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Only four out of 153 startups in 2017 had a female founder
To say that venture capital is male dominated would be a massive understatement.
As of October 2017, among the top 100 venture firms, only eight percent of partners are women, up from 7 percent a year and half before, according to the Crunchbase Women in Venture report. That number is much lower when it comes to female founders; of 153 VC firms founded in the United States in 2017, only four were founded by women.
Those minuscule numbers are partially why the announcement of the launch of Day One Ventures so noteworthy: the early stage firm was founded by Masha Drokova, a Russian-born angel investor, communications professional, and former politician and TV reporter.
The name of the firm comes from an idea from Amazon founder Jeff Bezos, Drokova told VatorNews.
"We invest in Day One companies. Jeff Bezos came up with that idea more than 20 years ago. If you want to stay innovative, then you need to live every day as if it’s day one. These companies follow external trends, are obsessed with their customers, resist proxies, and are capable of high velocity decision making," she said.
"We found over a dozen characteristics of true Day One companies. We filter investment opportunity through this prism."
Drokova identified five qualities she look for when investing: true customer obsession, meaning companies that put their customers first and anticipate their needs; embracing external trends, or companies that have a clear vision for where your space is going, predict market trends, and stay tapped into the newest innovations; flexibility, or companies that can roll with the punches and avoid managing on autopilot; high velocity decision-making, meaning leaders who make good decisions quickly; and companies that are press-worthy, that have compelling stories, where PR can truly move the needle.
That last quality has proven to be pretty important to what makes Day One stand out, as the firm provides its companies with more than just a monetary investment, but communications and PR services as well. The firm has a six-person team that includes communications specialists and analysts, who help companies shape their story, develop PR strategies, and actively secure coverage in top tier media, all of which is offered to them for no additional equity or charge.
Drokova says that Day One is the first venture firm in the world offering this type of service.
"The concept for Day One came to me when I was running a PR studio and questioned if that was truly the best model to help startups create and tell their stories on a strategic level. I realized that by working with startups as their investor rather than their vendor, I could create long-term partnerships with the companies based on trust and transparency, ultimately influencing their development at a larger scale," she said.
"I envisioned a VC that acted as a true partner to its portfolio companies, and supported founders almost as though it were an extension of their team. I tested it as angel investor. It worked well, we built meaning relationships and I've successfully exited an investment."
Day One has eight spaces it looks to invest in: AI, AR/VR, quantum, fintech (including blockchain), edtech, healthcare, marketplaces, and self-driving cars.
"We focus on these areas because we believe they will be some of the most impactful for society and business in the coming years," said Drokova.
So far, the firm has made 14 investments, including in Lvl5,a Y Combinator company founded by former Tesla and iRobot engineers which creates HD maps for self-driving cars; DigitalGenius, a provider of machine learning technology for customer service, which counts KLM Royal Dutch Airlines, BMW, and Unilever as customers; and Piper, an edtech company that manufactures a DIY computer kit for kids, which has been endorsed by Apple co-founder Steve Wozniak.
While the firm could not reveal the size of its current fund "due to SEC regulations," it has so far invested "a few million in these companies," with initial checks of $100,000 to $1 million. Day One typically invests in 20 startups per year, and plans to invest in between 30 to 40 startups in total out of this current fund.
"The long-term vision for Day One is to replicate this model for different areas of expertise. Because the model relies on professionals from various industries, it will open up VC to more diversity," said Drokova.
"We’re looking for founders who are not just genius entrepreneurs but also caring and kind leaders. By supporting those qualities, we influence business culture overall."
You may have previously read about Masha Drokova's story; she was profiled in the Wall Street Journal in May of last year. There was also a documentary made about her, called "Putin's Kiss," released in 2012; the title comes from an incident that occurred while Drokova was the leader of a pro-Kremlin youth group called Nashi, in which Drokova kissed Russian leader Vladimir Putin on the cheek.
In the decade since, she has gone on to consult companies like Gett, Houzz, Hoteltonight, and Acronis. She also went to work for VC Runa Capital where she sourced Classpass during the company’s seed round. She has also made 11 investments in two years as an angel investor.
"I entered VC because I saw a need to reshape how early stage investing works. I started working for a VC firm 8 years ago and noticed a lot that can be improved since then. For me, my customers are founders, not only LPs as for many older VC firms," she told me.
"Entrepreneurs need investors who will support them and who are always on their side as true partners. By providing specialized, hands-on expertise we’re able to support our founders in this way and accelerate their growth. I want this to become the new standard for early-stage investing. We don’t just provide advice, we do real work for them."
Drokova is something of an outlier in the VC world, as a 28 year old Russian woman launching her own fund, but she has a vision for how she, and others like her, can shake up the current system.
"I think women will have a strong impact on the VC landscape, especially as founders of firms where they can be key decision-makers. Women will change the relationships between investors and founders, making it more of a partnership rather than approaching entrepreneurs from a position of authority. There will also be more diversity in investment areas since women have firsthand experience with products targeted towards them."
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