Iconic Tour

Female founders who broke through the VC glass ceiling

Krysia Lenzo, special to CNBC.com
John Lund | Getty Images

Venture capital funding is at its highest level since the dot-com bubble, and female entrepreneurs are amassing more from VC's war chest. Of the 1,090 start-ups that raised Series A rounds in 2014, 10 percent were founded by women, according to a CrunchBase analysis. That was up from 2013, when women-run firms were 5 percent of VC funding.

It's a start, and venture funds devoted to women-run companies, such as Female Founders Fund, AOL's BBG Ventures and Valor Ventures, plan to change the equation more. Lisa Calhoun, general partner at Valor, said 94 percent of the VC industry is male, and an all-male VC views a female founder as a "hard-to-define financial factor, and that goes on the risk side of the VC equation." But as more female founders step up, that investing pattern will change. "The model will include female founders, but we're not quite there yet," she said.

Here are 13 female-run start-ups—ranked in ascending order by their funding levels—that have raised a combined $2.8 billion, according to investment tracker PitchBook.

—By Krysia Lenzo, special to CNBC.com
Posted 30 July 2015


Anna Counselman, co-founder of Upstart
Source: Upstart

Female venture capitalists are three times as likely to fund female-founder companies, Calhoun said. There's another reason why more VCs should be cast a wider gender net: 3 in 5 companies are started by women, according to The 2014 State of Women-owned Businesses Report, conducted by American Express Open.

Upstart, co-founded by former Google executive Anna (Mongayt) Counselman and other ex-Googlers, was created as a platform that allowed individuals to raise funds by sharing a percentage of future income. The company pivoted to the trend of peer-to-peer lending two years after launching and has lent more than $135 million over the past year to people with low credit ratings, such as recent college graduates. The data is primarily determined by credentials based on "character"—one's college grade-point average and SAT scores. Counselman spent five years at Google as head of the global enterprise customer programs.

  • Venture capital raised: $43 million
  • Valuation at last financing: $169 million
  • Year founded: 2012
  • Investors: Collaborative Fund, Eric Schmidt, Google Ventures, First Round Capital, Khosla Ventures, Mark Cuban, Salesforce.com CEO Marc Benioff
    (Source: PitchBook)

Hearsay Social

Hearsay Social founder and CEO Clara Shih
Peter Foley | Bloomberg | Getty Images

The American Express Open report also stated that in the past few decades the growth in the number of women's firms (up 68 percent), employment (up 11 percent) and revenue (up 72 percent) exceeds the growth rate of all but the largest publicly-traded firms.

Clara Shih is focused on finance, like Upstart, but is on a different path than peer-to-peer lenders. Shih turned her experience as a product developer at Salesforce.com into a eureka moment: social media was going to be a growth area that old guard companies in the financial sector wouldn't be able to master on their own. Shih co-founded Hearsay Social with Steve Garrity as a way for financial advisors and insurance agents to stay better connected with their clients. They can collect data from clients' social media feeds to build better relationships. Say, for example, a client has a baby—the financial advisor would likely want to talk about college savings plans.

Hearsay Social was a 2015 CNBC Disruptor and Shih herself made CNBC's Next List.

  • Venture capital raised: $51 million
  • Valuation at last funding: $175 million
  • Year founded: 2010
  • Major investors: Sequoia Capital, New Enterprise Associates
    (Source: CNBC)


Alexa von Tobel, LearnVest
Getty Images

One of the venture capital firms that has invested in several of the start-ups featured here just released relevant data. First Round Capital studied 300 investments of their own and found that female founders outperform their male-only founder teams by 63 percent, a data point the VC firm called" meaningfully significant."

A focus on investing paid off for Alexa von Tobel, founder of New York City-based Learnvest, a financial-planning firm that offers money-management guidance and personal finance information. The site has about 1.5 million users, with almost 10,000 paid subscribers, too, who get ongoing advice about budgeting and curbing negative spending habits.

Early investor Northwestern Mutual paid $250 million for the company in March. Von Tobel, still the company CEO, told CNBC in a past interview that her firm's initial goal was to "make financial planning as easy and as accessible as joining a gym."

  • Venture capital raised: $72 million
  • Valuation at last financing: $250 million (acquired by Northwestern Mutual)
  • Year founded: 2007
  • Investors: N/A
    (Source: PitchBook)


Katia Beauchamp and Hayley Barna, co-founders of Birchbox
Source: Birchbox

Women with established businesses don't seem to let the funding handicap get to them. Female entrepreneurs ranked their happiness nearly three times as high as women who are not entrepreneurs or established business owners, according to the Diana Project on women in business run by Babson College.

Birchbox co-founders Katia Beauchamp and Hayley Barna are among the female entrepreneurs putting a happier, prettier face on female-founded start-ups. Birchbox has 1 million subscribers globally who receive five sample beauty products for $10 per month. Last year its revenues were estimated at $125 million, and it has more than 300 employees. The service is now expanding its scope by offering a men's skin care and grooming box of samples.

  • Venture capital raised: $72 million
  • Valuation at last financing: $580 million
  • Year founded: 2010
  • Investors: Accel Partners, Comcast Ventures, First Round Capital, Forerunner Ventures, Alven Capital Partners, Grace Beauty Capital, Viking Global
    (Source: PitchBook)

Rent the Runway

Jennifer Fleiss (left) and Jennifer Hyman, co-founders of Rent the Runway
Source: Rent the Runway

A trait unique to start-up founders is seizing on something that drives them crazy—Uber was created by a few guys who hated the car-service options they had. But what makes female founders and their pet peeves unique is that they are historically extremely under-represented, so the ideas coming from them come from a new perspective.

Rent the Runway, founded in 2009 by Jennifer Fleiss and Jennifer Hyman, is a good example. The New York-based company provides designer dress and accessory rentals for a set fee, saving women from purchasing an item for a one-time special occasional at a full-time price. For example, a customer can rent a $795 Badgley Mischka dress for $115 over the course of four days. Rent the Runway has used its venture capital to expand its online e-commerce concept to five retail locations, including two in New York City and one in Las Vegas. Like the co-founders of Birchbox, Rent the Runway's founders were former classmates at Harvard Business School.

  • Venture capital raised: $116 million
  • Valuation at last financing: $452 million
  • Year founded: 2009
  • Investors: 2020 Ventures, Advance Publications, Bain Capital, American Express, Highland Capital, Kleiner Perkins, Technology Crossover Ventures
    (Source: PitchBook)


Cardlytics co-founder Scott Grimes and Lynne Laube.
Source: Cardlytics

One of the benefits of record venture funding levels is doors being open for the relatively large pool of unfunded female founders. "It's a great time to be a female founder or a woman going into venture," Calhoun said.

Many female-run start-ups are focused on lifestyle issues rather than something more boring—say, for example, bank technology—but Cardlytics has found a way to do both. Launched in 2008 by president, COO and co-founder Lynne Laube, Cardlytics embodies the trend of capitalizing on data for capitalist success. Cardlytics turns large sets of banking data—culled from a majority of U.S. retail banking customers—into actionable consumer intelligence. Clients can use the data to target ads to millions of individual consumers based on their recent purchase behavior. Cardlytics claims to reach more than 35 million consumers a month and says its data analysis yields a return that is four times higher than how a typical, relatively uninformed campaign would perform.

Here's one interesting example of how its data is being used today.

  • Venture capital raised: $173 million
  • Valuation at last financing: $696 million
  • Year founded: 2008
  • Investors: Canaan Partners, Discovery Capital, Kinetic Ventures, Polaris Partners
    (Source: PitchBook)


Julia Hartz, Eventbrite
Jesse Grant | CNBC

Start-ups can choose a narrow niche or go as broad as possible. All the VC money being thrown at cyber security is the narrow option. Female founders tend to think broader, so if there is no female-founded Airbnb or Uber to talk about yet, Calhoun thinks it's coming.

There are female-founded unicorns—start-ups valued at $1 billion or more. Eventbrite, co-founded by former ballerina Julia Hartz, is one. Eventbrite provides ticketing to 1.7 million people in over 180 countries. Geared primarily toward millennials, Eventbrite has capitalized on the portion of the population that prefers to spend its money on events rather than material goods. "This area of experientialism over materialism really drives this need to connect," said Hartz to CNBC's Jon Fortt. "So 3 in 4 millennials actually say that they would rather spend their money on experiences rather than material goods."

  • Venture capital raised: $200 million
  • Valuation at last financing: $1.2 billion
  • Year founded: 2006
  • Investors: 137 Ventures, European Founders Fund, Sequoia Capital, SoftTech VC, T. Rowe Price, Tiger Global
    (Source: PitchBook)


Adi Tatarko, co-founder and CEO of Houzz
David A. Grogan | CNBC

Here's a good example of a female-founded start-up founded on frustration. The founders of Houzz spent several annoying years trying to remodel their home. Connecting the dots of a personal annoyance to cloud technology has led to all kinds of start-ups working on the management of a home or lifestyle.

Adi Tatarko founded Houzz with her husband Alon Cohen, and she has certainly made her mark as the CEO of the online home-improvement and design community (it ranked 11th on the 2015 CNBC Disruptor 50 list).

Houzz's user base includes over 600,000 architects, designers and contractors worldwide. It also has approximately 25 million monthly unique users, 90 percent of whom are homeowners seeking the latest remodeling tips.

  • Venture capital raised: $214 million
  • Valuation at last financing: N/A
  • Year founded: 2009
  • Investors: Canvas Venture Fund, Comcast Ventures, Digital Sky Technologies, New Enterprise Associates, Sequoia Capital
    (Source: PitchBook)

One Kings Lane

Co-founders of One Kings Lane Alison Pincus and Susan Feldman.
Donato Sardella | Getty Images

Houzz is not the only start-up that has set its sights on the home, and this one could very well be the next female-run unicorn, closing in on a billion-dollar valuation.

Co-founded by Susan Feldman and Alison Pincus, One Kings Lane is an online marketplace that offers flash sales to consumers looking to purchase vintage and antique home goods for a reasonable price. Its founders recently opened a showroom in Tribeca, which showcases decorative items from the company's extensive inventory. "We felt it was time that our customers could touch and feel our brand, so we reverted back to our startup roots," said Feldman.

Calhoun said that a unique aspect of One Kings Lane is curated interior design with a celebrity twist. You can buy the place settings that Gwyneth Paltrow designed for a charity dinner.

  • Venture capital raised: $230 million
  • Valuation at last financing: $890 million
  • Year founded: 2009
  • Investors: First Round Capital, Greylock Partners, Kleiner Perkins Caufield & Byers, Marissa Mayer, Reid Hoffman, Tiger Global, Institutional Venture Partners, Scripps Networks
    (Source: PitchBook)


Anne Wojcicki, co-founder of 23andme.
Getty Images

An area of business in which women have long had success is in health care, especially compared directly to other sciences, such as computer science and coding.

23andMe is at the forefront of efforts to use personal DNA analysis to research ancestry and diseases. Through it has also created a very big controversy. The FDA made 23andMe stop its mail-order DNA service stating that the claims it made about disease risk were not reliable enough and could lead to poor health-care decision-making. It can still send you a kit to trace your ancestry for $99; it just can't tell you what it thinks is your risk of developing Parkinson's disease. (The more detailed genetic screening service is still available overseas.) The company uses its massive genetic database to research diseases.

It didn't hurt the company in its early days that co-founder Anne Wojcicki (with Linda Avey) was married to Google co-founder Sergey Brin (they've since split). Google is among the investors in the company. Investors continue to believe in the company's potential—it just raised another round of venture in June.

  • Venture capital raised: $265 million
  • Valuation at last financing: $1 billion
  • Year founded: 2006
  • Investors: Google Ventures, New Enterprise Associates, Yuri Milner
    (Source: Pitchbook)


Elizabeth Holmes, founder and CEO of Theranos.
David A. Grogan | CNBC

A college dropout from Stanford University, Elizabeth Holmes founded the blood-testing company when she was 19 years old after her uncle died of undetected skin cancer. It is transforming the way blood is tested. A single drop of blood garnered from a finger prick can provide a significant amount of data, ranging from measuring blood sugar to checking for E.coli, and it was recently approved by the FDA for patients with type 1 herpes simplex. Holmes currently has a net worth of around $4.5 billion and is the youngest self-made female billionaire.

"We have a belief system, which that this is not about us or our technology. It's about giving people a basic right that they have lost," said Holmes to CNBC's Jim Cramer in a one-on-one interview. "Our belief is that the cost of testing should be lower across the board."

Holmes has some luminaries backing her—two former Secretaries of State, Henry Kissinger and George Schultz are on the company's board. Theranos would top this list if debt were not included as part of venture capital raised.

  • Venture capital raised: $400 million
  • Valuation at last financing: $9 billion
  • Year founded: 2004
  • Major investors: ATA Ventures, Draper Fisher Jurvetson, Black Diamond Ventures, The Lucas Venture Group, Continental Properties
    (Source: PitchBook)


Kathryn Petrailia, Kabbage
Chris Rank | Bloomberg | Getty Images

With women starting 3 out of every 5 businesses in the U.S., one would think female founders would be all over the lending business, and they are. One reason: The average high-performance male-founded company starts with six times the capital given to a female founder, Calhoun said.

That's where Atlanta, Georgia-based , an online lender that is nearing the $1 billion mark in loans to small businesses, helps women-run businesses scale. Kabbage does not rely solely on a credit score. It analyzes sales, traffic and reviews of a business.

The COO and co-founder, Kathryn Petralia, has 17 years of experience in the payments and consumer credit space, something she said isn't common for women. "This may be a contrarian view, but I believe there's a reason women don't tend toward professions in technology and finance," said Petralia in an interview with The Huffington Post. "These industries can be competitive and solitary, while women tend to be more collaborative and may not gravitate toward those environments."

  • Venture capital raised: $601 million (debt represents $345 million, or 57 percent)
  • Valuation at last financing: $890 million
  • Year founded: 2008
  • Major investors: BlueRun Ventures, Softbank, UPS Strategic Enterprise Fund, Mohr Davidow Ventures
    (Source: PitchBook)


Lynn Jurich, president and co-founder of SunRun Inc.
David Paul Morris | Bloomberg | Getty Images

If Petralia doesn't exactly think women run to found finance start-ups, she'd might be even more surprised to see a woman running an energy company, especially one with a billion-dollar-plus valuation that's about to go public.

The market for residential solar has grown significantly as the cost of solar panels has come down and more Americans and American businesses seek to take greater control of power generation. Sunrun, the largest residential solar company in the U.S., says on its website that every six minutes someone installs one of its solar panel systems. The CEO and co-founder of Sunrun, Lynn Jurich, is considered one of the most influential women in the renewable energy sector.

The company filed for an IPO in June. The company intends to be listed on the NASDAQ under the symbol "RUN."

  • Venture capital raised: $690.5 million (debt represents $395 million, or 57 percent)
  • Valuation at last financing: $1.5 billion (now in IPO registration)
  • Year founded: 2007
  • Major investors: Foundation Capital, Accel Partners and Sequoia Capital
    (Source: PitchBook)