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Stories: Deborah A. Farrington

When Deborah Farrington and her two sisters were growing up, their mother and father made it clear to all of them at an early age that they could do anything they set their minds to. Her father worked in financial services at Lehman Brothers, and when his daughters would ask him “Don’t you wish you had a boy?” he would laugh and reply “I wouldn’t know what to do with boys! I love my girls!” In fact, his optimism and encouragement coupled with his connection to Wall Street instilled a financial curiosity in Farrington that was foreign to most girls her age, especially back in the 1960s.

“Growing up, I had an exposure to Wall Street, which I found really fascinating,” Farrington recalled. “I went onto the trading floor of the New York Stock Exchange when I was about ten. It was about the most interesting thing I’d ever seen, with people standing hip-deep in paper. And of course, there were no women on the floor back then.”

As co-founder and general partner of Manhattan-based StarVest Partners, Farrington is one of the few women to run her own venture capital firm. StarVest is the largest woman majority-owned VC firm, as measured by assets under management, in the U.S. In an industry where just six percent of the partners in venture capital firms are women, finding a successful firm run by a woman is more than unusual. But unusual is nothing new for Farrington.

Having graduated from Harvard Business School in 1976, Farrington has followed an atypical path to success in the male-dominated world of finance and venture capital. She co-founded StarVest in 1998, which was built upon investments in technology-enabled business services on the Internet, and she has had a consistently successful investment touch which, in 2011, earned her the title of “Queen Midas” as the highest ranking female VC on the Forbes Midas List.

Farrington’s experience at HBS has had a big influence on her career and she remains closely connected to the school. In 1999, as she was getting her first fund off the ground, she received a call from a former HBS section mate who was the CEO of a small California startup named NetLedger.

“He said to me `Debby, I know a lot of smart venture capitalists and quite frankly, you’re the only one I like,’” Farrington said. Looking for investors, he told Farrington that the only other investor at that point was Larry Ellison, the billionaire founder of Oracle. In early 2000, Farrington met the firm’s other co-founder and then flew to California to meet with Larry Ellison.

NetLedger’s business model was ambitious and it reflected the nascent Software-as-a Services (SaaS) movement in the high tech space. The plan was to put its customers’ financial statements and other financial data on the Internet, at the time a revolutionary idea. With just $100,000 in revenues, the startup’s ambitious plans were being met with indifference. Not a single Silicon Valley venture capitalist wanted to invest. For Farrington, coming in with a New York state of mind, she saw immediate potential and relished the chance to invest along with Ellison. “We became the first and only venture investor in a company that became NetSuite,” Farrington said.

The investment, which Farrington calls “the biggest success of my venture capital career,” paid off handsomely. NetSuite went public in 2007 and today has a market cap of $8 billion. Netsuite is one of the leading software-as-a-service companies, along with players like Salesforce.com and Workday,, and that $100,000 in revenues is on its way to nearly $1 billion. The firm has grown from 40 employees to nearly 4000. And Farrington remains the lead director of the firm.

Building on her success, Farrington has long been a vocal advocate and supporter of women entrepreneurs and investors. Though she acknowledges that Silicon Valley is the locus of tech investment, she believes that New York, with its strong foundation in financial services, retail, media, fashion and other key industries, has been a more fertile place for successful women entrepreneurs and VCs. “We just see more of them here,” Farrington said.

Given the timing of her career, Farrington’s journey has been remarkable. She graduated from Smith College in the early 1970s as the women’s movement was gaining momentum. At Smith, she learned leadership skills and a belief that women could do anything. “I felt an obligation to go out and be a leader and a pioneer,” she said.

In an undergraduate role as head of career coordination and campus recruiting, Farrington got a call from the Smith career office asking her to help arrange a recruiting visit by HBS. Though Smith was hardly a feeder college to business schools, she got some friends in the economics program to attend and the HBS recruiter was so impressed she suggested Farrington apply. Farrington was accepted, along with several friends from Smith, and agreed to attend but only after working for two years.

With her focus on finance, Farrington took a job with Chase Manhattan Bank and emerged from Chase’s training programs with a sharply honed financial foundation. It was, she said, like a mini-MBA and accounting degree. When she arrived at HBS, she aced every finance class and, even though women made up only 10 percent of her class, she dove in to every aspect of the school experience with exuberance.

From HBS, she joined Merrill Lynch as an investment banker. While with Merrill, she worked in New York, Hong Kong and Tokyo and came away with a potent ability to analyze companies, a skill she continues to use today in venture capital. By the age of 30, Farrington was asked to help create and run a division of Merrill Lynch international, thus gaining valuable management experience. She was deeply involved in strategic planning and human resources and learned the importance of establishing clear processes in running companies, especially the link between pay and performance.

Having displayed a penchant for independence from a young age, Farrington knew from the time she was an MBA student at Harvard that someday she wanted to run her own business. After ten years at Merrill Lynch, Farrington joined a Hong Kong-based merchant bank in the late 80s, and got yet another crucial push toward her VC career. Immersed in Asia’s then red-hot economy, Farrington learned “the joy of being a principal as opposed to being an agent.” Unlike American investment banks at the time, Asian investment banks were allowed to advise clients with whom they were investing. The art of mentoring and advising clients struck a chord and she stayed four years before deciding it was finally time to maneuver toward her own firm.

Back in New York, the HBS bond was rekindled. Farrington reconnected with two HBS friends and started a small private equity firm called Victory Ventures. There they developed an investment strategy based on acquiring several small, reasonably priced service companies, merging them, introducing sound financial processes and making them profitable. The experience exacerbated Farrington’s desire to start her own venture firm and in 1998, StarVest Partners was born.

With StarVest, her ability to oversee savvy investments took flight. Along with NetSuite, she has shepherded a string of successful exits such as Fieldglass, which was sold for $220 million, a 5X return on investment, to Madison Dearborn; iCrossing, acquired by Hearst; Insurance.com, acquired by QuinStreet; MessageOne, acquired by Dell, and Host Analytics, a rapidly growing planning, budgeting and analytics company.

Her long tenure with StarVest has given Farrington not only an experienced sense of the market but a passion for supporting women in business. “I love what I do,” she said, “but every once in a while I do think I would have enjoyed being the CEO of a big company. I wonder sometimes if I should have persevered at Merrill because I feel that we need more women CEOs of big companies. That’s a real passion of mine.”

Farrington believes that giving young women the incentive to embrace engineering and technology is the way to fill the pipeline and expand women’s presence in Silicon Valley. “We hire a lot of interns and analysts and we have had a lot of young women go through our firm,” she said. “It’s crucial to encourage young women to get great experience and training that will prepare them to be successful. We need a bright spotlight on encouraging diversity and we need to keep pounding away at Silicon Valley while also creating islands of friendliness for women. And I definitely think New York is one of them.”