Be as honest with women as you are with men during fundraising conversations; sometimes I feel like investors don’t give direct feedback to women — either by being dismissive or walking too delicately around the issue.
As part of my series about “the five things we need to do to close the VC gender gap” I had the pleasure of interviewing Wendy Xiao Schadeck, who is the Investment Manager at Northzone. Prior to joining Northzone, Wendy worked at A. T. Kearney and Accenture, and studied for an MBA at Columbia, where she became deeply enthralled in the dichotomy of roles women are expected to play without much societal support. Currently at Northzone, she is really tuned into the human side of founding a startup and is looking for technologies that create huge societal efficiencies by dramatically and fundamentally altering human behavior.
Can you tell us the “backstory” that brought you to this career path?
I started a co-working and childcare company called CoHatchery while I was getting my MBA at Columbia University. As a startup founder, I soon wanted to see what it was like on the “other side of the table”, so I decided to take a class in early stage investing. My professor then sent me and my fellow students an internship opportunity with a leading European venture fund, which caught my interest. The partner recruiting for this position sounded very different to other VCs I had come across, and I quickly decided I wanted to meet him. He was described as “a Swedish heavy metal guitarist who was also the first investor in Spotify”. That person was PJ Pärson, one of the General Partners at Northzone.
Can you share a story of your most successful Angel or VC investment? In your opinion, what was its main lesson?
I am still early in my venture career, so my companies are still too young to be classed as definite successes (though some are on great trajectories). From my observations so far, I think the main lesson is that we often underestimate just how long “the long game” is. Many of the signals that seem important in the short run (such as how “hot” the company is, how “viral” its growth is, how much “hype” the sector has, the brand name of the investors, etc.) ultimately aren’t great predictors of longer term success. When you invest in a company, you commit to a long journey together with the leadership team, and you have to make sure you invest in folks you want to go on that journey with.
Can you share a story of an Angel or VC funding “failure” of yours? Is there a lesson or take away that you took out of that that our readers can learn from?
Again, as I am still early in my venture career, so it’s still too soon to tell. Overall, I think company failures can be positive as long as they fail for the right reasons (hypothesis about the market proves to be wrong, for example), fail quickly and with relatively little capital at stake. This mentality reduces opportunity costs for everyone involved and allows entrepreneurs to take real risks. This is the basis of the venture model, which is high risk but potentially very high return.
Was there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that?
I lead Northzone’s investments into Web 3 infrastructures, and there were a few companies I really wanted to invest in at the beginning of the hype cycle for Crypto in particular, when we were still developing our thesis. We knew that the teams were talented, but they seemed further away from commercial adoption than the rest of the companies we were looking at and seemed to be evaluated under a completely different framework by the market. It’s still too early to tell how those companies will perform in the long run, but we’ve stayed close to many of them. I still have FOMO about working directly with those teams! However, I think sticking to the fundamentals that we know around incentive alignment, value chain, and delivering utility value will make the investments we make in that space stand out, from a long-term value realization perspective.
Ok let’s jump to the main focus of our interview. According to this article in Fortune, only 2.2% of VC dollars went to women in 2018. Can you share with our readers what your firm is doing to help close the VC gender gap?
I remember realizing one day that my calendar was completely full of appointments with all-female founders and investors, and that overall, this was more common than I had realized. I think that is just what naturally happens — people tend to gravitate towards those they can relate to. We have four members of our investment team who are women, two of whom are partners. On the whole, I’d say we have a pretty well-rounded perspective in terms of evaluating teams and consumer need. We also have a robust pipeline of female entrepreneurs, and some of our best performing companies are led by women. That said, there is room for even more improvement for us as a firm and the industry as a whole. Having women visible as decision makers in the fund helps, and we actively engage with networks that promote women in tech and participate in initiatives to drive the diversity question forward.
Can you recommend 5 things that need to be done on a broader societal level to close the VC gender gap.
- Relationship building activities that appeal to diverse groups — at Northzone, we host regular VC networking events, but instead of the usual drinks, we’ll do spin sessions or manicures. We have also started doing more brunches to make it easier for those who have children or other commitments, and struggle to make evening events work.
- Hire and promote more women at venture funds.
- Be as honest with women as you are with men during fundraising conversations; sometimes I feel like investors don’t give direct feedback to women — either by being dismissive or walking too delicately around the issue.
- Empower women in your organizations to make decisions after you recruit them, sometimes that involves leaps of faith and a whole lot of trust.
- Men have to be actively involved too! Closing the gender gap can’t just be a women-led thing.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I would hope to inspire women to take more risks in their careers, whether that be taking on a challenging role, speaking out more often, or taking on more financial risk. I’m generalizing, but I think on the whole, we women tend to stay more grounded to what we know. While I don’t think that should change, allowing that solid foundation to anchor us while being a bit more out there gives us additional upside that we often leave for the men.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“It’s the possibility of having a dream come true that makes life interesting.” — Paulo Coelho, The Alchemist (which happens to be one of my favorite books).
I think it is a good quote to illustrate my outlook on life because being optimistic in life is probably more risky as you are likely to be wrong more often, but it is also more rewarding because you have the chance of being right.
Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this, especially if we tag them. :-)
I would like to have breakfast with the Dalai Lama, but in case he misses this particular column, another person would be Warren Buffet, because he is very bearish on Crypto, and you learn the most from people who disagree with you.