When Sara Gates began raising venture capital for her Austin software startup this year, she was surprised by how investors reacted.
“Over and over, they would say how unusual it was for them to see a woman pitching,” said Gates, who met with half a dozen firms on both coasts. “They would say to me, ‘Wow, we just don’t see any women.’”
Gates raised $3 million for her company, Wisegate, which helps technology managers exchange information. But she said she wonders if her gender made the process more challenging.
“Investors are making decisions in a very high-risk environment, and they’re trying to mitigate every risk they can,” she said. “I think as human beings, when we’re making decisions, anything that’s unfamiliar can register as potentially riskier.”
The dearth of women in technology fields is hardly a new thing. Like most technology hubs, in Austin it’s still very much the exception to see venture-backed startups that are led by women.
But in that long-term problem, there could actually be a window of opportunity for the Austin tech scene, experts say.
Austin could strengthen its technology economy by making itself a magnet for women-led tech startups, they say.
For Austin, drawing more female talent into tech fields can impact not just the bottom line for individual companies, but for the region’s wider tech scene and for the area’s overall economy, said Brian Kelsey, an Austin economic development consultant and lecturer at the University of Texas.
“No region — including Silicon Valley, Boston or other tech centers we compete with — has developed a reputation as a place where women-owned technology companies and female workers can really thrive,” Kelsey said. “The playing field is wide open for Austin. If we can get ahead of the curve and become known as a community where entrepreneurs of all types can grow and participate as industry leaders, it could become a wonderful asset for economic development here.”
‘Where are the women?’
Austin might be a thriving technology hub that is bursting with startups, but run the numbers on its percentage of women in the tech sector and they tell a stark story.
At the Austin Technology Incubator, three of the 34 current companies started by entrepreneurs have women on their founding teams. Of the 40 startups that have participated in Capital Factory’s incubator program in the past four years, five have been led by women.
Of the 76 active companies in Austin Ventures’ portfolio, four were founded by women.
Around the nation, the numbers are similar. Women own nearly half of private businesses in the U.S., but only 3 percent of tech startups are formed by women, according to the Kauffman Foundation.
There are efforts underway to address the issue in Central Texas — including a tech accelerator for women, networking and mentoring groups, and meet-ups — and many in Austin’s startup community say they’re optimistic that the picture is changing. But it is slow going.
The reasons for the scarcity of women in the startup scene here and elsewhere, tech executives and entrepreneurs in Austin say, include the chronically low number of female engineers. Nationally, women make up about 10 percent of the engineering workforce, and about 18 percent of undergraduate college engineering students, according to data from the National Science Foundation and the Bureau of Labor Statistics.
Also at play, they say, is a shortage of role models, and that women are often not part of the networks that play crucial roles in fundraising. Just 4.2 percent of venture capital goes to women-led businesses, according to Stanford University’s Clayman Institute for Gender Research.
“It’s hard to believe that in 2013 we are still looking around and asking ‘Where are the women?’” said longtime entrepreneur and investor Laura Kilcrease, who founded the Austin Technology Incubator more than two decades ago and has been an entrepreneur-in-residence at the University of Texas’ McCombs School of Business.
At Capital Factory’s downtown Austin incubator, which is home to 25 startups, the entrepreneurs working behind laptops are by and large male. It’s something co-founder Joshua Baer says he has worked to change. But it hasn’t been easy, he said.
“We’ve tried to do everything we can to encourage anything that would get more women in the building,” said Baer, who has hosted programs that teach programming skills to girls and provided space for hack-a-thons − where developers gather to write software or collaborate on projects — for female coders.
“Research shows that teams perform better when they’re balanced, whether it’s executive teams or board of directors, and having women around the table adds a really important perspective,” Baer said. “Right now there aren’t enough women entrepreneurs out there.”
Becoming a leader in women-led startups is on the radar of the Greater Austin Chamber of Commerce, said Gary Farmer, chairman of Opportunity Austin, the chamber’s economic development affiliate.
“Based on Austin’s culture, personality and attitude, we certainly could be, and in fact we should be, a nurturing environment for female entrepreneurs and women-owned businesses,” Farmer said. “To the extent that Austin could have a competitive advantage in this regard, we should promote and amplify that advantage at every turn.”
A lack of female voices can have business consequences for companies and for the area’s tech scene as a whole, experts say. The latest wave of Web and mobile startups often target and attract more women than men as users. And women make the buying decisions for many bigger-ticket devices and services.
The question is, how can Austin’s tech scene take advantage of the issue and reach out to women tech entrepreneurs?
One effort is about to kick off: Austin entrepreneur Jan Ryan this fall will launch a program called Women@Austin that will meet at Capital Factory and will focus on providing resources for women starting and building companies, including mentorship by experienced tech leaders, networking and access to investors.
“Austin is so great at diversity, and I don’t believe there has been any intended bias, but I don’t think most of Austin has had this conversation,” said Ryan, who has held executive roles at companies, including Vignette Corp. and Rome Corp., and has founded and sold two software startups. “We have women who are building very successful companies, but we don’t hear their stories. We don’t stop to think why do we see local panels and conferences where there are a handful of women in the room and often no women on the panels. My mantra is, we can do better. We will do better.”
Despite the challenges, there are signs that the local landscape for women is starting to change, say both veterans and newcomers to Austin’s startup community.
With the emergence of efforts such as Avinde, a startup accelerator for women launching businesses, combined with a thriving community of meet-up groups including All-Girl Hack Night, Rails Girls ATX and PyLadies, more women are being drawn into the emerging tech scene.
“I’m feeling more optimistic than I have been in a long time,” Kilcrease said. “I see more Gen X and Millennials wanting to start companies. And many who have built their careers at startups are taking leadership roles in them. Some are getting themselves ready to be CEOs. That’s clearly on the horizon.”
Austin venture capitalist Rudy Garza said he also believes change is happening.
“It was once very rare to get a woman CEO of a startup coming through here. But I’ve seen more female-led startups in the past 18 months than in the prior three to five years,” he said. “People understand how to do startups more than ever before, and the barriers of entry are much lower. I think women are saying ‘Hey, these guys have been doing it, what’s stopping me from doing it?’”
Garza said he thinks those who jump in will find a level playing field: “If you think of how companies are built today, it’s often with virtual teams in different parts of the country or the world. Investors are so milestone-driven that as long as people are executing on the objectives to build a great business I honestly think we’re gender blind and culturally blind.”
‘It starts with teaching girls’
Austin software executive Charlie Wood remembers the day he started work as a pre-sales engineer at software maker Vignette Corp., about 16 years ago.
“I sat down at my new desk, and there was a phone list printed and taped to the wall,” he said. “I counted, a third of the people were women. I had never worked in a tech company like that. But founders Ross (Garber) and Neil (Webber) put an emphasis on hiring women. I decided that when I started my own company I was going to do that too.”
And that is what Wood has done at his 3-year-old startup Spanning, which sells a backup software service for Google apps. When the 35-person company, which has raised $9 million from investors, recently had a sales director position open, Wood asked recruiters to find a female candidate, who Spanning hired.
“Having diversity helps us make better decisions,” Wood said. “Different people bring different perspectives. When you’re all seeing things the same way, the end result isn’t as good, the products aren’t as good, and the company isn’t as interesting.”
But finding candidates takes effort. Spanning, which has two female engineers on its 10-person team, has received hundreds of applicants from qualified male engineers and just a handful from qualified females.
“You realize it starts with teaching girls how to become engineers,” said Wood, whose company hosts meetings of Girl Develop It, a nonprofit that offers classes and meetups for women who want to learn how to write software.
Wood said that bringing more women into engineering and leadership roles at startups will spur more to break out to start their own companies.
That’s how Ryan broke in. She began her at IBM Corp., and in 1997 moved to Austin to join Vignette Corp. as vice president of sales.
“When I started out, I didn’t really know what the word entrepreneur meant. I just knew I liked to build things from scratch and create things that did not exist,” she said. “Then, when you join a startup and see how you can play a big role in making things happen, you realize the possibilities.”
Ryan most recently was co-founder of Social Dynamx, a customer care software company that raised $3 million in funding and was acquired by Lithium Technologies for an undisclosed price last fall.
Working on venture-backed deals and mergers underscored the make-or-break role of networks, she said: “VCs are quite clear that they want deals, and they invest in deals that come from trusted referrals. Women often don’t have those ties, so we need to build out that trust base.”
‘Keep pushing forward’
Nicole Dimetman-DeLeon is an example of how a first-time entrepreneur can break out by tapping into Austin’s startup network. After graduating from the University of Texas Law School in 2007, Dimetman-DeLeon worked as a mergers and acquisition lawyer for Akin Gump and later had her own practice.
She was living in San Antonio when she had an idea to solve a problem she often encountered.
“I moved around a lot, and every time I moved I had to find pet care, which was such a pain,” she said. “There was nothing automated about the process, and I realized that it should be.”
She heard about an Austin entrepreneurial program called 3 Day Startup and signed up to pitch her idea for an online marketplace for pet boarding. That weekend she developed the project with a team of eight people, and, by the end, they had a demo of the site ready to go. They named the company Embarkly.
But when the weekend ended, the team scattered, and Dimetman-DeLeon needed a co-founder with technical expertise.
A friend introduced her to Austin software developer Orion Jensen and in September Dimetman-DeLeon moved from San Antonio to Austin to get Embarkly off the ground.
The company was accepted into Capital Factory’s incubator program in May and has built a network of advisers and investors including Pat Condon, founder of Rackspace, and Ross Buhrdorf, chief technology officer of HomeAway.
Mentors, including veteran software entrepreneur Josh Kerr, have spent hours helping the Embarkly co-founders prepare business and investor pitches and customer proposals.
“The idea of becoming an entrepreneur never crossed my mind until I was doing it,” said Dimetman-DeLeon. “Sometimes I wake up in the morning, and I have to tell myself, ‘It’s OK, keep pushing forward.’ I don’t know whether guys do that. I guess all that matters is that I keep going.”
Business reporter Lori Hawkins has been covering startups, entrepreneurs and venture capital investing in Central Texas since the mid-1990s. Recently, she assessed the rise of high-tech incubators as they spur the growth of more young companies.