Why does gender bias persist in fundraising, preventing many deserving entrepreneurs from accessing the funding they need? In this episode Marcia is joined by founder and angel investor, Allison Byers. They discuss the need for awareness and innovation to overcome gender inequity in venture capital. Allison Byers, a two-time founder and experienced operator in tech companies, shares her journey from being on the founding team of a medical device company to becoming an angel investor. She highlights the inefficiencies and gender bias she encountered during the fundraising process, which inspired her to start Scroobious. Scroobious is a marketplace to more easily connect entrepreneurs to investors and investors to the companies they want to support. The episode underscores the importance of awareness in tackling the funding gap in entrepreneurship. By uncovering the biases ingrained within the venture capital industry, Allison and Marcia emphasize the need for comprehensive education and support for founders, enabling them to present their opportunities in a way that resonates with investors. Through the tools Scroobious offers, entrepreneurs gain access to quality resources and guidance, helping them navigate the fundraising landscape and increase their investability.
Why does gender bias persist in fundraising, preventing many deserving entrepreneurs from accessing the funding they need? In this episode Marcia is joined by founder and angel investor, Allison Byers. They discuss the need for awareness and innovation to overcome gender inequity in venture capital.
Allison Byers, a two-time founder and experienced operator in tech companies, shares her journey from being on the founding team of a medical device company to becoming an angel investor. She highlights the inefficiencies and gender bias she encountered during the fundraising process, which inspired her to start Scroobious. Scroobious is a marketplace to more easily connect entrepreneurs to investors and investors to the companies they want to support.
The episode underscores the importance of awareness in tackling the funding gap in entrepreneurship. By uncovering the biases ingrained within the venture capital industry, Allison and Marcia emphasize the need for comprehensive education and support for founders, enabling them to present their opportunities in a way that resonates with investors. Through the tools Scroobious offers, entrepreneurs gain access to quality resources and guidance, helping them navigate the fundraising landscape and increase their investability.
To get the latest from Allison Byers, you can follow her below!
LinkedIn - https://www.linkedin.com/in/allison-byers/
Read more about Dana Kanze's data here: https://hbr.org/2017/06/male-and-female-entrepreneurs-get-asked-different-questions-by-vcs-and-it-affects-how-much-funding-they-get
Watch Dana Kanze's TED Talk here: https://www.ted.com/speakers/dana_kanze
More on Scroobious: https://www.scroobious.com
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Marcia Dawood:
Well. Hi, Allison. Welcome to the show.
Allison Byers:
Hey, Marsha. Thanks for having me.
Marcia Dawood:
Well, I am really excited to talk to you today and learn more about how entrepreneurship is growing as a career, but we really just don't have the capital moving at the same pace. So the Angel Next Door podcast is all about how people become angels and everything that they need to know about being an angel and why more people need to participate. So I'd love to start, since you are wearing both hats, you are a founder, angel investor, so entrepreneur and angel investor. So please start by telling us a little bit about your background and then how that's evolved into what you're doing today.
Allison Byers:
Sure. And I am likewise so excited to talk about all of this today. So, for me, I'll give the Abridged version because I've had a very nonlinear career path, which is something I talk about a lot, too. But I was an operator in tech companies for about ten years before I got into entrepreneurship, and so I'm now a two time founder. My last company I helped launched, and I co ran as the business team member with Scientific Founders to launch a medical device company out of MIT and a hospital system here in the Boston area where I am. And that was my first experience being on the actual founding team and also fundraising. So we did raise about $10 million over the course of five years from every source you can think of when we think of funding sources. And then the company was acquired. But for me, what really stuck with me was first the inefficiency of that fundraising experience and then also the gender bias I encountered. It caught me completely off guard, and I am totally used to being the only woman in the room, having been in tech and in consulting for a long time. And the bias in fundraising specifically was really incredible. And I didn't know any of the statistics that I know now. So that was the impetus for starting my current company, Scroobious, which I incorporated three years ago. For me, when I left that last company, when that was acquired, I spent a lot of time researching what this experience looks like for other people to understand. Was what I went through normal? Is this what happens was something specific to me. And very quickly, you discover all the statistics of 1.9% of venture dollars going to women in my state of Massachusetts. It's actually 0.9%, and had this immediate realization of, oh, my gosh, this is a system failing millions of people, not millions of people failing in a system. And where there is this type of extreme inequity, there are innovations and solutions that typically come from outside of that industry to address it, where you have some specialized insight. And that's where I felt I had that and is why I decided to start Scroobious. So I just went on a little monologue there, but do you want me to talk more about Scroobious or go into something else?
Marcia Dawood:
No, I'd love for to hear a little bit more about the biases that you encountered and what happened. Tell us a little bit more of the story there and what you learned.
Allison Byers:
Yeah, so again, looking back on it, I can recognize a lot of what happened, but I didn't know at the time. So part of the story of my last company and when it went to acquisition is that we struggled to raise our Series B. We went through a Series A prime and then when it came time for the big checks, new venture investors, we really, really struggled and we had to go to acquisition, which I now know is also a very common story for women having to go to early acquisition before what was planned for the company. When you go to raise those later rounds and there's a whole lot of things that work against you, one huge one is how the meetings themselves go and the type of questions that women are asked. So there's some really great research out there on prevention versus promotion, questions that I recommend everybody go read and watch. There's a great Ted Talk by Dana Kanze and women are overwhelmingly asked more prevention questions, which I did get all the time in the meetings, which is defending yourself, it puts yourself on the defense, how are you going to protect your customers, how are you going to lower churn? It's all about defense versus promotion questions that men tend to get, which is how big could this opportunity get? And really forward looking and it directly translates to dollars. Prevention questions lose investment dollars for women and I definitely experience that. But more so, the larger factor at play here is that we have relied on venture capital to fund our innovation economy for generations. And the evolution of VC of Venture as an industry results in bias and inequity the likes of which we don't see in any other resource. If I'm being honest, in our country or in the globe right now, 98.1% of VC dollars go to men. And when you think about it, it's pretty easy to understand because Venture began with insular social circles of men funding other men. And new investors are trained by apprentice model, right? So men training men and investments are made by identifying signals indicative of past successes. Well, those past successes, that data set is almost entirely made up of men. So we're training Venture is using signals based on a very male history. And when you look at it that way, it's pretty clear why women aren't getting funding today.
Marcia Dawood:
And I'm really glad you're bringing that up because we have talked about this promotion versus prevention bias in the past on the podcast, but not quite to this level. And we will definitely put in the show notes the link to all of the research that was done out of Columbia University by so tell us then how Scroobious helps with getting the biases and getting the angels matched up to the right entrepreneurs that they're looking for.
Allison Byers:
Yeah. And so Scroobious, I'm in a very meta position because we're a startup as well, that we work with hundreds of startups, helping them in their fundraising journey while we're in our fundraising journey. Plus I'm an angel investor, as we talked about at the start of a founder angel. So it's a really interesting place to be, but Scroobious as a platform is essentially a two sided marketplace, but it's a little bit unique. So in my research, before I decided to found the company, I talked to hundreds of entrepreneurs, I talked to hundreds of angel investors to really understand the landscape and the pain points and how we could make a demonstrable difference in the flow of capital outside a venture. And so for founders, particularly those who identify as underrepresented, which is where we focus, there is a real lack of access to quality education and guidance, not just in how you create a deck, but in how you understand what investors are thinking and what is compelling to them based on their needs. And investors are in different buckets there as well. An angel's needs are very different than a fund manager's needs. And so I knew if we were going to create something that helped investors discover opportunities, well, we have to educate the people that are presenting those opportunities and that's what we do. On the founder facing side of our platform, we've brought our material that we teach at dozens of accelerators and university programs to a public scalable format. So we help upskill founders in how they're presenting their opportunities so they will be taken seriously and really helping uncover the investability. Whereas before they weren't communicating themselves as investable. So we've worked with over 600 founders on that side of things through that scalable education and guidance and community oriented platform.
Marcia Dawood:
Somebody investable.
Allison Byers:
Sorry, Marcia, I think I missed the.
Marcia Dawood:
First part of yeah, we'll start again. So what makes somebody investable?
Allison Byers:
Yeah, that's a great question. And so, very purposely at Scroobious, we do not serve as a filter for what we would consider investable or not. We focus on the communication element of it. And we have a forcing function in our platform so that founders must have pitch material that speaks to ten core sections in our framework. So we know they have a full business plan that they are communicating in this platform. But that's a whole nother great area of opportunity, is the definition of investability because it doesn't have to mean venture scalable. There are millions of investable opportunities for angel investors or for other capital sources like revenue based financing or equity crowdfunding where there can be that kind of early acquisition or other types of quote unquote exits that deliver a return to investors where everybody considers it a win even though it isn't venture investable. So we don't define what that means. We don't filter the business plan, we filter the work that was put into making sure that it is comprehensive and that the founder created material that is a quality material.
Marcia Dawood:
Interesting. So what are some of the trends that you see then amongst the companies of all of the steps that they need in order to get to that investable piece?
Allison Byers:
Yeah, so in terms of trends, one big trend that we're seeing is a much more focused effort on the comprehensiveness of the plan and on how you communicate it at earlier and earlier stages of building. And it's really interesting because there is a ton of data that supports entrepreneurship as a legitimate career path in a way that it wasn't considered until pretty recently. Some quick statistics. There is now 5000 entrepreneurship courses in the US. That's a 1900 percent increase since 1985, which my gosh, that long ago. Yeah, right. Especially for us on the call here. Not that long ago. There are 5 million new businesses every year in the US. Which is a 94% increase since 2013. There's 8000 accelerators in the world, half founded since 2014. Yeah, these are huge increases. Right. And we're training everyone to realize the American Dream through entrepreneurship. But we're not distributing the capital in a way that supports it for large swaths of our population. And that's where we're lagging and that's where we're building at. Scroobious is using technology to build the infrastructure to allow for the efficient distribution of this capital, particularly among angels and other non VC sources that right now is going unused. Right. There are billions of angel dollars that are just going unused because we don't have the infrastructure to support it.
Marcia Dawood:
And can you expand on that? What do you mean by going unused? Where is it?
Allison Byers:
It's sitting around, it's just not being allocated. So if you look know, with Scroobious, I talked about the founder oriented side. We also have an investor oriented side and this is where we're building. Right. So not all of this is in fruition like it is on the founder side that we've built over the past few years. But when I looked at the market and the data, there were 4 million angel investors active angels estimated in 2021. And all of this is an estimate because this data isn't really available. The ACA is the primary source and they injected $29 billion into startups in 2022. It increased when Venture went down. Angel went up to 36 billion. But we also know that 65% of angel group members are latent. So what about all that capital that those angel group members are looking to invest? Or why would they be members of a group and they're not investing those funds? Yeah, that is a huge opportunity. And we are seeing now, even if you think about the transfer of generational wealth and the increase year over year in direct investing by angels. This is billions of dollars of opportunity to help fund our innovation economy in a way that really wasn't available before.
Marcia Dawood:
Interesting. So then how does the angel side work of Scroobious?
Allison Byers:
Yeah, so on the angel side, the vision here is to build an interest based network for investing. So just like when you log into Netflix or TikTok or any of these social networks, know creator networks that we're used to, it's inherently interesting to you because it's based on yourself, it's based on your behavior. These platforms get to know you and therefore they can predict other stuff you might like that you otherwise wouldn't have known about. Well, we can do that with investing. We can match or if you think of online dating sites, it's all very similar. All of this has been done before, just not an investing. And we have a marketplace with millions of entrepreneurs on one side, millions of angels on the other. So the idea is, through the work our founders do with us, we collect an enormous amount of data about them and their style and their business, and a lot of intangibles like how coachable are they, we can estimate that with combining different variables as they work with us. On the investor side, every angel is their own person, right. The curation needs to be personalized so we can get to know you and therefore we can show you opportunities from founders that are not in your geography that do match what you're looking for. So it's inherently interesting to you. And that's the AIpowered piece of this. Similarly, we can identify similar algorithms for people, right. We can match you with other like minded investors who are looking at similar opportunities. And you can pull your capital or you can bring it back to your angel groups where you know that this is of high relevance to you and you can think of others where it will be too. And then you can pool that capital through partners. There's a ton of different SPV creator technologies now, ways to get checks to founders that are equal in size to a precede or seed stage fund check.
Marcia Dawood:
Wow. Very interesting. So I'm guessing that some of our listeners may be thinking to themselves, how is this different than Angel List or some of the other platforms that are out there?
Allison Byers:
Yeah, and it's a question we get all the time. And when I looked at AngelList, what AngelList has essentially turned into is creating these offline networks online because it's syndicate based, right. If you have to be part of a syndicate. So therefore someone is leading the syndicate and deciding they're the filter of what is investable or not or what is a good deal or not. And there is a diversity issue in that set of syndicate leads and of syndicate members. Whereas I'm looking at it in really the opposite way of no one should be a filter for anyone else. Right. If I even think about my last know you always say, what keeps you up at night? Well, when I was trying to raise that Series B, what kept me up at night was somewhere probably nowhere near Massachusetts. There was a family office that would absolutely fund us and we will never know the other one exists. Why is that? And with angels, it's an even bigger problem that's millions of individuals and they don't make rational decisions and they're looking to have that reaction. Right. One of my best investors in Scroobious right now just saw me on the news and reached out and wanted to invest. It is a totally different process yeah. Than a syndicate based or things that introduce groupthink or heavy due diligence that doesn't necessarily exist in true angel investment stages.
Marcia Dawood:
Interesting. So then what is Scroobious's biggest competitor? Who else is doing something like this?
Allison Byers:
So there's a number of matching platforms that are out there that have come out. Very few of them that I know of. One, authentically focus on diversity as a major component of the platform. Or two, have the founder education side of things. So other matching platforms could be considered competition. But I also hope there's lots of them. This is such a big problem. There is no one platform that is going to rule them all. My goal is to get our founders funded and I don't need to be the only way to do that and then honestly googling for education. Right. I'll admit on the angel side, we need more work like the ACA puts out or like others to help educate and get more angels. It's not only latent money from active angels, it's potential angels that could be active that aren't because they aren't sure how to get into it.
Marcia Dawood:
That's right. We have a huge awareness problem, which is what I've been working on for a while now. And next year we'll have a book coming out about it.
Allison Byers:
Yes. And everyone should watch your Ted Talk as well. It is it's a big education problem. So in terms of direct competition, I really look at things that might be competitive as partners. Really? We're collaborative. We work with equity crowdfunding sites. We work with accelerators and university programs. They are customers of ours or channel partners of ours because people who authentically are working toward addressing the extreme inequity and capital allocation. We all know that we have to work together. When you come from a marginalized group, you to work together and we're all very supportive of each other.
Marcia Dawood:
That's so great. Well, Allison, thank you so much for being on the show today. This is a very important topic. I love what you're doing with Scroobious. Can't wait to see as it rolls out of mehem is bigger and bigger. And thanks for being on the show today.
Allison Byers:
Well, thank you so much for having me and for having this great discussion.