The (Alpha) Girls’ Guide To Venture Capital: People And Companies That Matter

What do Google, Facebook, Uber, and Zoom all have in common?

They have all transformed society in ways that were completely unimaginable before their introduction and far beyond their own immediate footprint. Because of Google, we now live in an age where you “never need to not know.” Facebook has connected everyone from siblings separated at birth to insurrectionists trying to dispute the presidential election. Uber’s ride sharing model and technology have transformed mobility as a service and Zoom has changed the way people and businesses connect around the world.

But before they were household names, they needed funding. And they were all funded by venture capital. In fact, these four companies are among the top VC-funded exits of all time, according to CB Insights.

Venture capital is the mechanism by which most new technology reaches society. Without it, inventors and founders are left with a good idea and no way to bring it to market.

The challenge arises once you consider the composition of venture funding, which reached approximately $330 billion in 2021. Using data from a 2019 2019 James L. Knight Foundation report, Managing Partner Elizabeth Edwards of H Venture Partners found that female or minority fund managers control only 7 percent of VC dollars managed. In 2020, only 2.3 percent of funding went to female-only companies and only 14.9 percent to companies with at least one female founder. Yet companies with at least one female founder perform 63 percent better than those that are all-male.

The lack of diversity in VC funding reflects the lack of diversity of those managing the funds.

Sonja Hoel Perkins is one venture capitalist blazing a trail to change that. With a focus on “people and companies that matter,” Perkins became the youngest general partner in Menlo Venture’s history at 29 and was named by Worth Magazine as one of the “100 Most Powerful People in Finance in the World.” An early investor in McAfee, Hotmail, F5 Networks, The RealReal, Uber, and Acme Packet, Perkins’ investments have improved the security and efficiency of the internet. As founder of The Perkins Fund and co-founder of the all-female investment group Broadway Angels, Perkins is changing the landscape of venture capital, and the companies that impact society as a result.

Considered one of the best-performing and most senior women in venture capital, Perkins was featured in Julian Guthrie’s book Alpha Girls: The Women Upstarts Who Took on Silicon Valley’s Male Culture and Made the Deals of a Lifetime. As Guthrie writes, “she was set on becoming a venture capitalist, knowing they played a key role in launching and shaping revolutionary companies. They were the futurists, hand holders, and risk takers in the financial world.” Perkins shares her thoughts on her career and evolution as a venture capitalist and angel investor.

What do you look for in an entrepreneur and in a startup, to know whether they have what it takes to be a disruptive innovator? What traits have you found that most successful founders have?

Sonja Hoel Perkins: I look for large and fast-growing markets. I look for companies that are solving real problems. To validate the size of the market and the problem, I call customers and ask them, “Is this a big problem, how were you solving it before, and what other solutions did you consider?” Then I’ll try to figure out if the company has the potential to be the market leader.

“When you have a new and growing market – like the Internet – you want to be investing in the “blue jeans” of the market – the technology that everyone is going to buy.” – Sonja Hoel Perkins

I like infrastructure companies. When you have a new and growing market – like the Internet – you want to be investing in the “blue jeans” of the market – the technology that everyone is going to buy. During the California Gold Rush no one knew which miner was going to find gold, but Levi Strauss knew all miners were going to need blue jeans. In the early days of the Internet, I invested in F5, which sold a load balancer for web servers called BigIP. The web was growing so rapidly that the processing power of servers was not keeping up. Every business needed an F5 load balancer.

I look for entrepreneurs who cannot sleep at night because they want to solve big problems. They have passion. I once saw a sign at Harvard that said, “CEO looking for a good idea,” which is an example of the worst kind of entrepreneur. The best entrepreneurs will say, “at my last job I recognized a really big problem that no one else was solving, so my co-worker and I decided to create a company that will solve it.”

I don’t look for degrees from certain schools or prior experience as a CEO. Some of my most successful CEOs have had trouble fundraising because they don’t come from “Central Casting.” One of my most successful founders has a degree in film, not engineering. That’s probably one of my secret weapons: being able to read people to see their potential as leaders. Probably because I’m a woman and not from “Venture Capital Central Casting,” I am open to less obvious entrepreneurs.

Venture capital is the path by which much of technology reaches society. Can you please share your thoughts on VC’s role in shaping society, and advancing Environmental, Social, and Governance (ESG) goals?

Perkins: Venture Capitalists have an incredible role in society and incredible power. They decide what does and doesn’t get funded and how technology evolves.

Several years ago, I gave a speech at the SHE (Social Human Equity) Conference in Oslo, Norway. One theme of my talk was that the venture capital industry is broken due to its lack of diversity. While there are many business models that are highly profitable, they cause huge problems for society – they exploit women, addict children to games, harm the environment, promote mental illness, and spread disinformation. Even though the costs to society are high, the venture industry still funds them. I personally think that if there was more diversity in venture capital, these companies would not be funded. There are very few women and people of color in venture capital. Only two percent of venture capital dollars go to women founders and less than one percent goes to Black founders – even less to women Black founders. That’s a real problem. Today’s issues around our democracy, misinformation, mental health, our environment, and trafficking are the result of companies which, sadly, were funded by venture capitalists.

When the venture industry becomes much more diverse, positive change will happen. For example, Juul, the e-cigarette company, probably would not have been funded. Teenage smoking was basically solved, and the funding of Juul created a new crisis of smoking among teenagers again. And I would bet that no mother would have ever funded that company, regardless of the business model. All venture capitalists need to think of big picture costs to society before making investments. Sometimes making money is not worth it.

“For each investment I ask myself, ‘If the world didn’t have this company, would it be missed?’ That drives how I spend my time and in whom I invest. – Sonja Hoel Perkins

Fourteen years ago when my child was just born, I began to deeply question my work. What was I doing, and was I working for the right reasons? I decided I wanted to move the world forward and make it a better place with each investment I made. I came up with a personal statement of purpose which is “investing in people and companies that matter.” For each investment I ask myself, “If the world didn’t have this company, would it be missed?” That drives how I spend my time and in whom I invest. I don’t invest in apps or games designed to addict children. I do invest in women – fifty percent of my founders are women. I do invest in Black founders and people of color. Fourteen percent of my founders are Black women which is almost unheard of in the venture capital industry. I hope this is a new trend.

You founded Project Glimmer (www.projectglimmer.org) “to inspire every girl to envision and realize an empowered future,” and your focus is on foster youth. What inspired you to focus on this segment of underserved youth? Can you share a particularly memorable story or two?

Perkins: While we serve all women and girls, we focus on the over 400,000 foster youth in the U.S. Twenty-nine percent of teenagers who transition out of foster care experience homelessness. Twenty percent are incarcerated before they turn 21 and are much less likely to finish high school or attend college.

I started Project Glimmer because I realized that self-confidence doesn’t start right when you graduate from college. Believing in yourself starts very early on when you’re young – when people like your parents or teachers tell you that you matter. There’s a segment of our society, young women and girls, who are told every day that they’re not valuable. Their schools aren’t great. Some of their neighborhoods don’t even have grocery stores. They are forgotten. We believe they are valuable, and Project Glimmer was started to let them know their worth. I truly believe that women who believe in themselves can change the world. I know for a fact my dad’s belief in me gave me the courage to believe in myself and take risks.

Project Glimmer started in 2010 when I learned that the San Francisco Firefighters Toy Program had no gifts for teenage girls. They were forgotten. That year we gave 800 gifts and have since served over one million girls nationwide. Our first program was giving “Gifts and Goods” (mainly jewelry and make up), and then we started our ”Days of Empowerment” and “Empower Hours” on Zoom. We also offer one-on-one coaching. We believe a girl can’t be what she can’t see, so we show them what they can be. We help girls envision and achieve their empowered future.

One program we work with serves youth in San Francisco who have attempted suicide. Kids spend two weeks in the program designed to help them like themselves again. One of the early goals is to get the kids to shower and take care of themselves. Project Glimmer takes that self-care a step further by providing nail polish for them to paint their own and each other’s nails. The kids are so moved when they get to take nail polish home. It’s such a simple thing to give someone something so small yet so meaningful. That small act of human kindness helps them to feel seen and heard.

Our partners include many organizations such as First Republic Bank, Birdies, Google, the Broadway show Wicked, Redken, and Sephora. The girls come in person to get their hair and makeup done, then participate in workshops about networking, resume building, and financial management. Finally, they hear a panel of women who started in life like they did and “made it.” Each girl is professionally photographed with a positive word that describes her essence. They are pampered and leave with amazing gifts and the feeling of being valued.

In the book, you describe your inspiration to found Broadway Angels (www.broadway-angels.com), an angel investment group of world-class investors and business executives who all happen to be women. What differences in culture have you experienced with this all-female group, as compared with your past experience?

Perkins: Broadway Angels is really efficient. We don’t waste time. We are not a venture capital fund. We are a group of over sixty women who share deals and due diligence. We meet about six times per year. We vet the deals before the founders present, allowing only companies where a Broadway Angel is already an investor or seriously considering an investment. Each company only has twenty minutes to pitch and the members who are interested can follow up after the meeting.

Our meetings are efficient. We make decisions individually. We all do not have to agree to go forward with an investment and vote individually with our checkbooks. As you may know, the best deals in venture capital are often the most controversial. The best deals go quickly, and we work fast.

Most of us are very busy with our work and families. We make time for Broadway Angels because it matters. We have created friendships with purpose.

The conversation has been edited and condensed for clarity. Follow me on LinkedIn or check out my other columns here.