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Anu Duggal’s Female Founders Fund Scored a $100 Million Exit. Male Investors Are Finally Paying Attention

Anu Duggal explains what shocked her about starting a company in the United States.

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BY Christine Lagorio-Chafkin - 15 Jan 2019

anu duggal's exit Anu Duggal

CREDIT: Female Founders Fund

Early in her career Anu Duggal founded two businesses in India, and helped to raise millions of dollars in venture-capital funding. But after she moved to New York City in 2011, she witnessed female entrepreneurs struggling to find backing, community, and support. She vowed to do something about the situation, starting Female Founders Fund to prove that women make excellent founders. Realizing that goal, though, would prove to be a long, difficult slog. --As told to Christine Lagorio-Chafkin

I was living in India from 2009 to 2011, having co-founded an e-commerce company called Exclusively.in. It was the first to apply the flash-sale model to Indian retail. We ended up raising about $20 million.

Through that fundraising experience I saw this pretty blatant disparity between the people we were pitching to invest in our company and our team itself, which was very much 50-50 male-female. We had two female and two male co-founders. Also the male investors didn't understand the business. They had to go home and ask their wives or their girlfriends, "Is this something that you would use?"

Still, investors knew who I was. I'd previously started India's first wine bar, so the respect was there. It was only after we ended up getting acquired and I moved back to New York and started doing some angel investing that I noticed women were really having trouble getting access to funding. It didn't really make sense. I think part of it was due to the fact that historically you just haven't seen that many cases of large technology companies being built by women. Female founders were--this was 2013--sort of a novelty.

At the same time, a lot of macro-factors had changed. You had more women working at large technology companies like Google and Facebook. The cost of capital to start a company had come down, and there was a difference in even just the basic structural hardware that was in place and the platforms that were accessible. These factors made it much easier to build a brand or consumer product than say, 10 or 20 years ago. I felt like we were at a pretty interesting point in time where you were definitely going to start seeing great companies being started by women.

That was really the genesis for Female Founders Fund: to build a brand that offered not just access to capital but also to a base of other operators and founders who could really help women who were starting companies.

I was really facing two major challenges. As a first-time fund manager, it's incredibly difficult to raise capital, particularly without venture capital experience. That's because you're asking investors basically to invest in both your ability to get access to great deals, and then your ability to pick well. Plus, this whole concept of "female founders being back-able" didn't exist at that point.

I did 700 meetings over two years just to get the first fund going. There were definitely days where I was wondering, "Is this actually going to go anywhere, given how long the journey has been even to just raise capital?" Women-run companies didn't have the national awareness--there hadn't been the Stitch Fix IPO or Eventbrite IPO yet.

Anyone who I met who said no, I would ask them just to introduce me to one additional person who might be interested. That resulted in a ton of introductions, which eventually got me to people that really understood the concept and were excited about it.

The first, $6 million, fund itself closed in 2014. Some of the companies in that fund include Zola, Tala, and Maven Clinic. Our big moment was actually this year when one of our first investments out of fund one, a company called Eloquii, was acquired by Walmart for over $100 million. For all of the folks that doubted the idea, the first time where you're actually returning capital to your investors is incredibly powerful. We want to be able to prove to the investment community that you can generate great returns with a portfolio that is 100 percent female-founded. For those male investors who still have a hard time believing that, the results will be something they can't argue with.

By early 2016, we were starting to see a lot more awareness around the fact that female founders are a thing and the amount of capital that they're getting is a ridiculously small percentage of the whole: 2 percent. Being first to market in terms of building a brand that focused on this was suddenly very appealing. The timing was great. Fast forward to today, the landscape has, as we know, changed dramatically, and an ecosystem for funding female entrepreneurs is continuing to develop. Several of our own investors have gone on to start funds that have a similar focus to invest in female founders. We launched our second fund, this one $27 million, in 2018.

Ultimately what's going to drive change, both in terms of female founders and female VCs, is exits. When it becomes normal to have a female-founded company go public or to be acquired, I think that's when there'll be true parity. Right now we're at the beginnings of that. I remember last summer, I think it was in July, in a single day three female-founded companies raised over half a billion dollars. Now that's a sign of something.

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