Jennifer Fonstad and Theresia Gouw are leaving big Silicon Valley firms to launch Aspect Ventures.
Two of the most prominent venture capitalists in the United States have launched a new investment firm that’s generating buzz in Silicon Valley and beyond at a time of intensifying debate about diversity in the technology industry. Aspect Ventures, which was launched this month by Theresia Gouw, formerly a partner at Accel, and Jennifer Fonstad, formerly a partner at Draper Fisher Jurvetson, will focus on the booming mobile technology market.
The Aspect Ventures launch is noteworthy because it’s rare to see partners at top-tier venture capital firms strike out on their own. The news is particularly significant because Silicon Valley’s insular venture capital community is dominated by men. And there are very few women in the top executive ranks of the nation’s largest technology companies. Gouw and Fonstad will use their own money to establish the company.
A 2011 survey by the National Venture Capital Association and Dow Jones VentureSource found that 89% of venture capital investors were men and 11% were women. Most of the most powerful tech VC firms, including Andreessen Horowitz, Sequoia Capital, Kleiner Perkins, Benchmark, and Redpoint are dominated by men at the highest levels, where the most important investing decisions are made.
Gouw and Fonstad say they won’t shy away from emphasizing the importance of diversity for companies of all sizes. “There’s tons of data showing that diversity on boards, both public and private, and in management teams, leads to better financial returns,” Gouw told TIME in a recent interview. But Gouw and Fonstad view diversity more broadly than gender or ethnicity to include different skill sets such as investing, operating, marketing, technology and product development.
“It helps to have a board room where people are looking at the same complicated problems from different angles,” says Gouw. “There is a growing understanding among entrepreneurs and executives that there are real customer and product advantages to having a more diverse group of people on your management team and in your board room. If you’re a consumer-facing service, half of your audience is going to be male and half of your audience is going to be female.”
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Gouw related an anecdote about a company that was building a mobile tablet device where all of the engineers in the first wave of product development were men. When the company, which she declined to name, brought the first female onto the team, she tried to use the prototype, but she had fingernails, which rendered the device completely useless. “We are venture capitalists,” says Gouw, emphasizing the final word of that phrase. “We are in the business of making money for our investors and our entrepreneurs. Diversity makes a difference for business and the bottom line.”
A 2012 study by Dow Jones found that venture-backed companies that include females as senior executives are more likely to succeed than companies where only males are in charge. The study of more than 20,000 venture capital-backed companies that received financing between 1997 and 2011 found that the proportion of female executives is 7.1% at successful companies and 3.1% at unsuccessful companies, “demonstrating the value that having more females can potentially bring to a management team.”
At Accel, where Gouw was the only female partner until 2008, she was responsible for several of the firm’s most successful investments, including Trulia, which went public in 2012, Xoopit and Zimbra, which were both purchased by Yahoo. Gouw was also instrumental in building Accel’s New York office, and told CNN in 2011 that she spends 100 days on the road per year as she travels between Silicon Valley and New York.
Aspect Ventures will ultimately be judged based on its business performance, says Lucy Marcus, a top corporate governance expert. “It’s unfortunate that we have have to single out businesses started by women, but we need to do it,” Marcus told TIME. “We’ve known for years that diversity at startups is good for business. The key question is about Aspect’s business moving forward. How big will they be?”
Gouw and Fonstad have known each other for 25 years, after meeting at consulting giant Bain and Company, where both women worked straight out of college. Gouw attended Brown University and Stanford’s Graduate School of Business, and Fonstad graduated from Georgetown’s School of Foreign Service and Harvard Business School. Both sit on a number of corporate and philanthropic boards. Gouw serves on the Board of Fellows at Brown, and on the Board of Directors of DonorsChoose.org, an innovative non-profit that raises money for public schools.
Aspect Ventures will focus on the booming mobile space, which is becoming one of the most important areas in technology. Just last week, Facebook struck a deal to buy mobile messaging startup WhatsApp for $19 billion. “We think that the opportunity for building new improvements that touch on mobility is ten times that of the first wave of the Internet, if you just look at the number of devices and the number of connections,” says Gouw. She says Aspect Ventures will focus on investing in companies at the earliest stages of growth and staying with them through the “long haul.”