How this millennial investor is breaking VC boundaries

It didn’t take long for Pocket Sun to realize that entrepreneurship can be a lonely journey – even more so for women.

She got her first taste of it in 2014 when she was studying for a master’s degree in Entrepreneurship and Innovation at the University of Southern California.

“One class I took was [about] Venture Capital and our professor was super networked,” she recalls.

“He invited CEOs and VCs to speak with us every week and I remember asking him on day one: [are] Will there be female speakers? And he says, ‘Maybe. There are very few of them.'”

SoGal was born… out of my own pain that I don’t see enough women in the entrepreneurship world. I felt incredibly isolated and like an outsider.

pocket sun

Co-Founder and Managing Partner, SoGal Ventures

There weren’t any by the end of the semester, Sun told CNBC Make It in a virtual interview.

“That’s when I realized, wow. Women are the real unicorns in this venture capital world.”

She was born in China and moved to the United States at 18, then founded SoGal in 2015 at 23. It started as a community group supporting young female entrepreneurs.

“It was born… out of my own pain that I didn’t see enough women in the world of entrepreneurship. I felt incredibly isolated and like an outsider,” added the Forbes 30 Under 30 winner.

But eight years later, SoGal is more than just a safe place for like-minded women. It’s now SoGal Ventures — a VC that invests in early-stage startups in the U.S. and Asia, all led by women or entrepreneurs from diverse backgrounds, Sun said.

Pocket Sun (left) with its co-founder, Elizabeth Galbut.

SoGal Ventures

His first $15 million fund was used to invest in 42 companies that have since created a total of $7.8 billion in market value, said Sun, who is also an executive director of SoGal Venture.

In a venture capital industry where fewer than 15% of checkwriters are women, Sun stands out.

With CNBC Make It, the 31-year-old reveals why it is worth relying on female founders and what success means to them.

Fundraising “a moving bar”

Sun decided to start her own venture capital fund after realizing that the biggest pain point for women founders is “lacking the capital to grow.”

But when she decided to take matters into her own hands, she faced the challenges that women entrepreneurs often face, such as not being taken seriously.

She said: “Because the majority of power and wealth is managed and controlled by men… people didn’t understand why would you invest in women? Is that even a thing?”

I remember that investor meeting in New York so clearly [a male investor] sat across from me and he said, “Investing in biotechnology is a thesis. Investing in women is not.”

pocket sun

Co-Founder and Managing Partner, SoGal Ventures

“I remember that investor meeting in New York so clearly, [a male investor] sat across from me and he said, “Investing in biotechnology is a thesis. Investing in women isn’t.'”

That meant Sun and her co-founder had to talk each other through boardrooms for the first few years.

“Because we didn’t have a great track record… did we really have to give them the full macroeconomic background on why venture capital as an asset class? Why invest in women? Why invest outside of Silicon Valley? Everything had to be explained.”

Even now — as SoGal Ventures has built a track record for itself with five unicorns — expectations still feel like “a moving bar,” Sun said.

“Now a lot of limited partners are saying, ‘Your track record isn’t that important. We want to see what is repeatable? What’s your secret ingredient that will take you through various funds?” she added.

“Sometimes I feel like if I were a man my fund would be oversubscribed now.”

Still, Sun sees being underestimated as a “unique gift” and a challenge she wouldn’t trade for an easier journey.

“It makes me better every day. Investors have become better informed about the importance of things like gender equality and diversity,” she added.

“[Now] we just have to explain it: we invest in women… what’s the best way to do it? And we’ll let the numbers speak for themselves.”

capital efficiency

Despite this, companies founded by women still receive only 2.5% of all venture capital investments, according to PitchBook data.

“Women are an underappreciated, underfunded group — and at different stages,” Sun said.

“If you look at the earliest phase, if it’s a female founder with an idea, it’s very unlikely to get funded. She’s going to need a lot more proof.”

Part of Sun’s role as an investor and entrepreneur is to encourage founders in their portfolio to dream bigger.

“Very few adolescent women would have thought that I would become a fabulous CEO or make so much money. It’s just not part of how we were raised,” she said.

I think a lot of women want to be more conservative and be able to keep what they promised… [but] There is a balance between overconfidence and optimism.

pocket sun

Co-Founder and Managing Partner, SoGal Ventures

That sometimes means “pessimistic or less aggressive” views and forecasts from female founders, Sun added.

“I think a lot of women want to be more conservative and be able to deliver on what they’ve promised … [but] There’s a balance between overconfidence and optimism.”

But female founders, who have always had to be “capital efficient” to survive, now have a chance to shine as the easy money era comes to an end.

According to a study by the Boston Consulting Group, startups founded and co-founded by women were “significantly better financial investments.”

Venture capital allocation has declined this year, according to VC firm 500 Global

“For every dollar funded, these startups made 78 cents, while male-founded startups made less than half that — just 31 cents,” she noted.

However, women have not chosen to be capital efficient – they have been “forced” to be, Sun said.

“In this environment, that’s not a bad thing. They’re prepared. They know how to save money. They’ve always known that like the back of their hand.”

Sun’s measure of success

While the obstacles and challenges for women entrepreneurs and women-led VCs remain, Sun said she has learned to see success differently and to enjoy the process.

“I started SoGal when I was 23. There was this naivety and this feeling of ‘This is going to be my life’s work and I have to hurry up,'” she said.

“Nearly eight years later, I’m much more relaxed about it. I can do things at my own pace.”

But now, success is when I feel good about what I do every day. I don’t have to doubt if I’m doing the right thing. I feel good in relationships around me.

pocket sun

Co-Founder and Managing Partner, SoGal Ventures

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