Tuesday, November 19, 2013

Women in Tech Investor Panel

Women in Tech Network hosted five outstanding women angel/venture investors at General Assembly/Cross Campus Wednesday November 13, 2013. The investor panel was featured to discuss the following items:

                How they discover new startups
                What they look for in startups
                Their levels of investment
                Trends in the LA Startup “scene”
               
Panelists included: Renee LaBran (early stage investor primarily in consumer products at Rustic Canyon/Fontis Partners), Victoria Cheng (early stage investor in financial services technology at Core Innovation Capital), Alyse Killeen (investor and fund operations strategy support for Clearstone Venture Partners), Alexa Fischer (investor and fund analytic support for Correlation Ventures), and Eva Ho (an active angel investor for her own early stage technology fund, Susa Ventures).


Any one of these individuals would have made a complete evening speaking about her experiences and her perspectives.  Perhaps one day we will learn to give women the full stage they have deserved to convey their insight.  Logically, in the approximately one and one-half hour window of this event, we had an average of 18 minutes with each investor – barely enough time to scratch the surface of their wisdom.  Of course, that doesn’t even include the time spent announcing sponsors, the moderator, and the moderator’s introductory statements.

The best discussions started with the question from the floor, “What three things do each of you look for from an entrepreneur’s business and pitch?” Even though we’ve discussed this many times before, the surprising part was that women investors expect many, if not all, of the same things as male investors.  Perhaps that is because money essentially is neutral and that businesses that desire to tap investment capital probably should be neutral as well.

In the opinion of one attendee, perhaps women were not asking the right questions to move forward.  Better questions might focus on what entrepreneurs should be asking or doing to get investor's attention – one of the prime reasons attendees came to this event. The panelists clearly were eager to be as responsive as possible in terms of insight into the investment process.

Another good suggestion was that the organizers might have polled attendees before the event so the moderator could pose questions to which attendees really wanted the answers.  The moderator’s introduction focused on statistics about the low status of women in STEM fields according to the World Economic Forum data. While the WEF ratings are important, and certainly worth acknowledging that women in tech (and venture) are highly underrepresented, the consensus from conversations afterwards was that it would be better to concentrate the discussion on, specifically, how we can help women change those ratings. 

Interesting data from the Kaufman Foundation’s research into women and venture capital suggests that women entrepreneurs who DO pursue investment funding received money in roughly equal percentages to their male counterparts, but a major challenge is that there is a shortage in the number of women entrepreneurs coming into the queue, itself.  If we could generate more prospective deals from women entrepreneurs, we might expect to see more women funded.

Toward the end, questioners were presenting hypotheses and asking the panelists to comment. One line of inquiry suggested that women in technology are less willing to accept an offer to collaborate on a project or enterprise compared to men.  Clearly, choices about whom to team with depend very much on the leadership, the quality of the other team members, and the specifics of the project or deal.  Over-generalizing might miss the nuances of the specific offer.  

We do recognize the high propensity of women entrepreneurs to remain sole proprietors, to not hire on a par with male entrepreneurs, and to hire fewer employees overall.  There are many possible causes and explanations, not the least of which is the escalating costs and overhead currently associated with employees compared to even five or ten years ago.  Women’s differential perceptions of risk might also be an explanatory factor – real risks related to women’s average earning levels and experience.  Such risk-management strategies might turn out to be quite appropriate to their circumstances and fundamentally sound in the long term. 

Above all else, it is satisfying to see five talented angel/venture capitalists who just happen to be women and who are making great strides building viable investment funds, themselves, while also making it possible for entrepreneurs (women and men) to succeed in today’s very challenging marketplace.

Friday, November 1, 2013

MSCI Considers Sale of ISS

MSCI Inc., the global stock market index provider, reported October 31st that it has hired Morgan Stanley to explore options of sale or other possibilities for Institutional Shareholder Services Inc. (ISS), the Rockville, MD governance proxy advisory unit which MSCI aqcquired when it bought RiskMetrics in 2010.

MSCI stands for Morgan Stanley Capital International, created in 1986 when Morgan Stanley bought the original global stock index company, Capital International. See: www.msci.com

ISS was founded in 1985 by Robert A.G. Monks as an independent, objective shareholder proxy advisory firm. Nell Minow was its President from 1990-1991.  ISS went through several different owners since that time, while consistently laying claim to over half of the proxy advisory business, although several new firms have grown up to challenge its leadership.

MSCI is looking to leave the business because ISS and other proxy advisory firms are coming under closer scrutiny for their practice of both providing recommendations to shareholders regarding governance practices and also providing consulting services to the companies whose boards and directors they assess.  This double-edged sword has become as undesirable as auditors which also charge management consulting fees of the same firms and credit firms that also provide consulting services to the firms they score.

For a brief historical survey of the many mergers and acquisitions which have occurred since the proxy advisory business began in the late 1960s, see the Technology Place Inc. Powerpoint PDF at www.championboards.com/ProxyAdvisoryFirms.pdf.

It is no longer clear who could buy ISS, deliver the independent, objective shareholder analyses required in today’s more demanding governance marketplace, and make money. ISS’s income is dependent upon fees from major corporations who have a vested interest in gaining positive opinions about their governance decisions made by their boards of directors. 

The other challenge is that both the SEC, Congress, and other regulators have toyed with the idea of tighter control over proxy advisory firms.  The uncertainty surrounding the business has perhaps been an even stronger motivation for MSCI to re-consider holding on to the storied firm.

If ISS ceases to exist, will the other proxy advisory firms take up the slack or will the business simply disappear?