“Women have been returning an average of 35% higher ROI for more than 30 years of data. Hedge funds go nuts for a point. We’re talking 35. And yet the money doesn’t follow the money.” – Gillian Muessig, Mastersfund This issue is a special investor edition of Emerging Forward, a deep dive into how venture is (and isn’t) evolving for founders who don’t fit the “archetypal” mold, and for LPs/GPs who actually care about both yield and impact. 1. The 2% anomaly that refuses to die Gillian starts with a statistic she can’t let go of: women receive around 2% of traditional venture equity, despite multiple decades of data showing that women‑led companies are unusually capital‑efficient and generate higher returns. She walks through the numbers: * Women‑led companies raise about 44% of the capital that male‑led companies raise in the same industry, then exit at similar valuations. * That translates into roughly 56% less dilution for investors: every new dollar raised dilutes existing equity, and women tend to raise fewer of those dollars on the path to exit. * In the datasets she cites, women‑led companies exit one to two years sooner than their male‑led peers; time as both a risk factor and a cost factor. * They generate roughly 2.5x the revenue per dollar invested. Gillian’s example: if a male‑led company makes 38 cents per dollar invested, a comparable women‑led company is closer to 76–78 cents. * Roll all of that up and you get the killer number: about 35% higher ROI for women‑led companies over more than 30 years of data. If these numbers sat inside any other asset class, the capital would stampede toward the anomaly. Hedge funds shift entire books for a single extra percentage point of return. In women‑led venture, 35 points of outperformance has barely moved the needle. So Gillian and her co‑founder, Anne Kennedy, chose to treat this as an investor problem, not a motivational poster. 2. Why the money doesn’t follow the money Mastersfund’s thesis doesn’t assume the anomaly exists because women are somehow “better” founders. A big chunk of the outperformance is structural: when capital is that scarce and the needle’s eye is that tight, the companies that make it through tend to be unusually strong. But that still leaves a question: if the anomaly is this obvious, why hasn’t the market corrected? Gillian’s answer is anthropological: * For most of human history, survival meant sticking with your own kind. The infant that cozied up to a saber‑toothed tiger didn’t survive long enough to pass on its genes. * The same pattern shows up everywhere: flocks, herds, schools, clusters. “We’re carbon‑based life forms; we’re wired for similarity,” as she puts it. * In today’s venture context, that instinct shows up as over‑funding of a very narrow archetype: tall, white, US‑educated, able‑bodied, youthful, baritone‑voiced men from institutions like Harvard and Stanford. Her point is not that these founders shouldn’t be funded. It’s that the human wiring behind this pattern is “vestigial behavior”, it made sense when huddling with your own tribe improved your odds of not being eaten, but it no longer serves a planet trying to solve 21st‑century problems. Crucially, she doesn’t believe the answer is endless shouting at Sand Hill Road: “Don’t shout at the tall white men with baritone voices in Sand Hill Road. They’re doing exactly what they’re programmed to do.” Instead, she argues, the money must flow from different hands. At Mastersfund, that means working on the activation of women’s capital: * Women are often taught to write philanthropic checks, not to manage their own investable capital. * They already hold and are inheriting significant wealth, but it is largely intermediated by institutions who have 101 good reasons not to move any of it into higher‑risk alternatives like venture. * Men will often say “yeah, Joe, just write the check.” Women get run over by that logic. The fund’s work sits at the junction of gender‑lens investing, agency over capital, and new instruments that reduce risk while preserving upside. 3. Venture is not just venture equity anymore One thing Gillian is very clear about: “venture capital” is a broader category than “venture equity.” Founders and investors, she says, need to stop treating the classic Silicon Valley equity fund model as the default for every startup on the planet. At the very top level, she splits the world into: * Venture equity * Venture debt Under each, there’s a much richer toolkit than most founders (and many LPs) use: * Dividend models * Royalty agreements * Revenue‑share structures * Variants of convertible instruments and SAFEs * Hybrid models that blend equity‑like upside with debt‑like protection Her counsel to both founders and investors: “Take a scalpel to this job, not a hatchet.” The existence of a “standard” note or a “standard” SAFE doesn’t mean those are the right tools for your company, or that their terms are set in stone. Every line of the instrument is negotiable, and in some cases, modifiable enough to become a new instrument. Which is exactly what Mastersfund did. 4. Inside Mastersfund’s redeemable warrant Mastersfund created a redeemable warrant for options, working with an attorney who had been experimenting with similar ideas in angel groups. Gillian contrasts it with familiar tools: * A convertible note is debt. In the US, as the note’s paper value increases, investors may end up paying taxes on that gain before they see any cash, an “unfortunate consequence” in an asset class where 80% of companies will die. * A SAFE is equity, with fewer investor protections but some simplicity benefits for founders. * In both, there’s usually a line that says the instrument is not redeemable and will convert to stock. From the investor’s perspective, that hard‑wires venture‑equity‑style risk. Mastersfund’s tweak: * Treat the instrument as an option: the fund can elect to convert into stock, or it can treat the position more like a debt instrument over time. * While the warrant sits as equity, the fund doesn’t incur the same kind of tax exposure as a classic note. The decision to convert (or not) is made with more information about the company’s trajectory. * That optionality allows them to pull the risk profile of the fund closer to something resembling private equity – earlier and steadier returns – without giving up all the upside associated with equity in outlier winners. Underneath is a deep critique of the way venture tried to “slather” a model designed for a very small set of hyper‑scalable companies (the software that powers the next big thing) onto every startup on the planet. Most of those companies were never built for that kind of scale. They need a different capital stack, and investors should know better. 5. Time, risk, and serial exits Gillian uses a simple analogy to talk about risk: * Ask her what the weather in Seattle will be in the next five minutes and she can tell you with near‑perfect accuracy: it will not rain. * Ask her about five days from now and the answer gets fuzzier. * Ask her to predict conditions 15 years from now and it becomes a joke. The same logic applies to holding periods: * The longer you stretch the time to liquidity, the more macro variables pile up: politics, regulation, cross‑border tensions, supply chains, whole technology cycles. * In the 1990s, venture could sometimes get away with 2–5 year exits. Today, even in AI and other “crack‑in‑the‑universe” technologies, exits are slower and path‑dependent. For her, the response is clear: * Shorten the time to serial exits for the same pool of capital. * Design structures that allow investors to see real liquidity events in shorter cycles, then redeploy into new companies. This isn’t anti‑VC. It’s a recognition that in 2026, the old “wait 10–15 years for a single monster IPO” model no longer matches either the macro environment or the kinds of companies non‑archetypal founders are building. 6. Playbooks for non‑archetypal founders and investors Gillian’s closing argument: it’s not just about women. It’s about any founder and any investor who doesn’t fit the archetype, and the systems we build around them. For founders: * Know your capital stack options. Equity, structured equity, revenue‑share, royalties, venture debt; each has a different risk/return profile and different implications for control and dilution. * Design for your actual trajectory, not someone else’s mythology. If your company is “the next decent thing” built on top of breakthrough platforms, you probably don’t need a capital stack designed for the few players building those platforms. * Negotiate, don’t default. “Standard” terms are a starting point, not a law of nature. For emerging managers & women investors: * Learn the instruments as deeply as you learn the theses. If you’re serious about gender‑lens or impact investing, structures like redeemable warrants and revenue‑share may be as important to your success as your sourcing. * Activate your own and your peers’ capital. Don’t just give philanthropically; build the world you want to see by allocating to instruments and managers who are solving real anomalies. Her final exhortation: “Bring a scalpel to the job, not a hatchet.” The tools now exist to design capital stacks that match the companies and founders you’re actually backing. The question is whether LPs and GPs are willing to use them. 🎧 If you’re an LP, GP, or founder exploring non‑archetypal paths, this episode is meant to live in your ‘save’ folder. If you’d like more conversations like this; on structured equity, non‑intr
