Cassidy: Let’s keep talking about venture funding for women

You could say that selling your startup is a little bit like having a baby: a long, occasionally painful process, followed by sudden exhilaration and a whole new chapter in your life.

But before you go speculating, you might want to ask Jennifer Zeszut, a CEO who delivered her baby boy, Henry, one day and closed the deal to sell her startup the next.

“I actually chose my delivery room — I had two choices — based on which had the stronger Internet signal,” says Zeszut, who in May sold Scout Labs to Lithium Technologies for what she said was between $20 million and $25 million. “It was deal negotiations up to the last second.”

It’s a great story that both Henry and Zeszut will no doubt be telling for the rest of their lives. But it’s also a vivid illustration of something we all need to keep talking about: When an entrepreneur is seriously driven, he or she will do whatever it takes to get past the obstacles standing in the way of success. Man or woman. Doesn’t matter.

But the uncomfortable truth is that companies led by women receive only a sliver of the venture capital dished out each year. Venture capital is the fuel that propels Silicon Valley. It is the boost that builds startups, which hire people, create new products and produce more startups.

In Zeszut I found a kindred spirit — not to mention a more authoritative source — to make my case.

“I think it’s important to keep talking about this because if we just do what’s comfortable and we never get outside our comfort zone, I think we as a country and a society are never going to harness and tap the great ideas that are out there,” says Zeszut, whose San Francisco startup tracked and characterized the Internet and social network buzz about client companies. “We should be trying to find the best business ideas in the world, whether they come from a man or a woman.”

It’s not always an easy subject. Men who talk about how it’s tougher for women to secure venture funding risk appearing patronizing. Women who talk about it risk looking like whiners or weaklings.

“I even struggle with it,” says Zeszut, who says she raised $10 million for Scout Labs. She says she’s been interviewed a number of times about the challenges of being a female entrepreneur.

“Usually the angle the reporter wants me to take is how vulnerable we are and how hard it is,” she says. “But the reality is I’m a CEO of a company and I’m not really comfortable talking about that stuff.”

Zeszut has read the research and knocked on the doors of venture capitalists and she has no doubt it’s tougher for women. She favors an explanation put forth by some academics: pattern recognition. The idea is that VCs are prone to fund deals that seem familiar, particularly if it is reminiscent of a successful deal that’s come before.

The bad news with the theory is that the historic pattern consists overwhelmingly of businesses led by men. The good news is that as more women-led companies like Zeszut’s provide big payouts, the patterns that investors recognize as promising will expand.

Jed Katz, a managing director with Javelin Venture Partners, one firm that invested in Scout Labs, says he’s already noticing a new pattern at his 2-year-old San Francisco firm. It struck him this summer at a baseball outing for the 20 companies that Javelin has funded.

“There was a point during the game,” Katz says, “when there were three women CEOs that my partner and I were talking to and we said ‘Wait a second. What’s the actual ratio?’ “

Add in a fourth woman-led company the firm funded and it turns out the figure was 20 percent of an admittedly small pool. A comparable number for all venture capital investment is hard to come by, but a number of studies looking at different business sectors indicate the percentage of venture-backed firms run by women is in the single digits. And Katz says 20 percent is far beyond anything he’s seen in his six years as a venture capitalist.

Not to mention that a company led by a woman — Zeszut’s Scout Labs — brought Javelin its first payday. It’s not a day Katz will soon forget.

That goes double for Zeszut.

Contact Mike Cassidy at mcassidy@mercurynews.com or 408-920-5536. Follow him at Twitter.com/mikecassidy.