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Insights from a VC on Fundraising and the Power of Diversity

The world of VC is changing. Sutian Dong joins us to discuss women-led funds and the evolving startup investment landscape.

We explore some weighty questions on this episode of Startup Success, including:

  • What would the world look like if half the venture capital dollars were in women-led funds?
  • Is VC funding the golden ticket or just another hurdle for startups?
  • How do we overcome the biggest limiting factor to success – ourselves?
  • Why is the bulk of venture capital still not in the hands of women?

Sutian Dong, Partner at Multitudes and a pivotal figure in venture capital, joins us to tackle these topics and to share profound insights on the dynamics that guide VC’s decision making process, how that impacts startups, and why she started her own fund.

Known for her work supporting female founders and investors, Sutian is the founder of Global Women in VC, the world’s largest global community for women in venture capital. Her firm, Multitudes, is built on the thesis that the next generation of innovation will be different than the last, and they invest in and incubate projects that explore the edge of human consciousness.

Join us for this enlightening discussion on the future of investing, the value of diverse perspectives, and the strategic decisions every founder should consider.

This discussion with Sutian Dong of Multitudes comes from our show Startup Success. Browse all Burkland podcasts and subscribe to the show on Apple podcasts.

Episode Transcript

Intro 00:01
Welcome to Startup Success, the podcast for startup founders and investors. Here, you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world, stories that will help you in your own journey. Startup success starts now.

Kate 00:18
Welcome to Startup Success today, we have Sutian Dong studio, who is a partner at Multitudes. Welcome.

Sutian Dong 00:26
Thank you so much. I’m excited to be here.

Kate 00:29
We are thrilled to talk to you. I want to get into Multitudes and what you all are doing and your work with Women in VC, but I thought at first if you could just set the stage and give the listeners a brief overview of your background, because you can really see, you know how you ended up where you are right now, based on on what you’ve done in the past.

Sutian Dong 00:50
Of course, yeah, so I will keep this as brief or as brief as I can. I tend to be a little bit long winded. So my quick. I guess once upon a time, history was that I was born in China. I grew up in Texas. I moved to New York for undergrad, where I went to NYU, and before venture, I worked briefly in sales and marketing at a technology company called MarketFactory, and then also as the director of marketing for a fashion house called Norisol Ferrari, based in New York City. And so neither of those things had, certainly not fashion, had a ton to do with venture, but took sort of, somewhat of a hard pivot into venture, and started at a shop called FirstMark Capital right after the financial crisis. And so I’ve been in venture in New York exclusively ever since then. And from FirstMark, gosh, I was at FirstMark for probably from 09 until 2015, I want to say. And then joined a fund called Female Founders Fund, where I invested in female founders exclusively. And post that in, guess, early 2020. Started Multitudes, where we invest in, we’ll call it ideas that explore the edge of human consciousness, amongst other things. And yeah, excited to be here. I would say that my background is a little bit varied, a little bit all over the place, but that really does inform how I think about investing. Because, you know, I do think that talent is evenly distributed, but opportunities, and more opportunities, or visibility, so to speak, is not. And so the more that we can put money and opportunities into the hands of people who just see the world a little bit differently. I think the faster the world turns in a positive direction.

Kate 02:27
Oh, definitely. So the way you framed Multitudes’ thesis really caught my attention. Can you delve into that a little bit more and give us some detail?

Sutian Dong 02:41
So I would say, when I had originally started Multitudes, I started Multitudes with somewhat of a different thesis. I had really, and this was really informed by my work and my community of female VCs. I work within women in VC and seeing how many female VCs were starting their own funds and having trouble fundraising, I had started Multitudes with the idea that we were going to invest in female-led and diverse-led funds. So startup funds, right? Instead of startup companies, and because the data has shown and just both anecdotally and from what my experience has been, from what the data has shown, that female and diverse led fund managers invest in more diverse-led companies, right? It felt like that was, to me, one of the fastest ways to create extraordinary change within venture and within the technology landscape. And then we were doing that for a while, and eventually took a pivot into investing and incubating ideas that, as I call it, explore the edge of human consciousness, because I had just seen through my own experience, through working with so many founders over the years, founders of both companies and also funds, that I think the biggest limiting factor in our success is oftentimes us right, in that we can’t get out of our own way. It’s hard to break conditioning and patterns, right? And so I think everyone has different challenges in their lives, right? But everyone has one thing where you’re like, I know logically what I should be doing and yet and yet and yet, I can’t do it. Like, why is that? And I guess for us, we thought, okay, well, how do we like moving even a level before people start companies and funds, right? Like, how do you get people to get aligned to a place where they’re best positioned, sort of internally, right to do the thing that they want to do? And our conclusion was that by investing in ideas that really explore and help people change their minds for the better, we are going to be even more at Ground Zero of creating change at scale.

Kate 05:00
Wow, that’s pretty powerful. I’ve never heard an investor take it that far back right to like, the internal like, to that far into the beginning. I guess you would say that, yeah, you know what I’m trying to get at here. I’m not saying it correctly, but it’s pretty powerful. Can you give us an example of a company? I mean, can you share one?

Sutian Dong 05:29
Yes, happy to. So there’s a company that we’ve been incubating for a while, and it’s still in stealth. So, not going to share the name just yet. So I’ll give some background on this company or background on my investment philosophy because you know “Man plans, God laughs.” I have always believed that venture capital was a great form of capital for companies that were high scale, high margin, high growth businesses. Most of that means that they’re technology businesses, right? Because it’s hard to get high margin with sort of like physical inventory, for example, or physical space. And so I had always been sort of bearish on investing in businesses that had space.

Kate 06:17
Which is smart, yes, which makes sense, yes.

Sutian Dong 06:21
Just because this specific company has space, so the idea behind this business is that, I think the overarching thesis is that over the last, I don’t know how many years, especially in America, there’s been a decline of organized religion, right? And because of that, people have been seeking ways to fill the whole left by organized religion in different ways, right? What do I mean? Right? Where is my community? Why am I here? Right? How do I talk about myself in the world? Who am I? And you could see that in the rise of astrology, for example, which I’ve invested in in the past. You can see that in the rise of self care practices, right as people take these rituals into their own hands. And so this specific company is designed to help people have a sort of meditative, almost like singular religious experience on their own that’s not tied to any organized religion. So it’s a moment that allows one to be contemplative by themselves, experience a state change without any use of psychedelics or ethnic drugs, and then come out a slightly different person. And then the goal, the reason why there is space to begin with is because it does matter in cases like this, where you need to start somewhere, where you feel something different, and then you can extend that experience online through apps and other virtual experiences.

Kate 07:51
Wow, I love that, because the thing about organized religion is there are so many benefits, but it got skewed here because of the political and all of that, and the way it went. And so to take something good that people used to experience from organized religion and try to make it so that it’s more, you know, accessible for everybody. Pretty awesome. It’s a great example.

Sutian Dong 08:18
It’s the search for meaning, right? You’re like, Okay, well, what are big markets? You’re like, oh, oh, everyone needs a search for meaning. That’s a really big market.

Kate 08:28
That’s a huge market. Great example. So that must be, I mean, to have that kind of investment thesis, and to start this firm, and to be working with founders that are doing things like that, must be incredibly motivating and fulfilling for you. But now I want to pivot into Women in VC, because that is pretty amazing, what you’ve done there. If you could walk us through that.

Sutian Dong 08:56
Yeah, yeah. So the quick, Once Upon a Time story of Women in VC is that Women in VC, which I co-founded with a very dear friend of mine named Jessica Peltz. We founded that in 2015 as a way to scratch our own age, right? We were looking for community amongst female VCs. And we started that with a group of, I want to say, like 10 women getting together for drinks at a rooftop bar in New York City, like super, super, super low key, casual, we didn’t know that it would grow into the organization that it is today. Now, Women in VC is the largest and oldest network of female VCs in the world. It has over 6000 members across 2500 funds, 250 something cities, I want to say 70 some odd countries. My vanity metric here is that we have members on every single continuously inhabited continent in the world, which is only six. But, you know, I like the every (laughing)

Kate 09:53
It’s a great marketing stat. So how did you do it, going from casual to this. Walk us through it.

Sutian Dong 10:04
Yeah, this is the remarkable thing. We’ve never, ever ever advertised Women in VC. We’ve never, ever ever marketed Women in VC. Women in VC has grown 100% through word of mouth over the years. And so in that way, it has made our jobs easier, and that we haven’t had to go recruit for members. But I think that really underlines this need, right? And it goes back to what I was talking about before, this search for community, right? This need for women in venture all over the world, to find each other, right? Find ways to connect, collaborate, share, deal flow, find new job opportunities, find new investment opportunities. All sorts of things that come, all sorts of great things that come when great women are put together in a room. And so it really grew organically. And now I think in New York, we have about 1100 members. We have about the same number in the Bay Area, and then we have great networks in London, in Berlin, in LA, in Singapore, like all places all over the world, which has been just fantastic.

Kate 11:09
That is so cool. So can you give us an example, like do you do events? What kind of things do you offer?

Sutian Dong 11:19
Yes, so Women in VC has had two big focuses ever since inception. So though we founded it casually, the focus of women in VC has never swayed. One, we want to help women who want to build careers in venture find pathways to do so. And two, we want to help women who are starting their own funds be able to raise bigger funds faster, right? And so our events are both virtual and also in person. The in person mixers are great ways for people to meet each other, right? I have so many wonderful stories of women in venture who like one that comes to mind is a woman was telling me she’s like, Oh, by the way, like many years ago, I sat next to this woman at a dinner you guys hosted, and now I’m one of her bridesmaids at her wedding. I was just like, Oh, my God, that’s awesome, right? It’s a relationship that transcended the professional even. It just tells you about the depth of some of the connections that are made. And then secondly, for a lot of our virtual events, we focus on professional development, right? How to read a cap table for emerging VCs? How to raise your first fund for people who are thinking about raising their first fund, right? What to do when end of year comes and you want to renegotiate your compensation like, what are best practices? So there’s lots of things that we put on because we want to give women more firepower right, to be able to build their careers in the way that they want to.

Kate 12:42
Have you seen. I mean, based on what you’re doing, I would say you must. Are you seeing improvements in that I mean, because a few years ago, all this data came out that was pretty disappointing about women and diversity in VC, have you seen improvements?

Sutian Dong 13:00
You’re going to have to have me back on your podcast to talk about this because I can get on a soapbox and talk forever. The quick is that, okay so in our community, I’ll just give you some stats, of over 6000 women, about a quarter of those women self identify, have self identified as partners, general partners, managing directors, people who have check writing abilities, which is commensurate with the rest of the ecosystem – 25%. Where the Women in VC community differs greatly, is that about half of those women, those general partners, managing partners, etc, identify as founding partners of their own firms, right? So 50% of that GP community has started their own firm. So it’s a highly entrepreneurial community, right? And I think it’s so wonderful because people are starting their own firms, not because they’re looking for more work to do, right in the world? No, I have this idea, I have this vision, I have this thesis, and no one else is doing it, and that’s why I’m doing it myself, right? And that’s incredibly empowering. And what I will say is that a lot of the funds that are being started, first time funds are not in the hundreds of millions of dollars, right? They might be ten $10 million funds, $15 million funds, $25 million funds. And fundraising for anyone is hard, right? Right now we’re in a really weird market for venture firms to fundraise. We’re also in a weird market generally, right, election year as well. So I won’t belabor those points, but I have a lot of feelings about this. So what I mean is that. One, it’s really compelling and exciting to see so many women hang their own shingle and start their own firm. Two, it is still a really hard fundraising environment for everyone. Three, I don’t believe that women are getting the funding that they need, right? I think there are so many missed opportunities because women are taking longer to raise funds. Right? Are raising funds that are smaller than they want them to be. So many missed opportunities. They’ve got some incredible founders, right, who could build companies that change the world because the trickle down effect of who controls the money that goes into these startups, who controls the money, the vast preponderance of that capital is still not in the hands of women. We’ll put it that way.

Kate 15:11
No, no, I agree. I mean, when I was younger, I didn’t buy into the whole thing about women. But then you reach a certain age in a certain part in your career, and you start to see it. And I hate to say it on the show, but it’s, it’s very true, so I’m not surprised that it’s not where it should be, but I’m happy that Women in VC are helping to continuously make improvements.

Sutian Dong 15:38
Because, you know, you just want to think, what would the world look like if half of all the venture capital dollars were controlled by women, right? What kinds of amazing companies would we have, would get funded? I think 10 years ago, if you were to pitch, yeah 10-15 years ago, if you were to pitch a lot of the companies that have gotten funded today like they wouldn’t have gotten funded, because the people on the other side of the table just did not understand the opportunity, right? And so you’re seeing that shift, right? My push is like, how can we get that change to go faster, right? How can we get more money in the hands of women faster? Because that money that then goes into the startups, that’s the accelerant, right? That’s the jet fuel that’s going to change the world.

Kate 16:24
Absolutely. Look at what you’re doing with Multitudes. Look at that example you shared with us, right? That’s exactly what happens more of that, I agree. I have to ask you about this, because you touched on it and my listeners always want to know what investors think about the current state of the startup ecosystem. You mentioned the election, inflation rates, everything. It still feels like it’s very hard out there to get money, and that the due diligence process is longer and more difficult, and it still feels like a very odd market, is that what you’re seeing, or?

Sutian Dong 17:02
Yeah, I would say that I’m seeing a continuation of a trend that has been happening for a while. And the trend is the bifurcation of, we’ll call them like haves and have nots, right? Where you see companies that go out to raise capital, who are either companies operating in very hot markets, right? Or companies that have, like, a compelling story that everyone just sort of gels behind, right, Yeah, that’s the one that’s going to IPO in 2025. Whatever that narrative is.

Kate 17:32
AI, anything. AI, yeah.

Sutian Dong 17:35
AI for XYZ, exactly. And so you see that happening, right, the haves and the have nots. I do think it creates this very weird noise in the ecosystem, right? Where as a founder, you’re like, Wow, it’s really hard for me to raise money. And then you read TechCrunch, you’re like, wait a second, how come all these other people are raising money? And it gets into this little you know, I think what is reported, right, is only a small fraction of what happens in any ecosystem, of course. And so I do think that sort of this trend of have and have nots is just coming a little bit earlier now, right. Where you see companies come out of the gate really hot and raise their seed and their A, and their B, and their C. But that’s like a very small percentage of the overall startups that are raising money that year. And then everyone else is still having, certainly, compared to a couple years ago, a much harder time raising capital. There is more due diligence. There’s less pressure to deploy from the VC side, because VCs you have to, as a startup founder, you have to keep in mind that VCs also raise money from LPs, right? So VCs are trying to time their deployment schedule as well to say, Okay, well, am I going to raise a fund in 2025? Should I try to push it until 2026? If I’m going to push it till 2026, how do I stretch out the capital that I still have to make sure I’m still in business this year, next year and the year after? And so there’s a lot of those dynamics that have been happening. I should say that I think has both created a market that continues to be challenging for startups to fundraise, but also a market that if you don’t double click on a couple of things, you might be like, wait, wait a second. Is it just me? Like, is it just hard for me? It’s definitely not. It’s hard for everyone.

Kate 19:16
I really like how you painted that picture, especially the whole point about the LPs and what the firms themselves are dealing with. I think people forget that side of it. Are you all doing anything different when you evaluate an investment right now?

Sutian Dong 19:32
It’s a great question. The short answer is yes.

Kate 19:35
Okay.

Sutian Dong 19:37
I should touch on this other trend that I’ve been seeing in venture, which is that venture as a market, is actually quite young, right? Less than 100 years old. Venture capital, depending on what you consider the start of it, was started in the 40s or the 60s. And so, as a consequence, I think venture is actually entering into its sort of sophomore season, right, where it’s experiencing some growing pains. You see that with big VC funds morphing into effectively asset management businesses, right, with the entrance of the Sequoias of the world raising very large vehicles right to do different things. But what that’s created, especially if you’re an early stage investor like I am, is a little bit more of a mismatch between exit expectation from firm to firm. Because if you are $100 million firm, for example, what you would consider to be a good exit is really, really different than if you are a $10 billion firm.

Kate 20:38
Yes, great point, great point.

Sutian Dong 20:41
And so what that means for us is that we are not hyper focused on, Okay let’s make sure that every single company that we invest in has the opportunity to be a DECA cord, right? First of all, those are hard to find, right? If we found all of them, I would, you know, be the best performing fund in the world, right? But secondly, let’s make sure that we’re aligned with the founder around where we think this company can go right, and how do we finance it right, such that everyone wins at every single exit point of that company, right? And so that means not, I want to be careful with my words here. There are some companies where you’re like, Okay, let’s go for it, right? We are going to shoot for the moon. And there are some companies that are probably not that kind of business, right? Their market size turns out to be not as big as you thought, one thinks, etc. And with those, it’s important to have the moment of truth, right? To be like, okay, these companies are going to be great exits if we make sure we finance it well, and everyone’s going to walk away super, super happy, because everyone is aligned around what that potential outcome can be. But I find that those conversations are more important to have now, right? Because, I mean, the IPO market, public markets look really different than they did, like 10-15 years ago, like the size of funds look really different than they did 10-15 years ago. It means that you could potentially raise into perpetuity. But oftentimes the best outcome for the company is not trying to go for it, because that’s not what the company is.

Kate 22:21
Wow, really, really helpful. Thank you for sharing that. That’s really I mean, I haven’t heard that so eloquently described before, so I think that will be very helpful for the founders listening. Thank you. I can’t believe this, but I have to ask the last question, time has flown with you. It’s been so fun, but we always wrap up with just general advice for startup founders that you can share, who are listening.

Sutian Dong 22:48
Gosh, lots of things. One, make sure you really, really know and really, really trust the reason why you’re starting this business right? Because shit gets hard. Things hit the fan. Your investors, some of them are great. some of them are less good. You know, there’s things that are hard and like, you know, the upward cycle, it looks like it’s a really squiggly line. And to have a really good reason, right, to be, be 100% honest with yourself about why you’re doing what you’re doing, I think, is incredibly, incredibly important. The second thing is to seek out capital that is the right fit for you, right? I think Josh Kopelman from First Round Capital said this initially, but I really loved it after I heard it: Venture capital is jet fuel. It is amazing for rockets. However, if you are building a car and you put jet fuel into your car, it will break your car.

Kate 23:46
Oh, well said, yes.

Sutian Dong 23:49
So even before you think about fundraising from venture capitalists, right? VC as a market, as an aside, has done an incredible job I think of marketing itself as like the place to go look for capital. But the reality is that, like, it’s amazing, it’s an amazing source of capital for a number of companies, right, that can use it well, and it’s not as good of a fit for a bunch of other companies, right? And so you should figure out whether or not your business is the right kind of business to take venture, right? Because if it’s not, and then you take venture, you’re going to run into some sticky situations further down the line. Once you take venture capital, you’re committing in some ways, traditional venture capital, I should be really clear. you’re committing to building your company in a certain way, right? And for a lot of companies in the US, that’s not necessarily the right path for them. There’s nothing wrong with being bootstrapped. There’s nothing wrong with being a mom and pop. There’s nothing wrong with being a small business. There’s nothing wrong with being a cash flow business. There are wonderful things in being a venture backed business as well, right? I want to be really clear. I love what. I do, and I love the industry that I’m in, but I do think that people should be very thoughtful around how they take capital, when they take capital, and who they take capital from.

Kate 25:09
Excellent spot on advice. I think both things. I think the journey is really hard, and I think founders should seriously think about it before, you know, undertaking it, and then, like you said, I mean, we see it in our business when you know that’s kind of like the thing, you start a company and you go get your VC funding. But as you point out, there’s other ways to do it, and it might not always make sense for your business. I think that’s incredibly helpful. Where do people find out more information on Women in VC and Multitudes?

Sutian Dong 25:42
So, the website of Multitudes is Multitudes.world. The website for Women in VC is women-vc.com. You could also put either of those things into your favorite search engine, and the results will pop up.

Kate 25:56
Great. Thank you so much. I really enjoyed speaking with you. You were super candid, and you just had a great way of walking us through things. So I really appreciate your time here today.

Sutian Dong 26:09
Thank you so much for having me. This was really fun.

Intro 26:12
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