The Changing Face of UK VC: Megumi Ikeda, managing director of Hearst Ventures

Megumi Ikeda is the managing director and general manager of Hearst Venture’s European branch, a global venture capital division of the media giant Hearst which was founded in 1995.

Her career in VC began in 2008 at Peacock Equity Fund, where she spent five years as an investment partner. Ikeda has an established background in media technology, and previously ran the European arm of GE Capital and NBCUniversal's venture fund before joining Hearst in 2014.

We spoke with Ikeda earlier this year to get more insight on her journey in the world of VC, below is a lightly edited transcript of our conversation.

Hannah Williams, staff writer at Techworld: How did you get into VC?

Megumi Ikeda, Managing director and general manager at Hearst Ventures Europe:I jumped into VC always on the corporate venture capital side, and I jumped in after doing M&A and digital distribution work and digital work for media companies.

Then when I moved to London, about 12 years ago, I jumped from being an operator to an investor in venture.

What year did you become an investor and how has the industry changed for you since you entered?

I think that was probably about 2008. So, my career in venture has always been here in Europe and it was very small... it really has proliferated in terms of the number of VCs here, the openness to be an early stage founder in Europe and frankly, the amount of attention that European’s get from non-European VCs as well.

That’s really interesting. In your opinion, how important is diversity to VC? And do you think it’s something that’s getting better?

Yeah, I think it’s important because at the end of the day the consumer base or the base of people that you’re selling to is very diverse, be it consumer or on the enterprise side. A sharper argument is always made by developing your point of view and your product with a diverse audience of people.

To your second question, of is it getting better? I’d say yes and no. Yes, because there are a lot more female VCs here than when I started and there are a lot more female founders here than when I started. There’s a lot more women going into STEM and viewing VC-backed entrepreneurship as a possibility for careers than when I started.

You’re also seeing so many of these mid-stage and later-stage startups, be it Spotify or GoCardless spanning the next generation of founders, and those are both men and women, so in that way it’s fantastic.

But when you look at the percentages, it’s still very small when it comes to diversity, both in terms of race, gender and schooling.

Are you able to tell me more about the fund? How exactly do you operate at Hearst Ventures, do you have an ecosystem that seeks female founders specifically, or are you diverse and open to include all kinds of founders?

We are a fund that is based off the balance of firstly European and US media companies, so we have one solo [operator], our investment partner, the senior partners. I would argue that we over-index versus others in terms of female partners.

There’s myself in Europe, there’s Katie [Hu] who manages our investments in China, and then there’s Gabby [Munoz] and Darcy [Frisch], who are also both MD’s in the US. So in California, there’s eight mid-level people and four of us across other areas.

In terms of how we think about diversity, I think by having female partners, I think most female partners will aim to over-index on finding female-led companies. It’s really rare to be a VC female partner who, you know, in candid conversation doesn’t say that they try to over-index, that helps.

Then there’s the real practical thing of in many of these products, women are the buyers so you want the board member to look like your buyers, and that helps as well. Interestingly, in China, we have a fair number of female founders, both on the consumer side where we are for example an investor in Rent the Runway for the Chinese market, but also on other sort of more B2B, B2C like a last mile delivery company we have called Flash Delivery.

I say that because it’s a very different market there and people are used to seeing women in those roles, and so we’ve done very well there in finding some very interesting founders.

You said that you have a fair amount of female founders in China, would you say that there are more in China than in the UK or is there a bit of a balance?

I don’t know what the actual statistics are in terms of the overall market, I actually don’t know that and I guess I can take a look. In terms of our portfolio companies, none of our founders in Europe are women. It’s not because I haven’t wanted to invest in women, I just haven’t had the chance to get into that cap table.

Again, I don’t know how much of that has to do with the funnel.

Since doing some research, I have noticed that there is actually quite a lot of female VC investors, but they either just go unnoticed and the same applies as well for female founders of companies. So why do you think that is?

It’s funny, I can think of two deals recently that I would have liked to have gotten into that were with female founders, but they had more than enough money. So, I don’t think that is the case with all founders in saying why is there a case of women not being able to get funding? That is like saying, how long is a piece of bread?

I think having female VCs helps, I think training helps in terms of the pitching, in terms of access and in terms of style and approach. I think funds are bringing in more female partners, they’re bringing in more female associates and more female principles so I think there is a pipeline there for female talent, if you look at that in the European ecosystem I think that’s really helped.

So, part of this is a time issue. That’s not an excuse but compared to 10 years ago it’s much better. Again, I’m not trying to whitewash it, it’s not an excuse. If you look at the Diversity VC report that came out recently, there’s a very salient point there about the warm introduction that lends itself to a warm audience.

That all sounds good, but what about companies that don’t have female investors? Would you say that’s a barrier to why female-led businesses are lacking, and what do you think can be done in that case?

I think a compelling business is a compelling business, it doesn’t matter who built it, whether they’re boy, girl, green or pink, I think a compelling business is just that and part of this has to do with presentation and access, more than you need a female at the VC partnership.

It’s interesting. There’s a Twitter feed from the guy who runs Framer, and he was saying it’s amazing that all the VCs he loves are all women. He’s not running a B2C company, he’s running a company that is geared towards the developer community.

He went on to mention the women that he’s thinking about and then basically identifying that almost all the talented venture capitalists in Europe right now are women, that’s a fantastic outlook.

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I think we need to stay on top of this and showing the numbers like some have done is fantastic, but it’s a long game at the venture and entrepreneurship level.

So, let’s see that the seeds that we’re planting start from my daughter in elementary school for example, to start proving that we’re very proactive about making sure those two percent get to this stage.

What sort of companies does Hearst Ventures tend to invest in?

We invest in Series A and later companies, both consumer and B2B and we invest across Europe, US, Israel and China in that category. An ambitious entrepreneur is an ambitious entrepreneur, it doesn’t really matter.

What kind of approach do you tend to take when investing, is it based on data or gut feeling?

We do a positive analysis with our management team, and we do look at the market but markets and founders experience are what we tend to focus on a lot.

Are there varied industries across B2C and B2B that you choose from, or is it mainly just in the technology industry?

It is varied. So, we’re looking at a deal right now in the travel space, we’re looking at a deal in the Industry 4.0 space, we’ve done investments in commercial real estate, we did an investment in employee retention, so it’s quite broad.

In terms of new deals and your diversity work, are there any plans that you at Hearst Venture are working on at the moment?

We are working on some new deals in Europe and US which are likely to be closing soon. In terms of diversity, Hearst has something called Hearst Lab which is a financial greenhouse focused on seed-stage funding for female founders that we provide.

Then there’s a number of initiatives that we have around supporting people from less privileged backgrounds that we’re supporting mostly in the US.

I myself take part in a number of the projects that take place here in Europe around supporting female founders. One that I was most recently involved in is a pitch to female founders event that I think Suzanne at Local Globe and Tara at Local Globe, with a few others helped to put together.

If you speak to a few of the female partners in Europe, and I know this is a case with my colleagues as well, we often spend that extra time with female founders. These are our people.

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