How this millennial investor is breaking through VC barriers

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 at the University of Southern California studying for a master’s degree in entrepreneurship and innovation.

“One course I was taking was (about) venture capital and our professor was very well connected,” she recalled.

“Every week, he brought in CEOs and VCs to talk to us, and I remember asking on the first day, are there going to be female speakers? And he said, “Maybe. There are very few of them.”

By the end of the semester, there was none, Sun told CNBC Make It in a virtual interview.

“Then I realized, wow. Women are the real unicorns in this venture capital world.”

He was born in China and moved to the United States at the age of 18, then started SoGal in 2015 when he was 23. It started as a community group supporting young women entrepreneurs.

“It was… born out of my pain point of not seeing enough women in the entrepreneurial world. I felt incredibly isolated and like an outsider,” added the Forbes 30 Under 30 honoree.

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

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

In a venture capital industry where women make up less than 15 percent of check writers, Sun stands out.

The 31-year-old shares with CNBC Make It why women founders are worth betting on and what success means to her.

Sun decided to start her own venture capital fund when she realized that the biggest pain point of female founders is “lack of capital to grow”.

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

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

“I remember so clearly in New York at this investor meeting, (a male investor) was sitting across from me and he said, “Biotech investing is a thesis. Investing in women is not.”

That meant that in the early years, Sun and her co-founder had to explain themselves a lot in boardrooms.

“Because we didn’t have a lot of experience … we had to really give them the whole macro context of why venture capital as an asset class? Why invest in women? Why Invest Outside Silicon Valley? Everything needed explanation.”

Even now — when SoGal Ventures has built a track record with five unicorns under its belt — expectations still feel like “a moving bar,” Sun said.

“Now, a lot of partners say, ‘Your recovery isn’t that important. Do we want to see what is repeatable? What’s your secret sauce that will get you through different funds?” she added.

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

However, Sun considers the understatement a “unique gift” and a challenge she wouldn’t trade for an easier ride.

“I’m getting better every day because of it. Investors have become more educated about the importance of things like gender equality and diversity in mind,” she added.

“(Now) we just have to explain: We’re investing in women… How do we do it best? And let the numbers speak for themselves.”

Even so, 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 that happens at different stages,” Sun said.

“If you look at the earliest stage, if it’s a female founder with an idea, she’s very unlikely to get funding. It will need a lot more proof points.”

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

“Very few women growing up would have thought I would be a fabulous CEO or make so much money. It’s just not part of how I grew up,” she said.

That sometimes translates into “bearish or less aggressive” outlooks and projections of female founders, Sun added.

“I think a lot of women want to be more conservative and want to be able to deliver on what they promised … (but) there’s a balance between being overconfident and optimistic.”

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

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

“For every dollar of funding, these startups generated 78 cents, while male-founded startups generated less than half that – just 31 cents,” it found.

However, women didn’t choose to be capital efficient — they were “forced to be,” Sun said.

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

While obstacles and challenges persist for female entrepreneurs and female-led VCs, Sun said she has learned to look at success differently and enjoy the process.

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

“Almost eight years later, I look at it a lot more calmly. I can do things at my own pace.”