Rent the Runway’s Jennifer Fleiss (left) and Jennifer Hyman
When Jennifer Hyman and Jennifer Fleiss met as sectionmates at Harvard Business School about a decade ago, they had no idea what the two of them would eventually create together. But soon after meeting the two began regularly meeting to discuss potential startup ideas, and by the time they graduated in 2009, they had successfully launched Rent the Runway, a designer clothing online platform. Nearly 10 years later, Rent the Runway has opened brick-and-mortar shops in five U.S. cities, collected about $126 million in venture capital investments, and, at the end of 2016, received about a $600 million valuation. Once on the Poets&Quants Top MBA Startups list, they’ve also inadvertently spawned at least two other women-founded teams currently on our 2018 ranking.
Both Jordana Kier and Kelsey Doorey spent time working at Rent the Runway, and the experience led both to founding their own companies years later. For Kier, a Columbia Business School MBA graduate, it was LOLA, which she founded alongside Wharton School grad Alexandra Friedman. And for Doorey, a UCLA Anderson School of Management grad, it was Vow to be Chic. With a current funding level of $11.2 million and $10 million, both LOLA and Vow to be Chic claimed spots on this year’s and last year’s Top MBA Startups list.
The two businesses represent a small — and not necessarily growing — population of startups with women founders to make the P&Q list, which is based solely on venture capital raised within the past five years. This year, nine of the 100 top MBA startups were comprised of women-only founding teams, while another 13 startups had at least one woman on the founding team. This means that 78 of the 100 MBA startups ranked by Poets&Quants were founded by male-only teams. And while the nine women-only founding teams is a slight uptick from last year’s eight, the number of Top MBA Startups with coed teams dipped from 15 last year to the 13 this year.
MBA STARTUPS REFLECTING OVERALL MARKET TRENDS
Denver-based Guild Education was the women-founded startup to rank highest on this year’s list, at 18th, raising $31.5 million. The Stanford Graduate School of Business team launched its business in 2015, offering education and tuition reimbursements for working adults. It raised a $21 million Series B round last September. Following Guild closely in the rankings is Columbia Business School-founded Away, which raised $31 million and placed 19th. The luggage brand had a similar Series B round, raising $20 million last May. All told, the nine women-founded companies on this year’s list raised a combined $137.74 million of the $2.455 billion raised by all 100 ranked MBA startups.
Compared to the U.S. national rate of women-owned businesses, these numbers are low. According to an economic report published by Women Impacting Public Policy last March, women own nearly 10 million businesses in the U.S. Those firms make up nearly 37% of all non-farm businesses across the country. However, the report also states, less than 10% of those firms employ people than just the founder. This largely comes down to funding, other research says. Male-founded firms start with double the capital, and what’s more, the same report says, there are “large gender gaps in the amounts of financing across all firms, high growth potential firms, and even the top ranking firms by employment.”
The problem is a persistent and well-known one. There simply aren’t enough women making venture capital decisions. According to a Pitchbook analysis conducted by Fortune and published in April 2016, women make up about 6% of decision-makers at U.S. venture capital firms. As of March 2017, the gender gap among VC investments was actually getting worse as women-founded and -owned companies collected $1.46 billion compared to $58.2 billion raised by male-founded and owned companies.
LOLA founders Alex Friedman (left) and Jordana Kier. Courtesy photo
LOLA’s Jordana Kier spent the entire second year of the full-time MBA program at Columbia working two days a week at Rent the Runway. “It gave me a front seat into a growing, successful startup that was pushing boundaries on fashion,” Kier tells Poets&Quants. Around the same time, she was in the recruiting process at CBS — a process she wasn’t particularly fond of. “I just wasn’t sure I was ever going to be someone who would want to go work at a big company,” Kier says. “And those were the sort of companies that were coming on campus to recruit.”
Kier decided, instead, to start one of her own. During a brainstorming session in which Kier was thinking of the products on the market that frustrated her most, she began seriously thinking about the feminine care market — specifically the materials that make up feminine care products like tampons, liners, and pads. Neither Kier nor anyone she knew had any idea what materials those products were made of and or they came from, so she decided to start a subscription-service business model selling 100% organic cotton feminine care products. In the end, it was the advice of a manager at Rent the Runway that pushed her to take the leap.
She should go for it, the manager said, but with a deadline. She advised Kier to spend a few months doing research, finding a partner, and reaching out to and meeting manufacturers. “I didn’t really have an industrial design background — I didn’t really have any business creating products,” Kier says. “That said, I had been a tampon user for 15 years. I knew what was the right product for me and what wasn’t, and what women might want.” She began conducting focus groups and market research. Kier also met her co-founder, Alex Friedman. LOLA has now raised $11.2 million, including a $7 million Series A Round in December 2016, placing the business 45th on last year’s list and 47th this year.
MENTORING, CONNECTIONS KEY TO GROWING NETWORK OF WOMEN FOUNDERS
Similarly, Vow to be Chic’s Kelsey Doorey used an experience at Rent the Runway to jump into entrepreneurship after having been in consulting. When given the choice to launch a business or take a high-paying job in fashion retail, Doorey chose the former right after graduating from UCLA Anderson’s full-time MBA program. Her choice brought her into a network of women that led her to launch Vow to be Chic instead of taking the position at Bloomingdale’s.
After a strong push from her own mother, UCLA Anderson Dean Judy Olian introduced Doorey to Susan Feldman, another Anderson grad and founder of One Kings Lane. The meeting with Feldman is what eventually led Doorey to launch her online rental service for high-end bridesmaid dresses.
Networks of women is one potential for overcoming the funding gap. In October 2016, Sequoia Capital, which invested in four Top MBA Startups including all-women founded Dia&Co, made Jess Lee its first-ever woman investing partner. Last October, Lee announced a new initiative called Female Founder Office Hours, dedicated to connecting investors to women founders and entrepreneurs for one-on-one mentoring sessions.
Doorey believes those types of initiatives and a push similar to the one she received is pertinent.
“We need to push more and more women to get outside of their comfort zones and try it out,” she says.
DON’T MISS: BIGGEST INVESTORS IN TOP MBA STARTUPS or TOP B-SCHOOLS FOR VC-BACKED STARTUPS
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