Maren Bannon founded Jane VC a year ago alongside her Stanford classmate Jennifer Keiser Neundorfer to focus on investing in female founded businesses. Bannon is based here in London and focuses on UK companies, a technology scene she is bullish on.
Jane VC is unique in that its founders, investor committee and venture fellows are all female and the fund has already invested in US technology startups focusing on AI and the workplace of the future.
Last month we sat down with Bannon to chat about Jane's unique model, the UK tech scene, what they look for in founders beyond their gender and how diversity and inclusion is improving across the industry.
Below is a lightly edited transcript of that conversation.
Scott Carey, editor at Techworld: First things first, how did you get into VC?
Maren Bannon, founder and partner at Jane VC: I never thought that I would go into VC. My experience is in operating roles for large tech companies as well as early stage startups. I’ve spent almost all of my career in San Francisco. I was also a founder: I started a company, raised capital, scaled it and had the incredible experience of being an entrepreneur. I became a venture capitalist because I saw a need in the market for a fund focused on women.
I started Jane VC with one of my classmates from Stanford Business School. She comes from the investing side, and has been running an accelerator and venture fund in the US for the past seven years. We were catching up about a year ago and we realised that we were both seeing the same problem – the problem of women not having enough access to capital - from different sides of the table. We had both been thinking about this issue for a long time, but the aha moment was realising it was something we could solve together.
The root of our passion for this actually goes back to our days at Stanford Business School. One of the things that we noticed was, even when we were students, the men were investing in each other. The men were asking each other to invest, they were starting businesses. And we noticed that a lot of the women in our class weren't; for some reason, it wasn’t a social norm. I think we've seen that trend continue over the past decade and that to us just felt like this huge missed opportunity.
When you were setting Jane VC up, was it just an anecdotal, gut feel that this was a problem, or did you go away and do some research and start to see that there was a huge market opportunity there?
It started out as a gut feel, but a gut feel that we felt confident about. There is actually a lot of data in the US about investment in women, although the data is newer in the UK. There are a lot of stats about the amount of capital that has gone to women. And everyone's heard the 2% of capital invested in women [stat]. Unfortunately that stat hasn't changed much over time. We've also seen stats about the higher returns on women led businesses.
So we knew there was the data to back it up. And we also had our personal experience of seeing the lack of investment in women in the microcosm of Stanford. But most importantly, we have seen our female classmates and friends actually build some really big businesses. So I think the combination of seeing this lack of capital, but also the fact that there is this huge untapped potential made us feel like it's an opportunity that we really wanted to invest in.
When you came up with Jane, did you see any other funds doing anything similar? Or were you very surprised that there wasn't anyone really focused on the female founder side of things?
There are more funds in the US focused on female founders. One thing that sets up apart from just investing in women is this idea that entrepreneurship isn't a geographic distinction, it's something that can happen anywhere. We believe that you don't have to live in San Francisco to build a unicorn. I'm from San Francisco, I've spent most of my career there, and I have strong connections there, but I do think there's a ton of opportunity in Europe, in the UK, other parts of the US and all around the world.
The other thing that I think is different is we're focused on radical transparency. In our experience, VC is a very opaque industry. And it's been set up in a way that you need a certain network and a certain set of connections in order to access it. I think that's a lot of what has held women back, but also diverse founders in general. If you're not a white male who went to Stanford or Harvard, it's harder to access venture and we don't think that's good for innovation. We think this is a missed opportunity.
So we’ve scrapped the intro. Anyone can pitch us, it doesn't matter whether you're connected to us. We're trying to be really open about what we're looking for, how our process works and give direct feedback to entrepreneurs. We're also doing some research to bring more clarity to this issue. We surveyed early stage founders to get at entrepreneur sentiment. We want to know what entrepreneurs lack, what they really need and what the gaps are, so that we can actually build solutions to serve a more diverse group of founders.
How do you go about building greater transparency into your processes?
We have an intake form that we have everybody fill out whether you're a cold intro or not a cold intro. We have a standard set of questions that gives us the basics that we need to evaluate whether a company matches our investment criteria. We do that initial screen on every company that comes through, and for the ones that match our initial criteria, we set up phone calls with or in person meetings.
We have created a process where we can manage a high volume of deal flow; we've gotten 800 pitches since we launched last October. This has been good verification that there isn't a pipeline problem, there are a lot of great female entrepreneurs out there, it's just a different pipeline that you have to work hard to access.
What kind of areas does Jane focus investment in?
We're focused on technology startups. Our focus is on high growth, big vision type of startups, we tend to gravitate towards software. We don't invest in hardware, medical devices, biotech or consumer products.
We're a generalist fund within software, but less consumer focused than some of the other women's focus funds. A couple of the themes that we're really excited about are democratisation of finance and the theme of using technology to help a wider range of people instead of technology that just helps the top 1%. Coming from San Francisco, I saw a lot of solutions that were focused on making the lives of wealthy people in San Francisco better. I think it's important to use technology to get out of the bubble and help a bigger portion of the world. We're also really interested in consumerisation of healthcare and bringing proven technology to traditional industries.
How do you see the VC and the entrepreneur landscape in the UK compared to your time in the US, especially from a diversity perspective?
I'm very bullish on tech in the UK, I'm excited about being here. If you look at the trend, there's been a huge increase in venture investment in the UK over the past decade. It feels like the UK is a nation of angel investors. I think the government has done a lot to encourage tech here. And then of course we're starting to see a lot more exits in the UK and Europe. I think Europe has a lot of the factors that make it conducive to being a leading tech ecosystem: universities, big tech companies, an educated workforce, leadership in some sectors like fintech.
In terms of diversity, the stats I've seen are pretty similar to the US, I don't think it's dramatically different. One thing that has impressed me is because tech isn't yet the dominant industry in London, there isn't the same noise that there is in San Francisco. There you walk into Starbucks and everyone is building an app, and every dinner party everyone's talking about their startup.
It's been really refreshing here where people are in tech because they love it. It feels genuine, which is exciting as an investor. I’ve found the community to be passionate, welcoming and open, and it's been easy to integrate and build connections.
Are you seeing those networks broadening out here and are there any initiatives or programs you have seen where people are trying to broaden out the access to those networks?
I’ve found tech to be a really open ecosystem in London with people eager to collaborate, especially at the seed stage, where it's all about collaboration.
Now that we have access to the stats and now that more people are talking about the issue of diversity and inclusion in venture capital, but also in the technology entrepreneur ecosystem, do you see things changing over the last year and what do you think could be done to kind of make things better in the future?
I think it is a big problem to change and is not something that you can change in six months, I think it'll probably take a decade to change it. And I think that one of the biggest ways to change it, in my mind, is more female investors.
When you have a more diverse group of people making decisions about who to fund, then you can start getting a better pipeline of female founders at the early stages, which helps with diversity at the later stage and within companies. We've seen the trend of more funds hiring female partners in the US, but there's a long way to go. The other important thing is, if you just have one female decision maker it's hard to make that much change, I think you need to get it to be 30, 40, 50% (of the decision makers) before you start to see more balanced decision making.
How do you respond to potential criticism of your model of just investing in female founders?
Every fund has an investment focus. The reason that we're focused on women is that the numbers are so dramatically skewed against women getting capital. We're not doing it because it's a social impact initiative, we're doing it because we believe women are undercapitalised and can build big businesses. Therefore we think women are a big investment opportunity that a lot of investors are missing.