Cindy Padnos hopes for a paradigm shift in the male-dominated world of startup technology firms and early-stage funding. The Holland native now works as a highly regarded, Silicon Valley-based venture capitalist with a portfolio of companies geared toward cloud computing and enterprise technology. Padnos will return to West Michigan on Nov. 10 for an event at Grand Valley State University to give a talk titled “Women, Technology and a Seat at the Table.” Padnos spoke with MiBiz about her investing strategy and how West Michigan can beat Silicon Valley.
With West Michigan’s reputation as an entrepreneurial community, what are the strategies that can be used to create a more inclusive startup culture?
I think part of the issue is that, historically, we all have natural affinities. We’re all used to working with people we know, we’ve grown up with, that we’ve been exposed to. One of the things that’s quite important is challenging ourselves to find ways to give examples to other people of how they can participate in that same kind of opportunity set.
What do you mean by that?
It’s not that easy to talk about this in big generalities. It’s easier to talk about in specifics. So let’s take Silicon Valley: Even there, which is the heart of the entrepreneurial ecosystem, you find that particularly in engineering roles, there are very few women. We have to step back and ask what’s the root cause of that.
What answers have you found so far?
First of all, you have to start with fundamentally having the right training and education. If we don’t do things at a very young age to demonstrate to young girls that being an engineer can be exciting, rewarding, and appropriate for them to think about, then of course they won’t choose to do that. If there aren’t good role models and examples and teachers that encourage kids in the right direction, then they don’t get the right training and education to go out and seek those careers and opportunities.
Cities like Grand Rapids like to tout their startup tech scenes. But Silicon Valley and other coastal areas still see the vast majority of VC activity. What role do places like Grand Rapids play in the broader startup and VC communities?
I don’t believe that all of the innovation and all of the good ideas are located on one coast or another. I think they can occur anywhere in the United States and I think historically, what’s been part of the problem is the lack of capital in those ecosystems. So many strong entrepreneurs have started companies there to go elsewhere, where the capital is. I think as we build capital in those regions, we have an opportunity to build businesses in those regions. The greatest limitation (going forward) is likely not to be talent, but capital.
As it relates to diversity in entrepreneurship and VC, how can a place like Grand Rapids show Silicon Valley the way forward?
I think Grand Rapids has the opportunity to be better than Silicon Valley in that regard. One of the things that makes it hard in Silicon Valley is that it’s a bigger challenge to change a culture in an established company from the hiring practices and the environment, versus one where you’re starting.
The perceived bias and gender disparities in Silicon Valley — and the broader technology sector — have made no shortage of headlines. What’s your take on the matter?
While (institutions) may always desire and hope that they’re creating a completely barrier-free environment for talent, that’s just not the reality. I think nearly 100 percent of those obstacles are unintentional. Silicon Valley likes to consider itself a meritocracy, and yet when those barriers exist, even though they may be unintentional, they’re real. I’m sticking with the gender thing here, but bias can be by race, nationality or language.
How does this play out in your work?
What we do from day one is try to be, first of all, very inclusive in our deal flow — in other words, the volume of opportunities that we have a chance to take a look at. We go out of our way to find opportunities that are perhaps broader than the norm.
What does that accomplish?
Once we do that, we don’t ever apply any diversity-related criteria to actually evaluate an investment. We think the fundamental is that if you’re inclusive in your deal flow, you should apply the same criteria to every investment opportunity.
As a venture capitalist, you’re probably a data-driven person. What kinds of metrics are you finding with this strategy?
Here’s an interesting data point: By having been more inclusive in our deal flow, our actual investments, it turns out, are much more inclusive in the end. Literally, in Silicon Valley today, on average, somewhere between five and 10 percent of startups have a woman co-founder. In our portfolio, it’s 40 percent — in the enterprise technology world where you don’t expect women.
On average in the U.S., 80 percent of venture-backed companies are founded by white males. Our portfolio is 50/50. There are a whole bunch of things that are different when you start out with a deal flow that’s broader and more inclusive. The results will be reflected.
Interview conducted and condensed by Nick Manes. Courtesy photo