Women might make up 51 per cent of the population, but you would never guess it by looking at venture capital (VC) funding numbers. Despite an uptick in women-led VC funds, recent data from research company Pitchbook suggests capital funding for women-led businesses is at a three-year low.
But there are still success stories, even during the COVID-19 pandemic, which has shuttered businesses and created disproportionate hardship for female employees. Toronto-based data startup Tealbook, helmed by CEO Stephany Lapierre, recently raised $18 million in Series A financing with its cloud-based products that unify and synchronize supplier data — a much-needed solution for many companies currently struggling with supply issues.
MaRS recently Zoomed in with Lapierre and Michelle McBane, managing director of StandUp Ventures, one of Tealbook’s investors. StandUp invests in seed-stage technology companies with at least one woman in a C-level leadership position, guiding them to Series A. The women discuss the challenges women-led businesses face, what sets some startup leaders apart, and how COVID-19 may lead to surprising funding outcomes after all.
Michelle, what did you see in Stephany and Tealbook? What initially got your attention?
Michelle McBane: I remember meeting Stephany in a little meeting room at MaRS, way back when. And then we kept colliding through various introductions. When you first meet her, it’s clear that she has deep domain expertise around the problem she is solving. And she truly identified a problem and was working to solve it. Not in a software way — more through her business and practice.
That, to me, is always really important in a founder. That means they have a leg up. And they have deep client connections that have validated their problem.
Having that early validation is so critical.
McBane: Stephany built a viable product that people were paying for, and she had incredible customer references. In the early days, it’s really the CEO who’s the evangelist in selling the product. And she had the ability to get to the right level of decision maker, build a relationship and get them to sign on the dotted line.
The other thing we look for is the ability to solve a really big problem. Her solution crosses industries. If she gets this right, her solution can be used anywhere. If you talk about market size, it’s massive.
But the next part is, OK, she’s got this great idea. She’s got customers. Can she build a team around it? That’s something that Stephany has proven she can do. She could give a master class on building a presence on LinkedIn! And she gets people excited about procurement — which, you know….
Stephany Lapierre: That was my biggest challenge initially, when I was looking for a CTO. There are so many exciting things happening around business to consumer and healthcare in the digital space. And suddenly you’re coming in with something that’s not necessarily the sexiest of problems to solve.
Speaking of recruitment, you’ve been hiring lately, 12 new data engineers, for example. Is taking on more women important to you at this stage?
Lapierre: When we have two really strong candidates, we feel like we owe it to ourselves, as an executive team, to hire more women and give that opportunity. And we’ve done really well on our data team. I know part of it has to do with having a CEO that’s a woman. That is a very attractive way to bring candidates.
Women-led companies are known for hiring great teams that lead to success. But despite that, capital funding for these companies is at a three-year low. So what needs to change?
McBane: You need to have role models. This is not just about women founding companies. It’s about women joining high-growth technology companies and seeing it as a place where they’re comfortable.
Lapierre: Our regional vice president of sales — she was a top salesperson. I asked her why she was leaving to join us. She said, “Yeah, I really want to work for a woman-led, a woman-founded or woman CEO, and you don’t get that opportunity to do that very often.” And so, I do think it’s a huge advantage.
McBane: I mean, our thesis is that diversity teams will outperform the homogenous teams. And if you start with a diverse team — and our focus is on gender from the start — it’s going to spiral out. So many of the large tech companies that started decades ago only realized they had a diversity problem once they got to thousands of employees, and then tried to fix it. And that just doesn’t work.
Steph’s story is going to get more women to say, “Oh, this is super interesting.” Because Steph doesn’t have a technical background either. When you look at the checkmarks that everyone wants, she’s a business person, but the traditional profile is a tech person. So, the fact that Steph is stepping up and succeeding is going to inspire others — and get rid of some of the biases that are out there.
Lapierre: I’m not the investor here so I don’t want to speak on behalf of Michelle, but I think you look at the risk profile, right? Like, how high-risk is this opportunity? And a lot of women have kids, right? In the beginning the work is just …
McBane: It’s all you.
Lapierre: It’s inhuman, because you have to be completely obsessed. And having children… I think the risk profiling is much higher. So what you need to do is reduce the risk profile. I was able to raise capital once I got a CTO. This was someone else who had built successful software companies on my team. That de-risked me.
Tealbook seemed to be at the right place at the right time in 2020 — as companies were scrambling with their suppliers and needed solutions like yours. But how has the COVID-19 pandemic had an effect on fundraising otherwise, particularly for women?
McBane: The fundraising environment overall is very strong. Although the data shows that female-led ventures declined in fundraising, I actually think the pandemic lockdowns are levelling the playing field. Steph sat in her living room and fundraised on Zoom. In March, April and May, all the VCers were like, “Oh my god, my portfolio is going to crap out.” And then they caught their breath. In the fall, the stock markets came back, and now there’s so much capital in the system. People are comfortable writing cheques without meeting people face-to-face.
Stephany would line up 10 calls a day with VCs. She was able to do that because the VCs weren’t travelling, so she was able to get to the key decision makers. I think in the long term, these changes are going to democratize the fundraising process. It’s going to be a turning point.
It seems that Stephany gets a lot of support from you. It’s not just about you writing a cheque and walking away.
McBane: Oh, that’s not my style. That’s not the kind of firm we’re building. I’ve always been, “we’re going to write a bigger cheque and be there however you need us.’
Lapierre: What’s special about Michelle is she’s all in. We text. We talk almost weekly. She cares so much and nothing fazes her. We’ve been through some peaks and valleys, and she just stays constant — and believes.
Interview has been edited and condensed for clarity.
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