The collapse of Milkrun should start a new conversation around venture capital spend (a female founders view).
Sadly, Milkrun fell over this week. People have lost their jobs and others have lost their money. No one feels good about that. There has been a lot written about the business particularly from a funding and investment view. I thought I would drop in a female founder’s perspective.
I am not close enough to their story to comment on what happened commercially. I am sure that the investors and the team worked hard to make it work. I am not writing about whether it was a good investment or not.
What does amaze me, however, is the size of the cheque.
As a female founder raising money to continue to scale my technology business, I can’t fathom raising $75M dollars and then losing it 18 months later. That amount is unimagine-able!
This week on Twitter, I suggested that the Milkrun investors could have spent that money on 10 female founded businesses instead of one big punt on one male founded business.
It sparked an interesting debate.
One investor (not a Milkrun one) told me that venture capital is inherently about high risk, fast growth opportunities. The possibility of a big win.
But how is this fair when those bets are being placed more on men and less on women? Female founders had significantly smaller median capital raises at $1.8 million, versus $5.8 million for firms for male founders according to LaunchVic’s Victorian Startup Ecosystem Mapping 2022 report.
Clearly this is a category that only works for some and why aren’t more people talking about how to change it? When you dive in to the category a bit deeper there are so many disconnects:
- Male voices are louder than women’s in this category. Many women are not speaking out about what they really think, maybe because they don’t want to risk what little chance they have of receiving venture capital.
- Women are pragmatic about their businesses. We are methodical in our growth, and we speak quite rationally about our successes. We are not trained to talk ourselves up. But it seems to be that hype, not just facts, wins venture capital.
- You can’t be a safe bet (we need to see more traction, what is your risk mitigation strategy) and a great gamble (fast growth at all costs) at the same time. And it is women who are being asked the safety questions not the growth questions.
When a category is so full of things that don’t make sense, when it only suits one type of customer and is inconsistent in how it delivers its experience, it requires investigation and disruption.
As venture funds continue to target larger and larger outcomes, there is a ton of opportunity left on the table that no one is seizing. You could invest in businesses that have an 80% chance of being worth $300M, rather than a 1% chance of being worth $80B.
I have been a profitable bootstrapped entrepreneur having run BrandHook, my consulting business for over 17 years. I am a proven, experienced, adaptable business leader who is also a board director and who has deep category knowledge in what we are building. Yet raising capital is new for me and this whole experience confuses me. We secured early Seed money from Skalata Ventures for Hearsay in 2020 so some might say we are one of the lucky ones. But to reach our full business potential, we need funds.
Bryce Roberts from indie.vc wrote,
There is an entire generation of entrepreneurs who are ambitious and highly qualified who can’t receive venture dollars because they look or act a little differently. Even for those founders who are building a “world-changing” company, this push to enormous outcomes forces them to embrace an insane amount of risk.
Let’s not shy away from having this conversation, let’s help more businesses grow, let’s push for fairness in an industry that at the moment only serves one customer, in one way.