” One of our successful early investments was Skybox, a satellite-imaging fi rm in which Canaan invested $18 million. It was acquired by Google in 2014 for $500 million. I have worked on a handful of other projects in the areas of cutting-edge robotics, driverless vehicles, and computing. The powerful benefit of the aerospace sector is that truly transformational tech and ideas are being developed. It’s also less competitive for VCs than consumer or enterprise facing sectors. We look for the open space and take advantage of opportunities there.  

“WOMEN ARE LESS AMBITIOUS”

Over the years, I’ve seen some fairly extreme biases toward female founders, and these are oft en difficult to break when it comes to non-consumer, non-healthcare industries such as enterprise software, infrastructure, frontier tech, and other “non-traditional” industries. Women are frequently asked questions like “Why are you the CEO?” and “How do you know this business?” They are questioned in ways a man would never be questioned. As we see more women entrepreneurs in these areas, I hope that those biases will go away. More women need to get into these fields and represent themselves, and we need to support the women who are already in these industries, and make sure they succeed.

I have also heard male investors say things like “women are less ambitious” and that women “tend to shoot for the moon instead of the stars.” These are incredibly unfortunate thoughts that we will overcome as we see more female success stories.

For me, the exposure of the extreme sexism in the VC world began with Ellen Pao’s sexual harassment trial against Kleiner Perkin Caufield and Byers. She had such incredible strength to speak her truth against the most storied of Silicon Valley VC firms. To do what had kept every woman quiet before her—risk her career and her reputation. So brave and groundbreaking. I followed the trial with intense interest as did many women in Silicon Valley. Then came Susan Fowler and her honest portrayal of life at Uber, which led to the ousting of the then CEO Travis Kalanick.

But it wasn’t until the sexual harassment claims against Justin Caldbeck, general partner at Binary Capital led to the unravelling of that company, that Silicon Valley began to take this whole issue seriously. Before this, many articles were written and “rumors spread” because they were titillating and got clicks for their publishers. People simply considered these incidents to be isolated and not a big concern.

Following the Justin Caldbeck situation in summer 2017, and then Dave McClure of 500 Startups, so many other men in tech began to be exposed for their sexual harassment behavior and, in some cases, flat-out sexual abuse and assault. These revelations, combined with a waterfall of so many voices coming out one by one during the #metoo movement starting in the fall of 2017, really changed the conversation in Silicon Valley. I have such respect for all of the women who were strong enough to make their voices heard. They made a difference.

In addition to the women who spoke out, social media played a positive and powerful role in rallying people quickly around this issue, spreading the news and connecting people together in a shared experience. The #metoo movement, which started somewhat after the meltdown in the VC and tech community over sexual harassment, wouldn’t have been so quick and so widespread without the benefit of social networks. They have been incredibly helpful at bringing this issue to light and amplifying the message for those who had the courage to speak. For this I am grateful.

BEING A WOMAN IS A DISTINCT ADVANTAGE

One advantage I have as a woman, especially at this time, is that it gives me an edge with female founders. I have women coming through my door daily who have had bad experiences with other VCs and investors. I hear their stories of biases, of discrimination, of being ignored and dismissed solely because they are women. I have funded at least four founders who have stories of walking into other firms and being treated as less than their male counterparts. I am given opportunities to see the potential for companies and founders that other investors have dismissed or overlooked, allowing me to build strong and valuable relationships with the founders.

Multiple studies have shown that when a woman is at the investment table, investment firms are much more likely to invest in female-founded companies. They are, in fact, two to three times more likely to receive funding if there is at least one woman on the investment team. We offer female founders that opportunity. I believe that female founders will feel more welcome and will bring in more good ideas if they have female investors with whom they can connect.

Despite the issues that women have experienced here in Silicon Valley, I have never felt that being the only woman in the room is a disadvantage. I have learned to use my voice in a way that is opinionated and reasoned, to have conversations that aren’t about emotions, but rather about doing the right thing. I have also learned to throw down the hammer when it is important. My nickname has often been “the velvet hammer.” I am living proof that investment firms can change, evolve for the better and still perform – or even outperform the competition. I hope that the recent trend  of hiring more female investment professionals is actually going to change things, and it’s not just a fad.

When everyone comes at something from the same side you have a limited lens. Women often don’t have access to funds because the investment table isn’t open to them. I look for diversity at the investment table – a larger, more diverse lens will lead to greater success.

BEING AN IMMIGRANT IS ALSO A COMPETITIVE ADVANTAGE

One other thing that defines me is that I am a first-generation immigrant. My parents immigrated to the United States from Egypt. I feel that it gives me an advantage, an extra bit of drive and hunger to achieve more. I have  found that oftentimes immigrants have something to prove; that’s what I’m looking for as an investor, and an employer. I look for people who are intelligent, driven, nimble, and who will hustle.

I have been responsible for hiring many of the analysts at Canaan and most of them are immigrants or first-generation professionals. This wasn’t an intentional choice, I saw the same drive and motivation in them that has driven my success. Sociology tells us that we like homogenous groups, a preference that manifests itself in surrounding yourself with people who have similar experiences. For me that homogeneity is immigrant and first generation Americans who have the same drive and motivation that I do to achieve something greater.

I have invested in several immigrant-founded companies, which is unusual both in the VC realm and at Canaan. I want people who have the drive and don’t have a safety net to fall back on, who will give everything to be successful. Startups are hard, and I need people who are going to get beyond the walls and reach the goal, who will do whatever is needed to achieve their goal. I often see that drive and intensity in immigrant founders.

WHAT I’M LOOKING FOR IN INVESTMENTS

I invest in early-stage opportunities so a key thing I am looking for is “How big is the market?” and “How quickly and how well can you attack that market?” The size and timing of the market are critical. It doesn’t matter if you have the greatest product or idea if the market is not ready for it.

As an investor, it is about the ambition and the opportunity set that you offer. Market size is first, followed by timing, then by your differentiator in that market. When you are pitching, you need to make the VCs believe that they will be successful and make money by investing in your business. You want the VCs to become what I call a “Belieber” (aka a Justin Bieber fan) – they need to become your zealot by the time your pitch is done.

WHAT IS SUCCESS?

The thing I struggle with most in the Silicon Valley ecosystem is the hype. I recognize the value of it from a business perspective, but I crave substance and authenticity that is severely lacking in the Valley. So, yes,  I am also looking for founders who are authentic, who truly believe in what they are trying to create.

This is an important question we all need to ask ourselves and find our own answer: “When are you a success?” I have reached the point where I’m able to wake up each morning and say to myself “Everything is all good.” The drive is still there, but it’s not as demanding as it used to be. I have learned to accept myself and reflect on my accomplishments.

Over the years I’ve experienced periods of insecurity. When I had my sons, now 10 and 11, it was difficult for me to take the time off . Of course, no one told me that I could take as much time as I needed, and I constantly felt the stress and insecurity of my situation. For three years, I felt that I was doing everything at only 70 percent — I was a 70 percent mom, a 70 percent partner at Canaan. I wasn’t able to give myself the freedom to acknowledge that I was doing the best that I could at the time.

Looking back, I know that it was because I had my eye on the prize, that I wasn’t settled, that I knew that I could excel even more. Now I realize that the goals I had set were unattainable, and I have come to terms with that.

As bystanders supporting female founders, it can be incredibly hard to look beyond certain circumstances, especially when you are also caught up in the situation. It’s important to not talk to female founders about maternity, motherhood, or how to figure out how they can “do it all.” It’s more helpful to talk about looking beyond work and what each woman needs to do to take care of herself.

I have learned to look beyond the current situation and to give myself the freedom and space to succeed and fail. This is especially true for my professional life: the VC business is more about failure than it is about success. If you are going to be in this business, you have to become comfortable with failure. I have learned to be more okay with that than I used to be.

MENTORING THE NEXT GENERATION OF FOUNDERS AND INVESTORS

Mentorship is an important topic for me, especially for women in Silicon Valley. I didn’t have a mentor or sponsor when I started my career here – for me, it was trial by fire. I would never wish that experience on anyone, but it has taught me how to treat others. It has reinforced to me that it’s all about empathy.

Over the years, I have been involved in many types of mentorship, from supporting students to working with the State Department on international women entrepreneurs coming to the U.S. I’ve also been involved for many years with Sonja Perkins’ Broadway Angels, a female angel network made up mostly of general partners who invest in female-led companies.

Right now, I’m involved with a group of female general partners who are trying to see what we can do to remedy the lack of diversity in our industry.

While we began working back in 2017, we launched the AllRaise.org website in April of 2018. We are dedicated to diversity in funders and founders. We are focused on supporting and informing women founders about how and when to raise capital, if it’s the right choice for them, what the next steps are, and answering many other questions to encourage more women to seek and find funding.

Lots of women are being hired at this time in reaction to the latest news and the ripples throughout firms in the Valley, but to me it’s not enough that they are being hired at the junior level. Together with Time’s Up, we will be organizing events for investment professionals who are interested in moving from analyst positions to more senior positions, such as general partner. We will focus on mentoring, career progression, negotiating styles, family, balance, and help to answer questions like “What’s the follow-up?” and “What comes next?”

We need to make sure that the junior members who want to stay in the industry are able to do so. By mid-career, most women have left because they were being treated badly and were tired of it, and either got out of investing completely or started their own firms. I see it as my responsibility to help keep the women entering our industry to stay in the industry. The worst thing would be to have more women come in and then have them leave – why would they stay here if they’re being treated badly?

CREATING THE VC 2.0 COMMUNITY

The changes I have seen in Silicon Valley in the last year have been monumental, and we still have lots of work to do. If there is one thing we can learn from Ellen Pao, Susan Fowler and every woman who shared her #metoo story to shed light on this issue, it is to make sure your voice is heard. Be present and have an opinion. You might be wrong, and that’s fine. Learn the most authentic way that you can persuade and do it. Your special persuasive power might be pounding your fist on the table, sharing your views via a presentation, writing a blog about your experiences, whatever works for you. Find your strength and speak out. You cannot be mute. Be prepared and don’t be quiet.

As an investor, I work to do the same, to develop a strong voice in this community, and a strong influence. I am heartened by the changes I have seen in Silicon Valley during my time here, and particularly over the last few years. This includes how these issues are being shown in social media and in the media at large. Women are being heard and are becoming a force to be reckoned with in business and as founders. I am excited that people are starting to understand that a lack of females in the workforce has a limiting effect on the work we do here in Silicon Valley in bringing new technologies and solutions to the market.

The next step is to figure out how we can promote and retain people of diverse backgrounds, both as investors and as founders. That is the open question I have (and one that needs to be answered soon). I am optimistic. I have said that when I lose my optimism I should retire – optimism and realism are the keys to being a good investor. And so, I remain optimistic.

---

This chapter of Changing Tides was written by Maha Ibrahim, a Partner at Canaan. Ibrahim spots technology trends early and partners closely with her companies to drive growth and exits. She focuses on e-commerce and enterprise / cloud, and was one of the first investors to recognize the potential of social gaming. A champion of women in technology, Ibrahim is passionate about funding and raising the profiles of female entrepreneurs and is a founding member of All Raise. She is also a trustee for the Carnegie Endowment for International Peace. Ibrahim holds a B.A. in economics and an M.A. in sociology from Stanford University, and a Ph.D. in economics from MIT.

---