How Contrarianism Attracts Opportunity

In pitch fests and media interviews, the Floodgate partners have expressed these ideas many times; the more they do, and the more times they put their money where their mouths are through their funding decisions, the better known these VCs will become as entrepreneur-friendly, especially among entrepreneurs who don’t fit the traditional mold. That gives the Floodgate partners an edge in the competition among VCs for good deal flow. A quarter of Floodgate’s portfolio companies are women-led, as are a quarter of the companies pitching Floodgate.44 If the next Leah Busque is seeking seed-stage financing, it’s a good bet Floodgate will be high on her list ofVC firms to pitch. “We fundamentally believe that some woman will start a company worth more than $50 billion in the next five to ten years,” Maples says, “and we have a better chance of winning her preference if we’re not a firm full of 6-foot-tall white dudes.” Research supports this idea. For example, a 2004 study of venture funding found that offers made by VCs with a high reputation are three times more likely to be accepted and that such VCs get a stake in the start-up at a 10-14 percent discount.45 These days reputational information about VCs is spreading more quickly, enabling newer, entrepreneur- friendly VCs to prosper. Traditionally, says Josh Lerner, a Harvard Business School professor who studies venture capital, “this has been a backwater cottage industry without a huge degree of visibility.”46 But that is gradually changing, Lerner says, with more transparency about the venture funding process than ever. Now entrepreneurs are talking more among themselves through start-up communities and review sites like, and VCs themselves are blogging and seeking publicity—so entrepreneurs can find more information about VCs than they could even ten years ago. Though in the past VC firms could attract plenty of venture deals despite their partners’ arrogance and sexism, these days such behavior can damage a firm’s reputation among entrepreneurs; VCs who keep up with the times will have an edge over those who don’t.

Maples invests in women because he is after high returns for his investors, not because he wants to right a social wrong, but he comes across as a hero nonetheless. A commonsense definition of a hero is someone who takes risks for the benefit of others. You need both the risk taking and the altruism components, which is why an ordinary firefighter is more likely to be thought heroic than even a world- famous daredevil like Evel Knievel. By risking ridicule for some of his investment choices, showing the courage of his convictions, and benefiting founders and investors, Maples becomes an admired partner to both groups. And when the businesses he funds create jobs and new services that wouldn’t exist without him, he becomes a hero for many more people, though an unsung one for most.

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