Women-founded companies are often pigeonholed as “lifestyle” firms by investors, Neha Sampat, founder and CEO of Silicon Valley-based tech startup Contentstack, said in an interview for DealStreetAsia’s Female Founders report 2022, implying that investors often assume that women start a business to sustain their lifestyle in the short term rather than being committed for the long haul.
“There are quite a few psychological explanations that account for why, but the fact remains that biases – conscious or subconscious – exist in venture capital, and that’s only now beginning to change,” she said.
While women-led VCs have started to address the problem, the entire industry needs to undergo a mindset shift, she added.
Sampat has more than 20 years of experience as an entrepreneur, female leader, and tech visionary. Before Contentstack, Neha was the co-founder and CEO of digital experience platform (DXP) Built.io, which German software powerhouse Software AG later acquired.
Contentstack is an experience platform with an API-first approach to optimise content creation and management. It offers an easy-to-use platform that empowers content creators, content editors, and business owners alike in creating websites and applications quickly.
The startup last raised $80 million in Series C funding co-led by Georgian and Insight Partners in November 2022.
What led you to become an entrepreneur? How would you describe your entrepreneurship journey so far?
I always wanted to start and run a business, with all my ventures being born out of market need. I started my first business, a PR agency, straight out of college with friends in Silicon Valley. It was the middle of the dotcom boom and brands needed help telling their stories. I eventually became a product manager but left that role to start Raw Engineering.
It was the early days of mobile and cloud technologies and clients were struggling with implementation and integration. This led us to build Built.io, which was spun out to focus specifically on cloud-based integration solutions. Eventually, we realised that the most significant pain point for enterprises striving to deliver digital experiences was infrastructure. They needed to be liberated from legacy all-in-one suites, which hampered business and tech teams’ creativity and productivity and provided a composable alternative. That’s how Contentstack was born.
I would describe my journey in one word: resilience. This road wasn’t easy; there were many challenges along the way. My PR agency shut down soon after 9/11. When we sold Built.io to Software AG, we did it without a banker. We bootstrapped for more than 10 years. But we believed in our product and held on until the rest of the market did, too.
Now, we’re pioneering an industry.
What are some of the biggest challenges you’ve faced as a female founder? What challenges did you encounter while fundraising? How did you overcome them?
I like to say I’ve taken the road less travelled, especially for a founder. I didn’t go to an Ivy League school, and I’m a female, non-techie in the technical world. I had to pave my path, especially when it came to fundraising. Therefore, I focused on our values and the uniqueness my companies brought to the market.
Another challenge I faced was a lack of VC experience. I didn’t know what I didn’t know — so I leaned on others to help me. I joined an accelerator programme that taught me how to build and scale a business and how fundraising works. I also surrounded myself with mentors to help champion and counsel me before I made decisions.
I overcame some of those challenges by learning how to fundraise the right way — and prioritising the right VC partner for the company. Fundraising is like dating; you have to make sure both parties are aligned on the most important things. Because when you have commonality on the goals you’re trying to achieve, the road is easier. Sharing values also meant our VC partner would have our back when it came to the way we planned to approach the market and be open to supporting a unique founder.
Do you think having a male co-founder made a difference in your fundraising journey?
I think it would be naive to say no — it probably did make a difference. But I’ve made it my mission to be vocal about my journey and the inequities that female founders face. By putting it out in the open, we can work to change that reality.
Do you think that investors tend to have different expectations or standards for female founders versus male founders?
Absolutely. A Harvard study found venture capitalists often ask women different questions compared with men. Men tend to be asked questions about the potential for gains, while women are questioned about losses. Men are asked about company vision; women are asked about work-life balance. Women-founded companies are often pigeonholed as “lifestyle” companies by investors. Meaning, investors assume women start their companies to sustain their lifestyle in the short term, rather than being committed to the long haul.
There are quite a few psychological explanations that account for why, but the fact remains that biases – conscious or subconscious – exist in venture capital, and that’s only now beginning to change.
What are some of the potential reasons for the gender gap in venture funding, and how do you think these can be addressed?
In the US, less than 10% of decision-makers at VC firms are women. In India, only two of the top six VC firms have even a single female partner. Because of that, there is still some systemic bias at work. We’re starting to see women-led VCs address the problem, but the entire industry needs to undergo a mindset shift.
VCs can open the door for inclusion by re-evaluating their criteria. For example, some VCs only fund founders who also serve as the operating CEO and have previous tech experience. It sounds simple, but it knocks out a large part of the pool. I’ve seen many successful founders who aren’t CEO and don’t have a tech background.
Still, female entrepreneurs who secure funding should look for ways to contribute towards closing the gap by making critical introductions, angel-investing in other female-founded companies, and more. If we uplift women on our way to the top, we’ll start to see the change that is needed.
In the current environment, when fundraising will get more difficult for most startups, could female founders find the going tougher?
Everyone seems to be finding it tougher to raise capital right now — but I wouldn’t let that discourage anyone. If you play to your strengths and take the right approach, raising money is an achievable goal. The right approach includes promoting financial responsibility and a conservative growth model that balances healthy returns with diligent investment.
Know that investors will be more selective during this time and you should be too. Make a list of non-negotiable qualities in an investor and make sure potential candidates line up with them before scheduling a meeting.
You want to show the economic safety of your company, so demonstrate how your company or product is a good investment for your customers. Customer satisfaction fuels revenue, and investors want to feel confident in your company’s growth.
What advice would you give other female entrepreneurs?
Build the right kind of relationships with potential investors. Raising funding is a long-haul journey that may take a few years. A lot of investors might be completely allocated, especially in this environment but maintain the relationship so they remember you for the next round. Also, find an accelerator or incubator programme that can teach you more about how fundraising works. You can get advice from other entrepreneurs or people who have fundraised before, who can mentor you from a similar perspective.
How can we work to change the culture and mindset within the VC industry to be more inclusive and supportive of female founders?
We need to raise awareness and put pressure on the industry to change. There are practical ways to do that, like ensuring that no less than 50% of members on a panel are women. More than half is even better!
We should work to find under-represented talent. Search for those candidates outside of traditional pipelines. Hold recruiting events in non-traditional areas and hire for skills rather than the type of school they went to or if they worked for big names in the past. Encourage under-represented employees to recruit from within their networks.
It also comes down to relatability — if we see more women in the VC industry, we’ll start to see more women-led startups funded. The way we’ll see more women in VC is by working towards equity over equality. Equality assumes everyone starts with the same opportunities and access, which is not necessarily true. When you address equity, you recognise that gaps exist and work to fill them.
In your opinion, what are some of the most important factors that investors should consider when evaluating a startup, regardless of the founder and gender?
Evaluate if the startup is solving a real business problem, in a way that no one else is. Do they demonstrate deep knowledge of their domain? Discovering what their customers think about them is insightful — a great business doesn’t solely rely on technology knowledge (though it is important), they need to fully understand their customers’ challenges.
Investors should get down to the inner workings. Are the business’s sales and marketing functions running efficiently and predictably? Are they delivering strong ROI to their current customer base? Because if those two things are aligned, they have a better chance at future growth.
Do the investors believe in the company’s mission and values? Founders are not only asking for capital; they’re also asking for support and advice, and both parties should be fully invested beyond the financial aspect.
The last thing investors should consider is the resilience of the founder. The startup world can be tough. Circumstances can change overnight and the founder needs to be able to make tough decisions quickly and minimize the impact on their team. A resilient founder is a wise investment.