Female Founders Fund partner, Sutian Dong, is the investor behind industry-leading companies like Rent the Runway, Maven Clinic, Zola, TALA, WayUp, Thrive Global, and more.  With a background in seed-stage investing at FirstMark Capital and as Director of Marketing for fashion house Norisol Ferrari, Sutian leveraged her background into investing in tech-based businesses founded by women entrepreneurs with billion-dollar opportunities.  After three years helping to create over $1 billion of enterprise value among 31 active portfolio companies based between NY, SF, and LA, Female Founders Fund has launched Fund II with $27 million to invest in the new wave of female talent.  By maintaining a laser focus on supporting female founders with more than just capital, F3 has differentiated itself with the belief that it's possible to achieve outsized returns by investing in women, and their mission to build the strongest ecosystem of female founders and investors worldwide.  Learn if venture capital financing is right for your business, how you can be a smart asset allocator, and how you can create a career investing in women.

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We’re investing in the exponential power of exceptional female entrepreneurs where we can be more than capital partners.

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Innovative Investor

When should a company seek venture capital funding?

A company should seek venture capital financing when it needs capital to grow.  Typically companies that are good candidates for venture capital are technology businesses who are either tech-based or leveraging technology to scale without a lot of capital expenditure.  When you think about the Facebooks of the world or the Snaps, Instagrams, LinkedIns, or Neflixes, these are all companies that are good candidates for VC, which is short for venture capital.

Venture capital is a very small piece of the private equity pie.  It’s a form of finance where investors, like Female Founders Fund and myself, invest capital into companies to own a piece of the business (equity), and then finance those companies until they hopefully grow and are IPO candidates.  Companies that are good fits for venture capital are companies, and subsequently entrepreneurs and the founders of those businesses, who want to grow their companies into billion-dollar opportunities.

That means that venture capital isn’t right for everyone or every company.  When you think about your business, think about your goals for growing that company and ask yourself, “Is my company a high growth, high scale, and high margin business?”  Assuming all of the answers are yes, and you’re comfortable taking equity dilution to grow your business, venture capital is definitely a potential financing opportunity to think about.

A company that isn’t a good fit for raising VC are companies where you want to own the business for a really long time (over ten years) and you want this business, at some point in the future, to generate cash to finance your life.  We call those ‘lifestyle’ businesses. When founders think about whether or not venture capital is right for them, a good thought experiment is asking yourself, “Do I want an entire cupcake or a piece of cake?”

When you think about a lifestyle business, you’re going to own that whole cupcake forever, but it’s going to take longer to grow, and it may never be as large.  On the flip side, you’ll own the business outright, and never have to answer to your board or any outside investors. There’s never a right answer, but there’s always going to be an optimal fit for yourself as an entrepreneur and for your company.  It depends on where you think you want the business to be and how comfortable you are giving up equity and subsequently some control in your business to grow that big opportunity.

What is the advantage to working with Female Founders Fund?

If you’re an incredible entrepreneur, money is really fungible, which means that there is often times more money coming at you than you know what to do with.  It’s a good problem to have, but that means for VCs, like Female Founders Fund, we need to differentiate ourselves.

This is where we’ve taken a step back and been really thoughtful in our funding approach.  At Female Founders Fund, when you take money from us, you’re not just getting capital to grow your business, you’re also getting a community of portfolio founders, a network of experts, and a lot of ongoing programs and events that help on five main pillars.  For us, it’s fundraising, recruiting, corporate development, customer development, and press. For all of those initiatives, we’ve started programming, ongoing services, and value ad opportunities for our founders to take advantage of.

Founders come to work with us, not just because we invest exclusively in female founders, but because they know when they take money from us, they’re getting a long-term partner in the business where we’re providing above and beyond services.  And, we’re hoping we’re partners with you in this business and the next and the next. Our industry is very relationship-driven, and as a fund, we want to be partners with you and our entrepreneurs for the very, very long-term.

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We’re looking for industry leaders in markets that are huge or have the potential to be huge.

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Can you share F3’s track record and vision for the future?

Female Founders Fund was founded in 2014 with the point of view that the face of entrepreneurship is going to look very different in ten, twenty, and thirty years from now.  Fast forward to 2018; Female Founders Fund is investing out of our second fund, a $27 million fund. We’ve been really fortunate to invest with great founders and companies like Rent the Runway, Zola, TALA, Primary Kids, and Maven Clinic.

When we think about investing, we’re looking for industry leaders in markets that are huge or that have the potential to be huge.  Zola is the largest and fastest-growing ecommerce company in the U.S. Rent the Runway, I know many readers and followers are familiar with because of the dress rental service they offer.  Maven Clinic is a leading-edge, women’s focused telemedicine platform, and really helped to create the market for female-focused healthcare delivered online. We’ve also invested in companies like ELOQUII, which creates amazing fast fashion for plus-sized women.

More recently, we’ve invested in companies like Co-Star (which is a really cool astrology app) and Winky Lux (which is like Zara for beauty), and Peanut (which is a social network for moms), and a bunch more we’re incredibly excited about.

One of the areas we’re excited about is the rise of ‘alternative communities.’  Alternative communities can mean anything from the SoulCycle group where women become friends, to communities like Peanut or Hip Sobriety (which is a community for sober individuals and people recovering from alcohol abuse), to communities like what Co-Star is creating around astrology.

Another area we’re really excited about is the confluence of health and wellness.  Growing up, the doctor was somebody you went to only when you were sick. But that’s changing with the rise of acupuncture or self-care - whether it’s a daily yoga practice or meditation practice.  The boundary between what constitutes wellness and what constitutes healthcare is really blurring, and a lot of this is driven by consumers like you and me.

Lastly, one of the trends we’re excited about is the changing nature of work.  More and more people are less excited about the 9 to 5 jobs our parents had. That doesn’t mean people are less excited to go to work, but we’re coming to the realization that, like learning and education, working should be individualized.  It’s this change in the structure of work, becoming an individual as a company versus an individual in a company that we’re really excited about.

What metrics or qualities do you look for when investing in a company?

At Female Founders Fund, because we invest so early, the most important thing for us is the founder and the founding team.  We’re looking for entrepreneurs with a unique point of view about the world. We ask ourselves, “What makes them the right people to take this idea and make it into a reality?  What problem are they solving in their personal or professional lives? What non-obvious realization have they come to? What have they done to demonstrate they are the right people to execute upon this opportunity?”

Funds have different things they’re looking for, but for us, it’s team and market size.  We look for companies in big existing markets, or in markets that are growing really tremendously that we think will become important in the future.  We think about the team’s ability to scale and ask, “Are these the right people to scale this idea and not just be the founding team?”

When I think about the best pitches I’ve heard, it’s the entrepreneur telling their story and their vision for the future.  We’re investing so early that, often times, there’s not enough data points to go off of yet, so the metrics the company has access to tend to be pretty light, but that doesn’t mean that entrepreneurs shouldn’t be prepared.

Also, always have a pitch deck.  You don’t need to have a business plan, but a pitch deck that solidifies in a couple of slides (no more than 10 or 20) what your business is trying to do, the problem you’re trying to address, and why you’re the best team to capitalize on this opportunity.  Think about the deck as a skeleton or a structure you can use to take investors through your company’s story. When I think about what we like when we invest in companies, it’s entrepreneurs who understand their business inside and out, and that means having a sense of the metrics and the levers you will use to grow the business.

If you’re selling a product online, have you done tests around online acquisition and online marketing?  Do you have a sense of what the cost of customer acquisition is? Do you have a sense what the lifetime value of your customer could be?  Do you know what margins would look like now and how you can have margin improvements with scale in the future?

These are all questions that tend to trip entrepreneurs up early.  We’re not looking for the right answer. I’m not looking for specificity necessarily, but I’m looking for an understanding of the business and an understanding of how those metrics improve over time.  You don’t have to have the exact answer, but you have to have a really deep sense of how the business works and be able to speak credibly to all the points that we just talked about.

What are your top tips for entrepreneurs when pitching a business?

When you’re pitching to investors, don’t think about it as an audition or a presentation that you’re giving.  Remember, who’s sitting on the other side of the table is a human and they want to have a conversation with you, get to know you, and get excited about partnering with you as a founder to grow the business for the very long-term.

Come with a pitch deck.  Come with an understanding of your numbers, even if you’re not the CFO type.  Take the time to get to know your business and get to know the numbers that move your business forward.

It’s fine to come with your co-founder if they have competencies that are different and can add some depth to the pitch.  For example, if your co-founder’s a person who built the technology or financial model, they have competencies that may be a little different from yours that can help the investors see the whole range of skills that exist within the company.

Definitely practice, as well.  This is what friends are for. This is what your family is for. Go and pitch to them.  They don’t have to know exactly what investors are looking for, but getting feedback, and more importantly, getting comfortable with talking about your business will make you more comfortable when you’re sitting at a table and talking to investors on the other side.  In New York, there’s a lot of different ways to do this and lots of meet-ups that are designed to help you refine your pitch.

You’re selling your ability as an entrepreneur to scale and grow your business and that means you have to be really confident about what you’re doing.  Do not undersell. A lot of people have a tendency (and I used to be one of those people) to not talk about their background because they’re not super comfortable ‘talking about me.’  Well, what are investors investing in? They’re investing in you, which means you really need to underline and capitalize in bold when you’re talking to people why you are the person to build this company.  Take that opportunity to brag about yourself.

Talk about your background, your accomplishments, why you’re doing what your doing, and then take that moment to talk about your business and why this is the right place in time to grow your company.

One last piece of advice is to research your investors.  Investors do a lot of due diligence on founders before they invest and founders should definitely be doing the same on investors.  It’s always a more fruitful and meaty conversation if you know the person on the other side of the table has invested in companies that have similar business models to yours, who are operating in tangential industries.

One really exciting thing for us at Female Founders Fund, given that we invest exclusively in female founders, is seeing the exponential increase in deal flow over the last couple of years from 2014 to 2018.  We’ve seen our deal flow increase over 10x and that means the breadth and depth of companies and founders have continued to increase overtime. That’s super exciting for us as a fund because one of the important ways our fund works is to find and invest in the best deals, and that’s deal flow.

We’ve been really fortunate to have invested in the majority of our companies from inbound introductions from our existing portfolio founders.  Differentiated deal flow for most funds is really important and we think that a reference from our founders is one of the strongest signals we have - both to take that meeting and also as a sign we’re doing our job as VC partners to our founders.

That being said, deal flow comes from a lot of different places.  As investors, we go to a lot of meetups and events and speak on panels, and founders come up to us afterwards.  Other funds send us deals that they may be leading or working to syndicate and think may also be a fit for us. Our limited partners, our funds’ investors, actually send us a lot of deals as well, and that’s been exciting.

When we think about venture as a relationship-driven industry, which it is, we’ve been fortunate to have fruitful introductions that have turned into deals, and those deals we’ve invested in have turned into companies that have now gotten quite large.

Watch Sutian's bSmart interview here! 

Your background lends your investment activities a special edge if you have a differentiated point of view.

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Accomplished Advocate

How did your background prepare you for a career as an investor?

I fell into my career as an investor and that's not unusual for a lot of people in VC.  Before Female Founders Fund, I worked at a fund in New York called FirstMark Capital doing mostly consumer investing.  Before FirstMark Capital, I was the Director of Marketing for a fashion house in New York called Norisol Ferrari.

My story isn't that unusual because investors come in all shapes and sizes from all different backgrounds.  That’s really important because your background lends your investment activities a special edge if you have a differentiated point of view from everyone else.  I leveraged my insights in fashion, and understanding of not just marketing, but also how clothing is made, to apply that in consumer investing at FirstMark.

The great thing about venture is that you don't have to have a specific background to be a great investor.  There have been amazing and well-known investors, especially in the Bay Area, who were journalists or people who came straight out of school and joined as an analyst at a fund.  When I think about aspiring investors, and what they should be doing to get that seat at the table in a venture capital firm, there are a couple things that come to mind. Intern or work at technology companies.  Our portfolio, for example, has over 30 active portfolio companies and many of them are hiring for college interns.

Whether you're in your undergrad program or you’re getting your MBA, these are opportunities to get into the weeds of a rapidly growing technology company and see how things are done.  That gives you an understanding of how tech companies work and grow, and then you can use that learning on the other side of the table as an investor to think about how that informs your decision making about what companies to invest in.  

At Females Founders Fund, we’ve launched the F3 Fellowship Program.  This program is open for college students to act as a focus group for portfolio founders and for us as a fund.  The fellowship is designed to be a year-long learning opportunity where you work directly with the C-level at our portfolio companies and the partners at Female Founders Fund to provide feedback on new product launches, potential deals we’re looking to invest in, and on trends you’re seeing from your vantage point as college students.

Also, if you can create a network, that's going to be the most valuable thing you bring to the table.  How do you do that? Maybe it's by launching a meet-up about something you're interested in. Is it music technology?  Is it the changing landscape of food? Launching something and creating a brand for yourself as ‘the person to go to’ about that specific subject is a differentiated point because investors and funds are always looking for people who have different points of views and backgrounds from theirs.

How has your professional network contributed to your success?

When I think about networking, and especially professional networking, this means finding people you can help and in turn help you.  How do you create a network? No one starts from zero. Start with the people who are closest to you. If you're in college, create a network of fellow students who you think are smart, motivated, and are going to do really interesting things in their career.  If you're getting started in the workplace, create a network amongst your peers. If you're in a small company, find people who are in similar roles and grab coffee with them.

With networking, it's not a ‘more is more’ equation.  It's not ‘the bigger your network,’ or ‘the more LinkedIn connections you have,’ the better off you are.  It’s about creating authenticity in those connections and deepening the connection for people who you really want to be part of your circle long-term.  The people in my network who have been meaningful to me are my mentors. I have a great mentor named Lawrence Lenihan, who was my boss at FirstMark Capital.  Also meaningful are the other women in VC that I collaborate and co-invest closely with.

Back in 2015, a dear friend of mine, Jessica Peltz, a partner at MDC Ventures, and I started a ‘Women in VC’ group.  We started it because there weren't that many women in VC at that point. We wondered why we weren't connecting more, sharing deal flow, and helping each other with opportunities.  When we created a ‘Women in VC’ group, we only had 15 women. Now, we’ve since grown to 225 women in New York and over 700 women across 400 funds in 15 different countries worldwide.

That network has been super fruitful for me because, not only has it allowed me to expand my reach, but if I’m going to LA, Berlin or Nigeria, there’s a woman within that network who I can reach out to.  It's also been really great because I’ve seen how that network has been used by other women to share deals or find new job opportunities.

The most important thing you can do to get started is be intentional about creating deeper connections with five people who can benefit you and you can benefit them.  You’d be surprised how that network grows. There’s a ton of serendipity in network growth.

Don’t be scared of asking people whether they want to grab coffee.  Especially if you’re in school, using your .edu email address is a very good way for getting people in the workforce to respond, because everyone loves helping students.  It's really about creating that activation energy internally and then taking the first couple of steps.

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When I think about networking, and especially professional networking, this means finding people you can help and in turn help you.

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What have been your biggest lessons learned working as an investor?

When I think about what I would have done differently, especially early in my career, I would have been much more vocal in asking for help.  That means sharing ways I wanted to get better at whatever I was doing and empowering people around me to get excited about helping me achieve those goals.  In turn, it held me accountable to those goals because if I tell people I want to learn more about cyber security, or about cryptocurrency, then that would be something people would follow up on with me.  That was a good nudge for me to actually do things I wanted to do.

When I think about my career as an investor, one of the biggest lessons I’ve learned is realizing that this is a very long-term, relationship driven business.  As an investor, as a leader in a company, as a leader of a team, growing your leadership skills is very different from growing your expertise and growing your competencies as an individual contributor.

That means developing and flexing some new muscles, which are more EQ driven.  Are you an empathetic leader? Do you enable people to trust you and confide in you?  Do you do everything you say you’re going to do, and things don’t fall through the cracks?  Are you dependable and reliable? All of those things are super important because you’re building a reputation around yourself as a good person to take money from or a good leader to work for.

It’s about doing exactly what I say I’m going to do.  It’s about delivering when I say I’m going to deliver.  It’s about being transparent, thoughtful, and open with my portfolio founders and supporting them and their journeys as well, and giving back before expecting anything in return.  What you provide, in terms of dependability and inspiration, comes back to you in spades.

What have been your proudest accomplishments working with founders?

I feel really lucky to have had an eventful year with the fund and our portfolio.  More recently, Female Founders Fund closed its second fund, a $27 million fund we’re using to invest in and support female founders at the earliest stages they need to scale their businesses.  When the fund was founded in 2014, the idea of investing exclusively in female founders was a little bit of a head scratcher for some people. They asked, “Are there enough female founders? Do you think they're going to go create big businesses?”  Fast forward to 2018: all of those questions have been answered.

Raising a $27 million dollar fund, which is about 5x larger than our first fund, was a really big, quantifiable way of putting a stake in the ground and to double down on what we believe to be the next big, metamorphic shift in how venture is done and the types of  founders and companies that are created. We’re investing in the exponential power of exceptional female entrepreneurs and investing at the earlier stages where we think we can be more than just capital partners to the founders.

Alongside that, when investors raise money, it's similar to when startups raise money.  We’re going out to a group of institutional investors, whether they’re endowments, foundations, pension funds, or family offices, to ask them to invest money into our fund so we can invest it in other companies.

When we were pitching Female Founders Fund, the investors on the other side of the table had similar questions and asked to talk to our founders.  Our answer was that you definitely should talk to our founders, and they will tell you exactly what we have done for them, even before we’ve invested.  We’re here to provide the highest level of support to our founders and our companies.

What was awesome to hear from our founders, was that they always said, without hesitation, that Female Founders Fund was the most helpful investor to them.  Getting that validation from them, especially at such an important moment of raising another fund, was great to hear and really energizing for us. It galvanized us to know that we’re doing something right, we should be doing more of this, and we should be really thoughtful about how we continue to scale out Female Founders Fund for the future

How can we bSmart investing in women like you?

When you're early in your career, it's an incredible opportunity to be opportunistic.  What I mean by that is to say ‘yes’ to everything. Take time to explore things and figure out what you want to do with your life, not just your career, because your life is so much more nuanced and richer than that.

One of the incredible things I've learned in speaking to younger women is that their desire to support each other as women, professionals, and entrepreneurs, is above and beyond anything I’ve seen before.  That type of support is just as valuable as investing money into companies and into founders.

Think about the skills you have, the special things you do, the hobbies you've cultivated over time, and use those things to invest in other women, and invest in your friends so they can be better set up for success.  Coming out of college, I didn’t have two nickels to rub together, so I’m not saying invest money into your friends, but invest time and skills to help them and empower them and their careers.

Giving first and seeing what comes back to you is important, as well.  I hold the notion that the more you give out to the world, the more comes back.  When you're really early in your career, understand what you have that makes you special, your skills that are differentiated, and use those to support other women and their endeavors.  Think about yourself and your skills as really valuable and also as an opportunity for you to give back.

Also, be really open to opportunity.  The lovely thing about traveling on uncharted territory when you create your career path (and your life) is that this awesome thing happens, which allows for serendipity at the edges.  When you go down a path and you know you're going to do something, there's always positive stuff at the sidelines that happens. Being open to those things, those serendipitous moments, can really change how your career grows, the networks, and people that you meet.  Then, there will be long-term opportunities that come to you as a result of being open to new things.

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Think about your skills as really valuable and an opportunity for you to give back.

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Spotlight on Sutian Dong

Neighborhood: West Village, NYC

Occupation: Partner at Female Founders Fund

Twitter: @sutiandong

Instagram: @sutiandong

Women I Admire: All of the Female Founders Fund portfolio founders.  All of them.  They inspire me every day as they work to fulfill their visions for the future.

Favorite Store: So hard to pick one! I love CAP Beauty in the West Village for their natural beauty products.

Go-to Outfit: A breezy dress and unique shoes - heels, sneakers, or flats - anything goes.

Must-have Shoes: The higher the heel, the closer to God.

Can't Live Without Product: Winky Lux Flower Balm

Salon Recommendation: Paintbox for a fun manicure

Signature Scent: I love this scent I bought in Cuba at a little perfume store in Havana - I have no idea what it is, and I'll need to go back to get it again!

Beauty Essential: Retin-A at night and sunscreen during the day!!!

Cocktail of Choice: Mezcal on the rocks

Travel Destination: Somewhere with a sandy beach to surf.

Current Craving: Watermelon sorbet. Yum.

Favorite Quote: One of my favorites: "Advice, like fruit, is best when fresh."

On My Playlist: Almost exclusively 90s and 00s hip-hop

Favorite App: Co-Star

University: New York University