A few years ago, I was invited to attend an investor salon. It was a private event hosted by a founder and a handful of her current investors, and she told us about her company's mission in hopes that we guests might want to become investors too. I loved the product, the brand the founder was building and her plans for growth.
Yet I was hesitant to invest. I went back and forth, doubts and questions swirling around in my head. Should I just do it? Is it worth the gamble? What if I lose all of my investment? Ultimately, I didn’t write the check. When I recently saw the news that this founder had raised another successful round of funding, I was thrilled for her and kicking myself at the same time. Should I have just written that check?
“Women are far more inclined than men to use their wealth to change the world for the better,” says Linnea Roberts, founder and CEO of GingerBread Capital. “They will easily write a check in support of their favorite charity but struggle with the decision to write a check in support of a woman-led business.”
Today in the U.S. alone there are 12.3 million women-owned businesses. Compare this to only 402,000 women-owned businesses in 1972. According to the Women’s Business Enterprise National Council, businesses run by women produce $1.8 trillion a year. Unfortunately, that $1.8 trillion is only 4.3% of total private sector revenue.
Roberts started GingerBread Capital because she not only saw a lack of women decision-makers at traditional funds, but also a lack of women writing checks. “When we looked at the landscape, we did not see a shortage of women founders. We saw a shortage of women funders,” Roberts says.
The impetus for Roberts starting GingerBread Capital — named in honor of her mother, Ginger, who was an entrepreneur herself — was a light bulb moment. One evening, Roberts and her husband were having dinner with Bertha González Nieves, a female founder who was making a name for herself in a very male-dominated industry as the first woman tequila master. She had started a company called Casa Dragones, which makes exquisite sipping tequilas.
“I wanted to make an investment in her company and was surprised to learn that she had NO women investors,” Roberts says. “Meanwhile, my husband was able to get a bunch of his buddies together to invest in her, but I struggled to get my women friends, who had the means and the wherewithal, to do the same. I could feel the concern and discomfort with this ‘type’ of investment.”
So she launched GingerBread Capital, a venture capital fund that invests in the next generation of women founders and entrepreneurs leading high-growth businesses. In 2020, women-led start-ups received just 2.3% of VC funding. Roberts and her team are on a mission to bridge that gap in the market by helping women gain access to the knowledge, networks and capital they need to build and scale successful enterprises. Carbon38, Hop Skip Drive, Sweeten, The Second Shift and Tia are just a few of their investments across industries and sectors.
Here are three lessons Roberts has taken away from building GingerBread Capital:
1. Break pattern recognition
Venture capital investing can be a powerful vehicle that drives innovation, enabling big ideas to come to life and scale to their fullest potential. And yet, as Roberts points out, one of the things the venture capital industry prides itself on is “pattern recognition,” which can result in perpetuating systemic bias: White men writing checks for white men. Pattern recognition is when an investor uses experiences or patterns from the past to make decisions about current investment opportunities. This could lead to only investing in certain markets, in certain problems that are being solved, or in certain types of founders.
Historically, products and solutions for women and their lives have been created by men. Yet women control the decisions in over 80% of home- and lifestyle-related purchases. “We see more women creating new products and solutions every day. And yet it’s not surprising that women-led companies addressing the needs of women do not resonate with men who are investors,” Roberts says. “The ‘let me ask my wife’ comment is still the norm.”
Roberts says that she does see a shift, with both men and women increasingly recognizing the importance of women’s voices at the table. “We are on a mission to break pattern recognition in the venture capital world,” she says, “because we know that diversity of founders, employees, board members is all a competitive advantage. And we need more women who have a seat at the table when it comes to investment decisions.”
2. Remember that perfect is the enemy of good
“I believe women in general are more cautious and risk-averse than men,” Roberts says, reflecting on her own experience with Casa Dragones and other investment opportunities where women investors were reluctant to write a check. Her comment echoes my own experience and reluctance in investing in a woman-owned business.
According to a recent study, gender difference when it comes risk-taking is a product of socialization. How we raise our girls and boys differently is directly related to why women might be willing to take fewer risks than men, even when it comes to investing. "Environment is extremely important in shaping risk-aversion," says Elaine Liu, associate professor of economics at the University of Houston and author of the study. "If we can teach girls that they should be more risk-loving, perhaps that will shape their future decision-making."
The chase for perfection can also stop some women from investing. “Perfect is the enemy of good, and venture investing lacks perfection. It is high risk, and your first loss can be devastating,” Roberts says. “Women are often trained to believe that perfection is the end goal and that making a mistake equals failure. And we don’t talk about our failures enough.”
One of the goals of GingerBread Capital is to help women get more comfortable with investing in the private company asset class. Each woman can decide how she wants to allocate her own portfolio of investments — and putting your money and resources to work behind other women needs to be a part of the equation. For women who are looking to start with smaller checks, Roberts recommends crowdsourcing platforms as a vehicle to start supporting women founders, such as IFundWomen.
“The good news is that more women are realizing their own economic power and using it,” Roberts says. “More women are actively looking for opportunities to invest with women. The secret sauce is that women are highly motivated behind purpose and passion.”
3. Be unapologetically you
Roberts' singular focus to get more women to write checks for other women-owned businesses includes continuing to look for women founders who are building scalable businesses in need of investment. Roberts and her team are currently developing an informal network of high net worth women who can pool their resources and support high-growth-potential women-led startups that they might not normally be exposed or have access to on their own. Additionally, Roberts wants to create opportunities where women can come in at the early stage angel and pre-seed levels, with smaller check sizes than are typical in traditional venture capital investments.
Roberts is unwavering in her commitment to make venture capital more accessible to more women founders. She remembers once being asked: “Aren’t you afraid you’re going to miss out on some great deal by not investing in a business that’s started by a guy?”
Roberts' response was simple: “Sure, I may miss something, but I’m gaining so much by investing in businesses led by women. I’m unapologetically focused on women.”