Having female founders is 'just good business sense:' Rent the Runway Co-Founder
Jenny Fleiss, Venture Partner at Volition Capital and Co-Founder of Rent the Runway, joins Yahoo Finance’s Alexis Christoforous and Akiko Fujita to discuss leveling the venture capital playing field for women.
AKIKO FUJITA: The gender divide in the VC space has been well documented. Women make up nearly 5% of venture capital investors in the US. That number is even lower when it comes to the amount of funding that goes to female led startups that dipped last year to 2.3% of overall funding. Let's bring in a guest who's very familiar, both in the VC space as well as the startup space.
We've got Jenny Fleiss, a venture partner at Volition Capital. She's also the co-founder of Rent the Runway. And Jenny, I feel like you're sort of the perfect person to be talking about this because you've played both sides of this-- on the startup side, seeking funding. Now you're actually looking to invest. How do we get to a point where that gender divide is no longer a part of the conversation within VCs?
JENNY FLEISS: Yeah, well, I think it comes to having more women in investing roles. And it's one reason I was so passionate about joining Volition Capital Growth Equity Fund is to be able to be on the other side of the table, deciding which founders, which companies are going to get funding. And if you're a woman, you can often relate to female-founded businesses and the female consumer they're often addressing in a unique way.
So for example, when we were fundraising for Rent the Runway, we really struggled to get male VCs to relate to the value proposition of renting apparel. We were trying to show them, like, hey, this is how confident it can make a woman feel. We often had to explain, like, what an accessory is. That wasn't even something that they often knew. And yet, we were able to build a business that's been valued over a billion dollars. And I think it's because we came to the table with that different mindset, that female mindset relating to the female consumer.
ALEXIS CHRISTOFOROUS: At Volition, I know you're their first female partner, so congratulations on that. But when you look at companies to invest in, I know that you started a company with another woman, right-- Rent the Runway. How important is it that a woman or women are on that leadership team?
JENNY FLEISS: I think that depending on the concept, it can be incredibly important. Women make up over 80% of purchase decisions. They influence over 80% of purchase decisions, which means that if you have the lens of a female in the executive suite or founding a business, you can connect to that consumer and likely make more informed business judgments and decisions.
We were able at Rent the Runway to constantly, by virtue of being the consumer ourselves, think about the rapid innovations that we needed to make, the opportunities of categories that we expanded to, and to have this genuine passion for the business that we were running on a day-to-day basis, that you just need to have as an entrepreneur.
So, you know, I think female founders is just good business sense. Female investors who can connect and relate to those consumer problems and opportunities is also just good business sense. And the numbers bear out as well. You can see it in all the stats of the top performance of women and investing in women in founding roles.
AKIKO FUJITA: I highlighted that number in the introduction to you, 2.3% is all female-led startups got in terms of VC funding last year. That was a dip from the previous year. And I wonder what you attribute that drop to. There's a number of theories that have been going around, especially given just how women have been disproportionately affected by this pandemic, the risk calculation maybe that has shifted as a result of what's played out. What do you attribute that decline to?
JENNY FLEISS: Yeah, I think that there's probably a couple of things going on. You know, one is just in the moment of COVID, women's lives have been drawn in so many different directions. I have three children myself. And I can definitely relate to the impact of, you know, when schools are shut down, and you have additional responsibilities at home to keep your family safe, you really start to think about, maybe I'll build my business more slowly. Maybe I won't kind of go for that next stage of growth that institutional capital often requires, or you're just mentally reprioritizing the different aspects in your life.
So I think, you know, that's one element that women have to factor in. Often, I see women who feel that taking institutional capital is a choice between running a business the way that they want to in order to fit into the rest of their lifestyle versus growing at a pace that feels either daunting or uncomfortable to them.
So I think women sometimes naturally shy away from funding for that reason. They're a little maybe intimidated by it overall. But in the moment of the pandemic, I think with good reason, we are drawn to these other really important pieces of our life. And we need to regain the footing that I think we had started this great momentum prior to that.
ALEXIS CHRISTOFOROUS: You know, Jenny, when women venture capitalists make the decisions, they are more than twice as likely to invest in female-led teams. What do you look at, at Volition when you're considering which companies to invest in? What's important to you?
JENNY FLEISS: Yeah, absolutely. Well, we look for businesses that have seen product market fit. So they're typically doing above $5 million in revenue, and they're growing at usually at least double every year, so really fast growth rate. They've hit that product market fit. They're attacking a big addressable market that is often ripe for disruption.
And they have a really thoughtful approach to how they've spent capital to date and how they'll be able to spend capital going forward in a very efficient way, so that hopefully they're building self-sustaining businesses that don't need to continue to raise capital. And we can best align our interest as investors with their interest as founders. And of course, I think there's always the DNA of just a passionate founder, who's able to be a great leader and to fearlessly pursue their goals and in growing a huge business.
AKIKO FUJITA: And finally, Jenny, a question we've been asking of all of our guests on Women's Day, which is, you know, what's the institutional change that needs to happen so that your industry can reach gender parity? How would you answer that?
JENNY FLEISS: Yeah, it's a big question. You know, I go with the show, don't tell. So I think as much as we can, the stats are helpful and I think as a reminder of the broader impact and progress that we need to make. But having more women in business leadership positions, more women going pitching venture funds, growth equity funds, more women at the table making decisions of what businesses to invest in, and building big businesses, IPOing their companies, like, you know, we saw Whitney do with Bumble, I think the more those examples are out there, the more the next woman will reach for the next biggest goal and dream that they can have.
For me, personally, I was able to see the amazing impact that having an investor around the table that had the operator founder background had on growing Rent the Runway, and also that many female mentors and females around our board table had to growing the business. And so that was a big inspiration for me to want to really try to pay it forward and inject the same relatability and skill set that they brought to us to this next wave of entrepreneurs.
AKIKO FUJITA: Yes, certainly, you've sort of paved the way for the next wave of entrepreneurs there. Jenny Fleiss, venture partner at Volition Capital--
JENNY FLEISS: Thank you. I'm trying a little bit.
AKIKO FUJITA: --and co-founder of Rent the Runway, it's good to talk to you today.