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Ivy Nguyen: Redefining Venture Capital

April 18, 2017

Each day venture capitalists meet with startup founders who share ideas that very well could be our reality in a few years. It’s exciting, glamorous, impactful, and unfortunately, exclusive.

 

So what is venture capital? VC is a primary source of funding for startups and what I like to call a “front row seat to the future.” In fact, many of the tech companies you know began as startups seeking VC funding: Facebook, Twitter, Uber, Instagram,…etc. Venture capitalists provide capital to startups by pooling money from external sources (high net worth individuals, pension funds, etc.) and investing on their behalf.

 

In what has traditionally been a homogenous industry (white, male, and middle-aged), Ivy Nguyen is a breath of fresh air. Not only did she work hard for her place in VC, but now that she’s on the inside, she is constantly thinking of others (founders, users, aspiring associates,…everyone really). An outsider-turned-catalyst, Ivy digs deeper than ROI (return on investment) and considers impact; i.e., what should we be scaling?

 

If VC is funding for the future, I for one am reassured that Ivy is a gatekeeper.

- Shadi

 

 

 

 

 

Ivy Nguyen

 

Venture Partner, Stealth VC

 

 

A Day in the Life of a VC:

 

- Check in with a portfolio company on their current fundraising round

 

- Coffee with a fellow investor to compare notes and observations from the field, as well as share upcoming deals

 

- Speak to group of entrepreneurs about how to raise in Silicon Valley

 

- Read industry newsletters and tickers to keep track of recent funding rounds and new funds

 

- Meet entrepreneur for initial screening

 

- Conduct industry research: deep dive and look for relevant companies

 

 

 

 

 

 

 

 

1. For undergrad, you attended Stanford and majored in chemical engineering. How did you get into VC and why was it appealing?

 

While I was at Stanford a lot of my friends were in BASES (Business Association of Stanford Entrepreneurial Students) and the Dorm Room Fund (student-run VC). At the time I really had this (in retrospect) naïve frustration with the companies that were coming out of these programs – like Snapchat and Instagram. It felt like all of these VC’s were pouring infinite amounts of money into hiring the top minds of my class, and figuring out the trivial problem of how do we get more faces in front of ads.

 

The problems that I thought were more interesting included climate change, access to clean water, maintaining a sustainable food system to sustain this rapidly growing global population. That’s why I decided to strike out on my own and start a clean water access company, building low-cost water filters to sell and distribute in rural communities - starting in Southeast Asia (where I’m from). I raised a small amount of funding and did that for junior and senior year until I hit a point where we couldn’t figure out how to get any bigger. I was just 21 at the time and I didn’t really know how to make it global. That was when I started to soften my stance on VC a little bit.

 

The one thing that I took away from VC and the startup world was that scale was something that they were very good at. Facebook at the time had just IPO’d and I think 1 in 7 people in the world had a Facebook account. I realized there was something in the startup community and VC that I could learn after all so I came in with the idea that I would spend some time in that space and see what I could take from it so I could return to this problem later on.

 

2. Women make up only 7% of VC investors. Why is that and what are the implications?

 

I think that the VC ecosystem tends to select for a certain type of personality. It’s often quite aggressive in terms of trying to elbow your way into a deal. These firms tend to select people who are outwardly more competitive and aggressive, which aren’t considered acceptable for girls as they are socialized through adolescence.

On top of that, there is a definite hiring bias. The most obvious way to get into VC is to go into investment banking or management consulting – and men tend to go for those jobs. As that pipeline progresses there isn’t as much of a supply of women applying for these jobs as you might hope for.

 

Additionally, there is a lot of implicit bias. The second most common way to get into venture capital is to be a startup founder — and we know how bad the gender ratios are among venture-backed startup founders. When VC’s are looking for new partners (even associates) to bring onto their firm, they often look to their pool of former founders because it’s very relationship-based and trust-based. You have to get to know a firm for years at a time before an opening comes up in order to even be considered for the job. Given how clubby this whole ecosystem is, and this whole network is, it can be quite impenetrable for a young woman who is interested in breaking into this sector.

 

Another problem was one I encountered when I was trying to break into VC: a lot of these jobs aren’t even advertised. I ended up making a list of VC firms I thought were interesting and were doing things that aligned with my goals/what I had to offer. Then I just went through that list of 170 firms one by one and contacted them trying to lobby for a job there – even an initial meeting – to start building that relationship. As you can imagine, when most people don’t even know what VC is, it’s quite difficult to have the conversation as an outsider.

 

3. What motivates you?

 

Coming from a family of immigrants has really shaped how I think about my career. My parents were married before the Vietnam War and then they fled the day the war ended in 1975. Having grown up in the US, especially in the heart of Silicon Valley, I’ve basically lived in the future relative to the rest of the world – amid this incredible abundance. The world just seems so much bigger from San Jose than it did in Saigon, Vietnam and that was what really started to get me to think about the problem of scale, distribution, and access.

 

VC is so good at that – for example, taking transformative ideas and combining them with the right levers and distribution models to do something as crazy as putting a smartphone into almost every hand across the world. Think of all the different solutions that smartphone distribution has made possible: mobile banking in places that didn’t have credit cards just five years ago, using drones to deliver precious medical supplies to places that don’t have roads, off-grid electricity, and everything else that has been unlocked because they solved this problem of scale. That’s what motivates me so much. At the end of the day I am thinking of my family back in Vietnam and the magnitude of how unevenly the future is distributed.

 

 “I often find myself in the strange situation where I’m chasing down these women entrepreneurs and trying to get them to tell me what they’re doing.”

 

 

4. What advice do you give to female founders seeking funding?

 

Often when I’m looking on LinkedIn, I’ll notice male founders will take a quick look at my profile and within the hour, I’ll see an email hit my inbox with “Hey Ivy, here’s my company selling football gear to the NFL. It’s a ridiculous idea and I have no indication that you like sports but I think this is a great thing and we could totally work well together. How’s Tuesday work for a call?” In contrast, when I see a female founder look at my profile, they’ll look at it once, I hear nothing. Then the next day they’ll look at it and again I hear nothing. Often it’s some incredible technology that I publicly have said that I absolutely want to hear more about – something in water tech, medical devices, space technology even. There’s so much evidence out there that I absolutely want to hear from these founders and I still don’t.

 

So I often find myself in the strange situation where I’m chasing down these women entrepreneurs and trying to get them to tell me what they’re doing and to see if there’s any opportunity for me to participate in or learn about their round. While I would love to do that for all of my career, it can be quite difficult because my bandwidth is also limited and there’s only so much time I can spend chasing you all down. I definitely encourage anyone who’s interested, sees evidence for there being a fit (either with my firm’s interests or with another firm’s), to just reach out. Don’t be afraid because other than the five minutes it takes for you to put together that email, there’s not much you can lose.

 

*Please email Ivy at nguyen.ivyk@gmail.com

 

Why She’s At The Forefront

 

Women make up: 7% of VC leadership.

                               9% of entrepreneurs.

                               85% of consumer spending.

 

Do you see the gap? How can we create and invest in the future without the input of 50% of the population – or 85% of consumer spending? Setting aside the moral argument, female input is better for the bottom line: In 2015 First Round Capital analyzed their portfolio and found that companies with a female founder performed 63% better than those with all-male teams.

 

- In 2016, VC’s invested $58.2 billion in companies with all-male founders – female founders received $1.46 billion.

- VC firms with female partners are 2.5x more likely to invest in startups with female management.

 

Suppose we get more girls in the STEM pipeline and even increase the number of female entrepreneurs, how much change can we truly expect if there aren’t any women on the other side of the table?

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