Stitch Fix’s Katrina Lake Did More With Less Cash

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Katrina Lake turned the primary feminine chief govt officer to take an organization public within the U.S. this yr when Stitch Fix Inc. began buying and selling on Friday. Almost extra uncommon is the very fact she did it with a fraction of the money of most venture-backed corporations: The on-line subscription attire retailer had raised simply $42 million.

Lake needed to do extra with much less as a result of feminine entrepreneurs are at an obstacle when elevating cash from principally male enterprise capitalists. A Bloomberg research final yr confirmed that girls founders acquired about $three for each $four that male founders raised. Just 7 p.c of founders are girls.

Katrina Lake, co-founder and chief govt officer of Stitch Fix Inc.

Photographer: David Paul Morris/Bloomberg

But Stitch Fix’s IPO reveals that this funding shortfall can generally be a bonus in a startup surroundings brimming with money. 

“Female founders are much more focused on capital efficiency, partly because they have access to less capital,” stated Magdalena Yesil, an entrepreneur, tech investor and writer of the ebook “Power Up: How Smart Women Win in the New Economy.”

In distinction, some startups in male-dominated Silicon Valley have arguably raised an excessive amount of cash. “The excessive amount of capital in Silicon Valley has allowed a lot of entrepreneurs to run around without much discipline because if you’re not running out of money you’re not constantly asking to be regraded,” enterprise capitalist Bill Gurley instructed Bloomberg TV on Friday.
He has backed corporations together with Stitch Fix and Uber Technologies Inc.

Lake herself embraces that pondering, telling Entrepreneur journal earlier this yr that she thinks the worst piece of recommendation for entrepreneurs is to lift as a lot cash as doable.

“There are companies out there that may have failed because they had too much money and never had to think about the economics of their business,” she stated.

She didn’t title names, however some notable disappointments in e-commerce embody One King’s Lane and Gilt Groupe, which raised greater than $200 million every earlier than being offered for significantly much less. 

Many of the ladies who’ve been capable of increase outsized sums of money did so because of their superstar standing. The Honest Co., which has raised greater than $200 million and is searching for extra, was based by film star Jessica Alba.

Several male-run on-line commerce corporations that began across the identical time as Stitch Fix have raised extra cash however do not appear near an IPO. They embody Le Tote, which has raised greater than $50 million, and Poshmark Inc., which raised $88 million this week, bringing its whole funding to greater than $150 million.

Of course, male entrepreneurs additionally embrace the self-discipline that comes with much less money. Eric Ries discusses the significance of capital effectivity in his widely-followed ebook “The Lean Startup.”

Yesil, an early backer of Salesforce.com Inc., says robust occasions can produce additional creativity. After the primary dot-com bust, Salesforce could not increase money from VCs so it was compelled to supply reductions in change for longer buyer contracts. It survived and is now valued at $77 billion as a public firm.

Lake nonetheless has work to do – on Stitch Fix and the expectation that CEOs of public corporations are males. Stitch Fix shares ended their first day up just one p.c, a disappointment for an IPO. Earlier this week, Lake tweeted a screenshot of an automated suggestion from her iPhone to show the phrase CEO into an emoji of a blond man. 

Lake added a cartoon image of a girl with darkish hair and a notice: “Hi! Actually, I look more like this.”

— With help by Emily Chang

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