Merrill Lynch last year put the total purchasing power of U.S. women at $5 trillion. Globally, women’s buying power will skyrocket to $18 trillion by 2018, from $13 trillion in 2013. By 2018, women’s purchasing power globally will hit $18 trillion from $13 trillion in 2013, and by 2028, women will control nearly three-quarters of all discretionary spending world-wide, the Boston Consulting Group says.
Tell that to the VCs on Sand Hill Road. Bring beer – guys tend to like it. And if you happen to have an idea for a sure-fire new “smart” trout lure, heck, bring that, too.
Only 6% of U.S. venture capital firms have female partners, according to Babson College’s Diana Project. And as one Harvard Business School MBA found out, that imbalance, combined with basic gender differences, can pose a problem for an entrepreneur seeking money from men for a startup selling to women.
Katrina Lake is the founder and CEO of Stitch Fix, a tech-driven online clothes styling and sales platform, and the 16th most highly funded MBA startup in Poets&Quants’ 2016 ranking. Lake started the e-commerce company in 2010, during the second year of her Harvard MBA program. Her San Francisco company has now received a reported $46.75 million in equity funding, and just moved into what will be five floors of new offices in downtown San Francisco.
GONE FISHING WITH THE WRONG BAIT
In 2013, in the period between seed funding and a $12 million Series B round, Lake ran into a little-discussed rampart of the Silicon Valley gender barrier. “There were definitely times when it was quite hard to fundraise,” says Lake, 33, who is one of only a handful of women in the Poets&Quants top 100 MBA startups ranking. “At the end of the day a venture investor wants to be passionate about the business they’re working on, and wants to add value. If I were a venture investor, I wouldn’t be interested in hunting or fishing or computer gaming.”
To be sure, other concerns kept potential investors’ wallets shut. Stitch Fix ships to its clients – after the women have sent in their size, clothing needs, and style preferences to a stylist via the Internet – five items of clothing at a time, any or all of which the customers can keep and pay for or send back for free. So the company must carry inventory – buying wholesale, selling retail. “Not a lot of investors are excited about using funds to buy things,” Lake says.
Still, she says, she never lost faith in Stitch Fix’s success. Even early on, when customer service was “imperfect,” customers kept coming back, she says. “I could always see that this business model works.”
Stitch Fix says it does not reveal how much funding it has received since series A and B rounds totaling $16.75 million. BloombergBusiness reported in April 2015 that Stitch Fix received $30 million in VC funding in the fall of 2014. When presented with the $46.75 million figure for total funding, a company spokeswoman did not dispute it.
In any case, major blocks of funding helped confirm Lake’s belief in her startup. “The fact that a well-known, smart investor is willing to make a high-risk gamble on you is validating, and I think a sign that you’re onto something,” she says.