Female Founders: Elizabeth Galbut of SoGal Ventures On The Five Things You Need To Thrive and Succeed as a Woman Founder

Know your superpower and use it to your advantage. When we saw Function of Beauty, we wanted in on the deal, but we were a brand new fund trying to pitch an almost profitable, fast-growing business to let us take equity. We were eventually able to win the deal when I leveraged my experience as a design professor to help them with packaging and store design and Pocket leveraged her international experience to help them strategize about global expansion.

As a part of our series about “Why We Need More Women Founders”, I had the pleasure of interviewing Elizabeth Galbut, Co-Founder and Managing Partner of SoGal Ventures.

Elizabeth Galbut is the co-founder and managing partner of SoGal Ventures, the first women-led, next-generation venture capital firm. With a relentless pursuit to change the way that we see and treat entrepreneurs, Elizabeth has founded two successful VC firms and invested in over 150 companies, personifying the mantra of being the change that you want to see in the world. Elizabeth’s career in Venture Capital is rooted in a fundamental belief that appeared to be an afterthought in the multi-billion dollar industry: startups should improve human health outcomes and quality of life.

Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?

Thank you for having me! I have an MBA/MA Design Leadership Dual degree from Johns Hopkins University and Maryland Institute College of Art. I am also a proud alumnus of Georgetown University and the London School of Economics. Both of my parents were doctors, so I was naturally drawn toward the healthcare field. During my time as a Strategy Consultant at Deloitte for large healthcare clients, it became clear to me that too many tech startups weren’t designed with all of the stakeholders in consideration. With full intent to change the way we see and treat entrepreneurs, I co-founded SoGal Ventures in 2015 to ensure underrepresented founders have a voice. With SoGal, I invest in what we believe are the three biggest investment opportunities of our time: underrepresented founders, undercapitalized geographies and underserved problems. We double down on companies that are solving the right problem for the right group of people with the right solution.

Can you share the most interesting story that happened to you since you began leading your company?

When Pocket and I launched SoGal, many existing VCs were skeptical about our investment areas and interests. We have consistently been the underdog’s champion. SoGal has consistently invested in companies that were underestimated due to factors ranging from their product, the founder’s background or business model. Even when a lead investor solely saw a good product, we always took the time to deeply understand their moats, how they could scale with favorable venture economics, and invested with strong conviction in those fundamentals. I even recall people calling me crazy for wanting to invest in custom shampoo and conditioner, but I was convinced the advanced manufacturing capabilities behind the scenes and the sentiment and attachment that customers from coast to coast felt towards the products. Now, that investment — our first portfolio company Function of Beauty — is a billion-dollar unicorn.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

Back in 2015 when Pocket and I first hosted a major event as a team, we secured a dozen of in-kind sponsors including a boxed pasta brand. One day before the 3-day event began, we got a phone call from the venue saying there was a truck delivery for us, and we were confused about what it could be. When we arrived at the venue as fast as we could, it turned out that we got a mountain of pasta boxes for attendee gifts — we had never, ever seen so much pasta in our lives! The two of us ended up doing physical labor all morning, offloading and transporting a truck load of pasta boxes into hundreds of gift bags.

Lesson learned: sometimes entrepreneurship gets very physical and catches you by surprise and you just gotta be ready for it!

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

SoGal wouldn’t be the powerhouse it is without my co-founder, Pocket Sun. We met at a VC executive program at Stanford in 2015. Sharing a passion to create systemic change from the ground up in the VC world, we immediately banded together to form the SoGal VC firm alongside the fast growing SoGal communities of women entrepreneurs. The rest is history!

Ok, thank you for that. Let’s now jump to the primary focus of our interview. According to this EY report, only about 20 percent of funded companies have women founders. This reflects great historical progress, but it also shows that more work still has to be done to empower women to create companies. In your opinion and experience what is currently holding back women from founding companies?

Pocket and I launched SoGal with the mission to fund underrepresented founders. With 98% of our portfolio company founders being women or BIPOC, we are truly achieving our vision. While there has been historical progress when it comes to the increased levels of women founders, there are still many barriers that prevent women from entering business.

We see the greatest barrier being the VC environment not being one built for women founders to thrive at the same rate as their male counterparts. While pledges have been made across the industry, structural biases persist. An argument we have come across time and time again is that women can’t run a business while having children. Several of our founders have founded their companies while pregnant or already juggling a family, and we’ve had 20 newborn babies from our portfolio founders in the past 3 years! Our unicorn companies involve women founders with young kids, and we’ve seen women founders launch a business and deliver a baby in the same week with sweeping success. Society often tells us that we cannot do it all, but our founders prove that wrong all the time.

In my experience, finding female founders has never been an issue. However, female founders receiving funding from VCs has been the inherent barrier. Women founding teams still only receive 2% of all VC funding. There’s just no way to justify it. This reality fuels my mission to provide capital access for women and BIPOC founders.

Can you help articulate a few things that can be done as individuals, as a society, or by the government, to help overcome those obstacles?

There is a lot that can be done. Individuals can support and advocate for diverse-led businesses. The least we can do is to vote with our dollars and champion underrepresented people and communities. Governments can introduce grants/funding for minority founders and VC firms can implement policies that would bind them to invest a significant portion of their fund into women and BIPOC founders.

According to MIT studies, women-led enterprises have consistently been shown to outperform and have much lower failure rates. The debate in recent years seems like an improvement but statistically, women founders are having an even smaller piece of the pie. LPs (i.e. pension funds, endowment funds, fund of funds) who invest in VC funds play an important role in shaping VCs’ decisions and appetites, but have not been held accountable to make diversity-minded decisions.

For these reasons, our sister nonprofit, SoGal Foundation, launched the Black Founders Startup Grant. This grant awards Black women and non-binary founders on a rolling basis and offers both financial support and programming to awardees. In 2022, we awarded 30 founders with $5,000 each to help kickstart or support their growing enterprises. This is just one initiative we are doing to ensure women and BIPOC founders are getting attention and support, and it has resulted in 147,000 applications which also turn into amazing deal flow for our fund.

This might be intuitive to you as a woman founder but I think it will be helpful to spell this out. Can you share a few reasons why more women should become founders?

Aside from the fact that women-founded businesses drive higher revenue with higher capital efficiency, there are so many reasons why women should become founders, investors, and board members. The system as is was not designed for us by us, so there are enormous opportunities for women and the rest of us to innovate and create better, more inclusive solutions.

I firmly believe that women should own more of the next big thing because ownership is a crucial part of wealth equity. You rarely get rich with salaries; you need ownership to build generational wealth. Women need to be invited to those opportunities and they bring incredible talent and lived experience to the table.

What are the “myths” that you would like to dispel about being a founder? Can you explain what you mean?

We’ve seen egomaniac type male characters as the “strong” founders and there’s been more than a few rise and falls of those founders. Some people believe that you need to emulate that masculine, toxic energy to be successful in the business world. It doesn’t need to be that way. We believe the future of business should be built with empathy, design thinking, inclusivity, and sustainability of both humans and the environment in mind. You can be soft, kind, AND a successful founder.

Is everyone cut out to be a founder? In your opinion, which specific traits increase the likelihood that a person will be a successful founder and what type of person should perhaps seek a “regular job” as an employee? Can you explain what you mean?

It takes a certain type of person to found a company and make executive decisions that not only positively impact the business, but also the customers they set out to serve. The qualities that I see most commonly within founders that I consider successful are: forward-thinking, unique insights, perseverance,work to serve the greater good, and lastly, setting a goal that many may call them crazy for, then proving people wrong and exceeding that goal.

Ok super. Here is the main question of our interview. What are your “5 Things I Wish Someone Told Me Before I Started” and why? (Please share a story or example for each.)

1. Know your superpower and use it to your advantage. When we saw Function of Beauty, we wanted in on the deal, but we were a brand new fund trying to pitch an almost profitable, fast-growing business to let us take equity. We were eventually able to win the deal when I leveraged my experience as a design professor to help them with packaging and store design and Pocket leveraged her international experience to help them strategize about global expansion.
2. Ask for help when needed. We don’t know everything and we are not afraid to ask for support when we need it. At SoGal, we have over 150+ LPs. The success of our fund and portfolio companies would not be possible without them.
3. You’ll need to pitch a lot even as investors. Our first 3 deals and now unicorns/ soonicorns (Function of Beauty, Everlywell, Lovevery) all became portfolio companies after we pitched ourselves to the founders.
4. Don’t underestimate yourself. It doesn’t always come naturally to ask others for money. It is extremely important for women to know their value and understand how to negotiate for it.
5. You need partners on your side. The success of SoGal would not be possible without the remarkable partnership of Pocket and I. We invest intentionally into our relationship as it becomes such an anchor for business and life. Strong partnership is crucial in the success of a company, and you don’t need to do it alone. The highs and lows become so much more meaningful when you have someone to share with.

How have you used your success to make the world a better place?

We only invest in companies that could be part of our legacy that we would be proud of no matter the business outcome. Our founders embody the same “business for good” ethos, which makes working with them a joy. For example, our company Everly Health in 2020 create the first at-home coronavirus tests given emergency clearance by the Food and Drug Administration, and made health tests extremely affordable and convenient. ZZ Driggs is leading the conversation in sustainable furniture. Cabinet Health has invented the first zero-plastic, refillable, clean medicine system. Eterneva has helped thousands of people go through more peaceful grief journeys.

With over 150 investments to date, my mission is to continue backing startups that are revolutionizing the way we live, work, and stay healthy. I not only focus on expanding diversity within venture capital, but funding companies that build a more equitable future.

We have also emphasized mental health as being just as important as physical health for SoGal founders. For example, we pioneered a 6-month founder peer group (think of it as an AA group but for founders) led by psychologists to help entrepreneurs with mental health and holistic leadership. My hope is that mental health holds a permanent place in the conversation of founder stories.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good for the greatest number of people, what would that be? You never know what your idea can trigger.

I would inspire a movement to determine how technology can create affordability, democratize access and reduce health disparities.

We are very blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch with, and why? He or she might just see this if we tag them.

Serena Williams, since she’s a fellow VC & GP!

Thank you for these fantastic insights. We greatly appreciate the time you spent on this.