Defying Investment Odds and VC Bias for Underestimated Female Founders

Stephanie LippSo it’s really interesting, but really exciting to see where we can take this with such a meaningful impact on the environment as a larger piece of the clean tech solution pie that we really see with all the other clean tech startups we’ve been getting to know during this experience.

Hessie Jones Thank you. You are a woman founder, a woman of color. And so everything that I talked about earlier about this risk wall and the fact that investors traditionally are having a hard time seeing over this wall and which is twice as high for minority owned businesses, minority and women owned businesses, what is your reaction to this? As a founder who’s trying to build this amazing new material in an industry that’s already, like, really hard too.

Stephanie Lipp I also didn’t realize that there was such a gap. I guess that’s part of the problem. A lot of people just assume there’s equity, that there’s accessibility for all types of founders. But when I got into the startup world, I realized that there are lots of barriers and just by looking at the numbers, it’s obvious. And I really shouldn’t have assumed that there is as much equity as I thought there was, and especially doing it in clean tech and learning about past famous founders, as you mentioned, Adam Newman and some of the other ones that have been able to get away with a lot of things that I just don’t think I would. And so it does make me nervous about how we’re going to move forward with a start up that has a really long runway, a long time to revenue, even longer time to profitability. It’s a little bit hard sometimes in the beginning to know whether it’s because we just truly are early or if someone of a different background would have been given the chance to be funded at these early stages, early risky stages. If I look differently or if I had a different background, that means that I do live with a lot of privilege where sometimes people don’t always assume that I’m a person of color. 

Stephanie Lipp But I do also feel other in these more traditional white male arenas also having a diverse background. I don’t have degrees or traditional academic background. So I do find that when a certain type of person is a dropout or didn’t go to university, they’re like, wow, you went and went into the grain and you did all this. But then people ask me like, can you really deliver? How can we prove to people or have confidence that you can deliver if you don’t have these? So that’s something I’ve definitely noticed already. So as we open our angel round in the next coming months, it’ll be interesting, now that I’m more attuned to these intricacies, how that will affect the opportunities that do come to us as we raise and go forward in our business.

Hessie Jones Thank you. Now I’m going to turn to Azar because this is not your first rodeo. You built businesses before, and so tell us a little bit, first of all about your startup, AI VALI. And then I’ll do a follow up question about your current raise and what challenges you’re facing and maybe the dynamics between you and investors. I do engage with them during your pitch. 

Azar Azad First of all, thank you. I really appreciate the opportunity and it’s an honor to be with Stephanie and Giselle and Bryan. Thank you. I really appreciate that. First of all, AI VALI, we started to look at using machine learning and deep learning technologies for quantitatively analyzing medical images. The reason for that is the golden standard for us so far is clinicians are visually looking at the medical images and making interpretation, analyzing it. In many of the drug development projects, we actually using the key opinion leaders to confirm the drug is effective, especially in cancer. That means before the treatment and after the treatment. And imagine if you’re just looking, visually analyzing, and that’s one of the major criteria for you, how many errors you can have. And interpretation is not really a solid methodology, but that’s what we had for many, many years. So that’s what we started. And we focused on colorectal cancer because endoscopy is the golden standard for it. And colorectal cancer is still the fourth cancer cause of death. And if you detect it at the earliest stage, is one of the best cancers because you can treat the patient. 

Azar Azad And the financial impact, the quality of life, especially the quality of life for the patient, is very much better than if you miss it and get it, let it go further. That’s the reason we started and we pivoted because of the economy, because of not being able at their start to raise enough funding given for it. The fact that there are giant companies available and talking about the same technology, but nobody delivered, many people told me, how could you do that? So, it’s so funny, you have been hearing all of those questions. Yes, I heard a lot people who even recently in the fundraising that right now I have. And I’m very conservative about financial projection. I never had a hockey stick. That’s part of our nature. We are very conservative. But the guy actually asked me, I don’t think you can make it. You can’t make it. How can you sell 100 devices? How you can sell these are the attitudes that sometimes you face. But there are also amazing groups such as Bryan, Giselle and some of the other VCs that started to come in and invest in women, invest in minorities and people of color.

Azar Azad The social groups that are supporting also started to get to really supporting a startup company. 

Hessie Jones That’s great. Thank you. Thank you for your time, for telling us about your experience. I’m going to turn it to Giselle, who is the GP at MATR Ventures. So tell us about your story. Like, why did you start MATR Ventures as an entrepreneur?

Giselle Melo As an entrepreneur. So basically, I’ll give you a quick little snapshot of who we invest in. And that pretty much tells you why I started MATR Ventures. So, like you said, Hessie, we invest in underestimated founders, but it’s since evolved to say we invest in underestimated founders with a mamba mentality. And so if anybody knows Kobe’s mindset around having a mamba mentality, these are founders that have likely spent their entire lives experiencing setbacks, but just ultimately decided that success is their only option. And so that’s the reason I started MATR Ventures. I was in their shoes at one point experiencing some of the things that have been said in this session already. But you just decide that is not the game that you’re here to play, you’re here to win. And I figured out a way, even though I didn’t get the capital and you have setbacks and people that will judge you before award comes out of your mouth. And the numbers sometimes speak for themselves, but they don’t even get to that point. Because as you walk in the door, they’ve made their decision. The reason I started MATR Ventures is because I experienced that, found my way past that.

Giselle Melo Built enough, I guess, personal capital and still recognize that there’s like this we’re going to this like the demographics. We’re undergoing this huge seismic shift right now. It’s interesting why we’re still called minorities. But the economy, I fundamentally believe I’ve always said this will grow in the hands of visionary, diverse founders and women are it because we’re the smartest bunch? No, I think it’s because we’re underestimated. But, you know, by 2031, half of the North American population will be made up by by this group of individuals. So for me, as much as it’s, it’s a personal thing where I’ve overcome it. And now I want to make that path easier for other founders with that mamba mentality. It’s also math, right? I like math. I was never the kid who was never the best speaker or writer in the class, but I understood math. And so if more than half the population of North America, we haven’t even touched globally what that looks like, but if more than half the population in North America will be in the hands of diverse citizens and we’re seeing the tremendous shift in businesses being built by this group as well.

Giselle Melo To me, it’s like one plus one equals two. In both cases. That’s where I’m going to put my money. And so what I believe is MATR Ventures was built for that reason. And so when this moment to unlock the most significant investment opportunity, some people will call it an arbitrage opportunity if you’re hardcore into the investing space and this opportunity presents itself to at least the investors who have invested in MATR Ventures, they get it. It’s an untapped market, probably the best opportunity and biggest opportunity that they have not even experienced yet. What do you do? You invest. So like I said, I like math. Diverse founders and women are my number one draft pick. And let’s go. 

Hessie Jones So you like math. But as you know, today women VCs only represent 1% of those in the VC community. So it’s going to take time. It’s going to take more than that. It’s going to take more than just money as well. I know you’re enthusiastic, I know you’re gung ho, I know you’re young, you’re young, so you can do this for a while. But what does that really mean to you as an emerging fund manager? The fact that you have this uphill battle? 

Giselle Melo 

Well, is this question for me or for everybody? 

Hessie Jones 

Yes. 

Giselle Melo 

No, for you it’s like this, you know, and people throw things at me all the time, like Giselle. You don’t understand how hard it is. But where am I going to spend my time? Where am I going to spend my energy? Where do we focus our time and our energy and the things that are working against us? Or do we find the networks, the people in the capital that at this point in time are moving us forward? I don’t have the luxury, and I’m going to call it that like many founders, black, Latino, people of color, women, I think the thought of spending so much time focused on the things that are coming against you is a luxury at least I don’t have, but it’s for the reasons you said. So if I don’t have that luxury, I’m going to choose to spend my time and my energy with people, networks and places and things that are going to move that needle forward even a little bit. But I’m also here for the long run. I understand that any good investment takes time. Any shift that’s been going on for 400 years takes time. 

Giselle Melo 

So I’m here for as long as I’m not that young, but for as long as I’m here, I’m here to play a long term game. So who’s with me? That’s the way I have to look at it. And I recognize –let me be very clear– I recognize the uphill battle, but I don’t have the luxury to focus on that. I just don’t. And so that’s my position. I’m not saying it’s right and I’m not saying it’s easy, but this is what I mean by a mamba mentality. The luxury is not there. So where do we put our time and whatever we have? Where am I putting it? I’m putting it to win. Who’s with me? 

Hessie Jones 

Thanks, Giselle. Bryan, do you have a mamba mentality? 

Bryan Duarte 

For sure. Echo everything that Giselle is saying. She’s probably right when she’s saying, don’t have the luxury, don’t have the time to worry about what you’re up against. Right? And as Stephanie brought up, I recognize my own privilege. I recognize my privilege as a male. I recognize my privilege as growing up very much in white spaces. So I’m going to use that privilege to try to break down those barriers and go in. And then I recognize where you haven’t asked a question yet, specifically. But as a male, I know if I’m going and talking to female founders, I was going to miss things. So when I originally found my first co founder, she was a woman GP. Unfortunately, she wasn’t able to continue on. I went out specifically looking, saying, I need another woman co GP to be on my team because she’s going to recognize what I don’t recognize. So I know I’ll have my own unconscious biases as a male. And that’s why I said I need to have a woman co GP as part of my team to make sure that I’m not missing what I’m missing. 

Hessie Jones 

Along those lines, this unconscious bias as a male, the full male person in this panel. So there are two things that are against us. Like, we have a system that is run by, let’s say, white male investors. And so they seem to be the ones that are dictating process and how they interact with founders. And so when we talk about the systemic barriers, it seems to me that Kapoor study actually came out with this, saying that the way the investors interact with founders is very different in the way they interact with male versus female. And they’ve indicated that males will receive more questions about the upside and market opportunities, which are more promotion-based questions, whereas women female founders will receive questions that are more related to potential loss or risk or market fit prevention type questions. And those who actually receive the promotion questions, which by the way, are males, will actually get six times the probability of receiving funding, six times more than females. So how do you stop or how do you actually curb some of these biases that are already out there? It already favors male, and this investment community seems to be somewhat resistant to change. 

Bryan Duarte 

So I’ll answer it the way Giselle answered math, right? So in the Canadian ecosystem, we’ve got two places to look to say how do we change it? We look at the BDC, which is one at least by investment volume, is one of the largest VC investors and they have put out through Diversio. Studies now show asking anyone that whether they’re investing into or funds they invest into have to disclose the statistics. So being a government organization, we as a population need to be putting pressure on them saying, make sure those numbers are coming out. Their last reports to me are too aggregated. Like, especially when it comes to minority groups, they’re grouping us altogether. To me, it needs to segregate it between black, indigenous, Latino, let’s see what the actual numbers are. Same with the CBCA that represents a lot of the venture funds across Canada. Let’s look at those numbers. And then the pressure needs to be put on that. The VC firms need to have in their representation more female partners. They have to have more racial partners, BIPOC partners. So that’s the only way it’s going to change. And to me, from a background in the energy sector, in a lot of smart metering sector, you can’t change it if you’re not measuring it. 

Bryan Duarte 

So to me, that’s the first place we have to get down to the nitty gritty numbers. A lot of the numbers we have in Canada and the stats that you’re quoting are North American and more US based. We need to see what the Canadian numbers are and start working to change those. It’s going to take funds like Black Tech Capital, like MATR Ventures, others out there like BKR Capital Capital and ventures that are focused on overcoming some of these things. And it’s a process, it’s a long game, it’s not a short term. This is going to change overnight. And we always have to be careful. Like right now when I look at the BDC and I see their leadership, I see actually another bias going in of white females. Right? And so there’s no racial makeup inside the senior executive of BDC making these decisions. And I’ve already heard it saying, so this is down some of the earlier stages, but women of color are being overlooked. Right. And again, there’s another level of unconscious bias. So we always have to be checking ourselves and asking us questions. Where is that? And you’re right. You bring up the report by Morgan Stanley, and there’s other reports showing that teams with female executives, female founders, earn anywhere from 15% to 60% more money. 

Bryan Duarte 

Right. Diverse founders, diverse teams have exits that are 30% higher. So the numbers don’t lie, right? So if you want to do that and then especially when you’re looking in the clean tech space, I wouldn’t want to leave out and I found it that’s going to make the next difference for our planet just because of some unconscious bias. So it’s something that I always ask myself. It’s something that we as a team are asking ourselves, and it’s something that we need to be putting pressure on everyone and bringing this conversation up like you are here today. 

Hessie Jones 

Thank you. Now I’m going to ask both Stephanie and Azar, based on everything you heard today, and I mean, your motivations to try to make changes in your respective industries is admirable because you two are also playing the long game. But what would you say to other, let’s say, young entrepreneurs who want to make a dent in this space and who know that they’re going to face this kind of adversity, especially female minority founders? I’ll start with Stephanie. 

Stephanie Lipp 

Well, I think no matter how hard it is and we’re still on the hard part, if you really believe in your solution, you love the problem. You love the solution. You just have to go for it. Because as much as the Hollywood and news and real crime shows make it about becoming famous and rich, like, no one really does this, you can’t possibly get into this just to assume you’re going to be rich out of it. You’re doing it because you really love what you’re doing, especially in impact fields. And you just have to constantly strive to stop being the exception, but change the rule so that you’re part of the next set of statistics that are more positive. Just something I want to add in response to, you know, what, Brian Giselle we’re talking about in terms of the attitudes of VC. I attended an info session about finance where I learned literally the history of how venture capital came around. And the presenter said it was about looking at patterns and, like, what’s the pattern of a founder that grows fast and has access to a market? But those patterns are set by the traditional old guard where so how can a woman, how can a person of color, how can someone without a strong academic background ever fit into a pattern when those patterns traditionally excluded all those things? 

Stephanie Lipp 

So I don’t really have an answer how to fix that, but it’s just interesting to have that in my mind now. It’s okay to break the pattern. I can’t look at it where I need to fit a pattern. I have to find ways to break the pattern and then convince the VCs that it’s a good bet. So that’s just something interesting to talk about. Again, even with the questions, they’re looking for a pattern of answers that promote what they are looking for. But if we’re getting asked the wrong questions, we’re never going to fit into that pattern. So I guess the starting point is thank you to Giselle and Bryan for those type of funds that are trying to pass that and to promote past that. And I guess founders need to talk about everyone needs to talk about it. We can’t stop talking about it because as I just didn’t know how my demographic was targeted, other people just might not know somehow. So if we educate, then we’ll make a dent. 

Hessie Jones 

Okay. Azar. 

Azar Azad Stephanie said it very nicely. There is a wave. There is always a change when there is an imbalance. And it doesn’t matter you look at the investors or entrepreneurs in our culture, in our society, that distribution of the funding, distribution of opportunities is not there. And it’s not just one aspect. It’s the wave that has to change all of our society. If we provide the opportunity for the kids in the high school, for all of them equally, then you can expect that many of the kids from the minority or many of the new immigrants who actually escape to save their lives, the parents, did, they deserve these opportunities. So it’s not just one aspect. But I’m very grateful, I have to say, compared to five years ago, now there are so many women entrepreneurs with the financial capability, or exactly as Giselle said, with the understanding of the financial system that now are able to risk and are putting themselves in front to support other entrepreneurs. And that’s a very positive aspect. I’m very grateful for that one. And is it simple? No. Who said it’s simple? Entrepreneurs life is just full of fun because of the challenges.

Azar Azad So it’s not simple, but it is doable. It can happen. And as long as we do not give up because of the attitude of some people and stay to change the norm, what we call it as a pattern, that they get used to it, as long as we really don’t give up and be resilient, I believe there is a change and it is going to happen. 

Hessie Jones Thank you. Okay, we’re running out of time. I do just want to get one question in. I’m going to throw it to Brian and to Giselle. Do we have a pipeline problem? That’s the argument. Because VC say, hey, if we had more people to invest in and there should be more than enough racialized founders, we would definitely invest in more. What do you say, Giselle? You want to start?

Giselle Melo I always laugh at this one. Not because it’s funny. Unfortunately, it’s not a funny joke. It’s this ongoing discussion about the pipeline problem. Maybe I’ll make three points. One is in life perception is reality, right? Meaning how we view the world is largely influenced by our personal experiences in our environment. And so, like, if an investor has been accustomed to a mental calculation of what a successful founder looks like, any profile outside of that is not going to fit, right? So that’s number one. Number two in business, and I’m not sure anybody would argue this point, relationships do deals that money can’t. And what I mean by that is relationships are not formed based on numbers, they’re formed on commonality of experiences. And personally, as a founder who experienced all these adversities, some of the greatest opportunities I had was after forming certain relationships with no less or more capital. So those relationships or those networks opened doors for me that money couldn’t. I’m making a point here, but the third point is pipeline. Like, who is saying that there’s a pipeline problem? The people saying there’s a pipeline problem are the people who have that mental calculation, right?

Giselle Melo And who don’t have access to the networks of founders that are building game changing companies. So if you don’t have access to the network and you’ve already decided what that successful founder looks like, of course you’re going to have a pipeline problem because you don’t know where to look and you don’t know how to make the mental calculation. You don’t know how to shift that mental calculation. For me, I think the pipeline problem is real. It’s not made up, but it’s real to those who hold that mental calculation and don’t have access to the networks, if that makes sense. The third piece is there’s some people who will throw that up as an excuse, and there’s nothing we can do about it. If they’ve decided that there’s a pipeline problem or they’re using that as an excuse because in the back of their minds, they don’t have an interest or an intention at all to make that investment in women and underestimated founders. And we can beat them down as much as we want, they’re not going to change their mind until maybe the herd, which is very investor based, right? People say investments are made through calculations. 

Giselle Melo While we’ve seen, I think, Hess, you’ve made that example, whether it’s a Newman, FTX, whatever, there’s been many, many cases because those are the televised ones. But I’m sure there’s many, many smaller cases that don’t get talked about where deals get done and they just flop and they were done for all the wrong reasons with no due diligence, but because the founder just looked a certain way. So let’s just put the money there because they’re comfortable in that space, even taking the hit. And I’m going to say this, whether you’re a VC or you’re a pension, who’s responsible for the livelihoods and retirement, more than half of which are people of color and women, but yet you’re making these decisions based on what? Based on comfort? Based on a certain profile. So there’s no pipeline problem for a set of people who understand there’s no pipeline problem. But if you’ve decided there’s a pipeline problem, I promise you I’m not the girl who’s going to go and change your mind because you’ve made that decision. And again, like Kobe me, once I’ve made a decision, I’m not negotiating with myself. So if you’ve made that decision, that’s on you. 

Giselle Melo As far as I’m concerned, we’re going to keep building and those who understand the opportunity that’s in front of us will take that opportunity and over time, like anything, the herd will follow and they’ll see there’s no pipeline problem.

Azar Azad Thank you. 

Hessie Jones Brian. I’m going to give you the last word. 

Bryan Duarte 

I’ll echo everything that I’ll just said. I equate it to if you’re going fishing in the same pond that you’re all just fished in, you’re not going to find any different fish there. Because for me, there’s no lack of pipeline problem. My problem is I have too many, right? There’s just so many, which is a great problem. I get to say no and I get to pick the best of the best. I see a lot of overlooked, under invested, underestimated founders that to me, they’re further along, have more resilience, more grit. So it’s a great investment opportunity. Back to Giselle’s point about pensions and so on. When you look at what’s happening, say, in the ESG space where you’re looking at some minority shareholders putting pressure on large corporations, the people that have money in pension funds, the teachers pension fund is one of big the ones that threw away a billion dollars or whatever, that $100 million in FTX, right? I don’t know what diligence you said they did. We can start putting pressure on these organizations to say this is our money, this is our retirement money. We want it to go into these phases. 

Bryan DuarteShow me how many women founders you’re investing. Show me how many racialized groups you’re investing into and put the pressure on that way, because I’m quoting Jeff Ser from Raven Indigenous Capital, he’s saying keep the pressure on. And all of us, it’s up to us to keep that pressure on to make this change.

Giselle Melo Brian, let’s go. 

Bryan Duarte Yeah. 

Hessie JonesAwesome. Well, thank you, everyone. That’s all we have time for today, unfortunately. I want to thank all of you for coming and talking about this hot topic and being very transparent about your views because that’s what we need to be able to make a difference. So I’m going to end the broadcast. Stay tuned to everyone and come back next week, same Friday, same time, 1230 to one. In the meantime, have fun and stay safe. Thanks, guys. 

Giselle Melo Thanks, everyone. 

Hessie Jones Thank you. 

Bryan Duarte Thanks, Hessie. Thanks, everyone. 

Giselle Melo Thanks, everyone. Bye.