What’s The Password?
Startups are thriving in Indy, but where are all the women founders?
One sunny winter morning in 2015, Aimee Kandrac headed downtown to pitch her startup, WhatFriendsDo, to a couple of investors. Walking into an office in the Mile Square, she didn’t feel nervous. Rather, Kandrac was excited—eager to get feedback. Whenever she pitched an idea to a potential funder, she always made a point to note the number of women in the office. In this particular one, there weren’t any. Nevertheless, Kandrac tried to remain focused.
Two male investors greeted her and brought her to a table, where the three of them got to know each other a bit before Kandrac walked the guys through her concept: a website for people to coordinate their assistance to friends in need, whether that be someone who’s sick, grieving, or just overwhelmed. With no prior tech experience, Kandrac never intended to start a business. But after her sister’s best friend fell terminally ill, she saw a need for a product like WhatFriendsDo in the market. After her pitch, Kandrac readied herself for questions about her business model or how she would run the company. Instead, she was humiliated.
“It’s so nice when a housewife has an idea,” one of the investors said. “But it’s kind of like playing Legos with your kids. The ideas just need to snap together.” Shocked, Kandrac fell silent. “What you have here is what we like to call a family business,” the other investor said. “It’s not really something we could invest in.”
This wasn’t the first time Kandrac had endured condescending comments from male investors. But after a long series of similar rejections in Indy, she realized she faced an even bigger problem. Despite the idea’s potential, funders here tended to shy away from consumer tech businesses like hers. Eventually, Kandrac acquired $500,000 for WhatFriendsDo. Although that investment came not from a venture capital fund, but from individual investors across the country, all of whom happened to be female.
In some ways, Kandrac’s experience is surprising. The Indianapolis tech scene is thriving. Between 2013 and 2015, the number of tech jobs here grew by 30 percent, the fifth-fastest rate in the country. It’s a great place for women to work in tech, too. According to a recent report by SmartAsset, a New York–based company that studies these things, Indy ranks fourth on the list of cities for females in the industry. Notably, women in tech here make more than men, earning 102 percent of their male counterparts’ salaries. But the city falls short in one crucial area: the number of women starting tech companies. About 18 percent of venture-backed tech companies in the U.S. have at least one female founder on the team. Here, that number is only 8 percent.
Why is Indianapolis so far behind? The answers highlight not just the reason Kandrac struggled, but why many women here never get as far as she did. And like most things in the local tech sector, those answers begin with ExactTarget.
Most of the growth in the tech community in the last few years can be traced back to a single event: Salesforce’s purchase of Indy’s largest email marketing firm. On June 4, 2013, the San Francisco software giant acquired ExactTarget for $2.5 billion, making as many as 100 new Indianapolis millionaires. Among those were CEO Scott Dorsey, cofounder Chris Baggott, president of technology and strategy Scott McCorkle, vice president of web products Eric Tobias, and chief marketing officer Tim Kopp. Today, all of these men remain active in the Indianapolis tech landscape. In June 2015, Dorsey launched High Alpha, a venture studio that funds and mentors software companies. Tobias is a partner, and McCorkle recently joined the team as an executive in residence. Since 2013, Baggott has started and sold several ventures, including Compendium and Husk, and he’s currently the CEO of food-tech startup ClusterTruck. Kopp serves as partner at the Chicago-based fund Hyde Park Venture Partners, which has invested in a number of local startups and now has an office in Indianapolis.
In terms of leadership, ExactTarget alums like these serve many of the tech startups here, and women are largely missing from the lineup. There weren’t many women in leadership positions at ExactTarget during its acquisition, so there aren’t many women in leadership positions at its spinoff companies today. It’s an unintended effect, but one that doesn’t come without consequences for the community. “The big challenge in Indianapolis is that when people look around at who they can emulate, who they can aspire to be, unfortunately, most of those folks are males,” Tobias admits.
Mentors help entrepreneurs in several ways. For one, mentors who have gone through the same challenges of testing a business idea, raising money, and hiring a team can provide firsthand insights the internet can’t. Second, with large, powerful networks of their own, mentors can open doors. From potential partnerships and customers to talent and investors, they often have the power to make game-changing connections for the first-time entrepreneurs they help. Yet most of the firms that nurture young tech startups here have the same shortage of women High Alpha does. At Elevate Ventures, which focuses on growing Indiana-based companies, only three of the 16 advisors are female; at Hyde Park, none are.
In addition to that problem, the success of ExactTarget had another unintended consequence. Most tech investors tend to stick with what they know. In Indy, that’s now enterprise software, the kind ExactTarget sold. Traditionally, women haven’t gravitated to that sub-industry. So founders with any other kind of idea face an uphill battle when it comes to finding money here. When Crystal Grave started Snappening, a website where consumers shop for event planners and venues, she searched high and low in Indianapolis for a few dollars to get things going. Eventually, she gave up and decided on a more mobile lifestyle. She now moves from city to city every few months, running her company remotely.
“I’ve heard this sentiment from investors that more women-led companies would get funded if women in the state of Indiana had any good companies to fund,” Grave says. “That’s nonsense.” According to Grave, many women entrepreneurs in Indianapolis already have traction and paying customers—two key ingredients for funding. They just happen to be starting companies that don’t fit into the ExactTarget model. “It’s almost impossible to raise money in Indianapolis unless you’re trying to raise for a business-to-business, software-as-a-service company,” Grave says. “There’s just no nice way to put it.”
The lack of mentorship and narrow funding opportunities seem to be pronounced issues locally. But national forces are at work, too. Women face a bias from colleagues in the tech industry. According to the Kaufmann Foundation, which studies entrepreneurship, female founders have a more nuanced view of risk, meaning they tend to research facts and financials more thoroughly and are less likely to project overconfidence when evaluating their business. Because entrepreneurship is a risk-taking activity, a lack of overconfidence can easily be confused with lack of any.
With a Harvard MBA, Angie Hicks, founder of the former local tech giant Angie’s List, rarely had a reason to feel insecure as the only woman in the room. She helped build the most notable exception to Indy’s few-female-founders problem. But she realizes some women approach business in a way that could put them at a disadvantage. “Women can naturally be the kind of people who hang back and don’t always say, ‘Pick me,’” she says. “That just isn’t a natural tendency for some of us. Women want everything put together before they ask the question, whereas men might ask sooner.”
Perhaps an even bigger problem than bias is education. The pipeline of aspiring entrepreneurs with the STEM skills to build tech companies hasn’t been flooded with women. Nationally, only 17.9 percent of those with a computer-science bachelor degree are female. While statewide data isn’t available for Indiana, the same issue seems to exist here. Last year, Rose-Hulman—perhaps the best school in the state for computer science—celebrated a record-breaking number of women in its freshman class, and they still only accounted for 30 percent of first-year students. Women made up just 33 percent of undergraduates in Purdue University’s College of Science last year. And IUPUI, where women represent only 6.7 percent of all STEM grads, made BestColleges.com’s list of schools with the worst ratio in the country.
The resulting shortage of women with that training has led directly to a dearth of female tech entrepreneurs. Oscar Moralez, the managing director at VisionTech Partners, a network of angel investors based here, receives 400 applications for investment at his downtown office every year. Out of that pool, he can count on one hand the number of applications he has seen from female founders. “The fact is, we just don’t see many women-led companies,” Moralez says. “I don’t think our group is biased in any way toward men. In Indiana, most of what you see are white, male CEOs and entrepreneurs that are bringing these companies forward.”
A few local organizations are working to get more women into the entrepreneurial pipeline, most visibly The Startup Ladies. Established by Kristen Cooper in 2014, The Startup Ladies caters to female founders. The women provide mentorship and camaraderie, discussing businesses every other Wednesday at their Startup Study Hall events. Cooper brings in expert speakers, hosts pitch nights focused on women-owned companies, and organizes events aimed at exposing issues of gender diversity, like a screening of the movie Hidden Figures earlier this year.
Prior to becoming a leader in the tech community, Cooper worked in the non-profit sector. She segued into technology in 2012 by trying to build a dating app for friends. Cooper never took the product to market, but after seeking feedback from experts and networking with other business leaders in Indianapolis, she realized how short the city was on women founders. That’s when The Startup Ladies idea was born.
Chere Cofer is a prime example of what’s possible when an entrepreneur plugs into the resources The Startup Ladies can offer. When Cofer saw the group pop up on Meetup.com in 2015, she had a few business ideas, but wasn’t committed to becoming a full-blown entrepreneur. Today, Cofer is the founder of Open Books MD, a software company that connects pharmaceutical reps with doctors’ offices to schedule appointments. Through The Startup Ladies, Cofer met Billie Dragoo, founder of the Indiana Conference for Women. Dragoo encouraged Cofer to submit her business plan as one of about 30 businesses in the area to be considered for a pitch competition, Dolphin Tank, at the conference that year. Cofer was one of four women to win a finalist spot, meaning she got to pitch Open Books MD to a group of successful business owners and investors for feedback. She credits a lot of her success to the connections The Startup Ladies and the Indiana Conference for Women made for her.
Among other things, Dragoo focuses on the gender funding gap. She believes the problem could be solved by starting a female-centered investment fund. There’s nothing like that here just yet. Danielle McDowell, the executive director of The Speak Easy coworking space, agrees on the need for such a fund. One of the best-known female founders in the city, McDowell launched an e-commerce site called Jada Beauty in 2013. A year later, she sold the company to the national Beauty Systems Group. Today, when she’s not mentoring entrepreneurs at The Speak Easy, McDowell focuses on investing in women-led companies. But individual investors, unlike an organized fund like High Alpha, typically don’t bring the same resources or visibility to a company. McDowell believes that a female-focused fund would encourage more women to pursue entrepreneurship.
Others believe that when it comes to closing the gender gap, early exposure to innovation and technology is the key. The first lady of Indiana University, Laurie McRobbie, has studied tech in higher education for more than 25 years. Although it wasn’t her original plan to work in information technology, she was encouraged by her first husband and a couple of people she knew through him in the 1980s to take an IT job, and she loved it. Today, she worries that type of peer encouragement is in short supply. “There was a sense of pioneering back then,” she says. “You were fooled into thinking that if you broke the path, others would automatically follow.”
Through ServeIT, a clinic she founded at IU’s School of Informatics and Computing, McRobbie gives undergrads a chance to put newly acquired computing skills to use in the nonprofit sector in Bloomington. Teams of students support local nonprofits that otherwise might not be able to afford tech services. The program seems to appeal particularly to women—half of ServeIT’s participants are female, and McRobbie says it has led to a dramatic increase in the department’s female enrollment. Other programs help women realize not only that there’s room for them in the market, but that there are ways around funding challenges. Last year, an IU student named Ellie Symes had an idea for bee-monitoring software that would help commercial beekeepers combat hive loss. She entered her concept at a competition there for entrepreneurs called BEST, and ultimately won the $100,000 investment that is its top prize. According to McRobbie, in the first five years of the competition, women didn’t even participate on teams, let alone lead them. The landscape at IU, at least, appears to be changing.
Getting women involved in tech earlier in life will be key to solving many of the problems plaguing the local industry. More trained female entrepreneurs will lead to more mentors and investors, which in turn may diminish the bias women face in the business. That last hurdle may be what bothers McRobbie most. “Tech isn’t a thing women do to be like men,” she says. “It’s women’s work just like it’s men’s work.”