By Polina Marinova
April 25, 2018

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

Hayley Barna co-founded beauty cosmetics company Birchbox in 2010. As the co-CEO, Barna helped grow the startup to more than a million monthly subscribers — all while raising tens of millions of dollars in venture capital.

But then in August of 2015, Barna decided to relinquish her chief executive role. “I realized that after six years of starting, operating, and growing BirchBox, it was best for me and for the business to step away,” she said.

During her six months off, she began angel investing and found that her startup experience was valuable to peers who were trying to get their own startups off the ground. “What I learned in those six months off was that my energy was coming from advising and investing conversations, so I never really picked up the pen to start writing the next business plan,” she said.

Barna dipped her toe in the VC world by joining First Round Capital as a venture partner in 2016. Five months ago, she was promoted to general partner, making her the first female GP in the firm’s history. So far, she’s invested in companies including Collective Retreats, Keeps, CrowdJustice, and Mirror.

In a conversation with Term Sheet, Barna talks about her transition from operator to investor, her biggest mistakes as a founder, and whether she plans to start another company.

TERM SHEET: How does your experience as an operator affect how you invest?

BARNA: Having been a founder, I think I’m more optimistic because I feel like if I could do it, the person in front of me can make it happen too. I also think it makes me more empathetic — especially in the fundraising process but also during the different inflection points in the lifecycle of the business. It makes founders more comfortable to reach out to me knowing that I was recently in their shoes.

You wrote the following in a blog post: “When I joined First Round, I gave a lot of thought to the type of VC I want to be, and I decided to be one that wouldn’t hedge talking about mistakes and lessons hard won.” What were some of the mistakes you’ve made in your career as a founder & what have you learned from them?

BARNA: The set of mistakes I end up talking about the most are the ones we made when we were raising our seed round. We made almost all the mistakes in the book. Ultimately, it turned out great in that we were able to raise a round from top-tier investors, but it took us six months of mistakes to get there. There were a few things that happened.

First, Katia [Beauchamp] and I were students when we started BirchBox, and we had done an MVP test proof-of-concept. And then we stopped — we packaged it up and made a beautiful slide deck and went to go pitch it. This meant that we had essentially lost momentum. It’s a total “no-no.” It was a chicken and egg type thing, where we said, “Look at what we did, but we need your money to do more of it.” And investors would say, “OK, so what’s next?” And we would respond with, “Well, we need your money first…”

We also didn’t understand that not all investors invest in everything. We talked to a lot of people who had never invested in e-commerce and ones who were scared of a tangible, inventory-based business model. We just thought that if you call yourself an angel investor, why not invest in us? This meant that we wasted a lot of time because investors typically always take the meeting and they try to avoid saying no. We followed a lot of leads that ended up going nowhere and just wasted a lot of time.

We learned a lot during our seed round. The way we got over all of that is that we decided to raise a very small amount of money from friends and family. The most important thing was that we had a fantastic launch with a great product. We believed that if we could do that, we’d get the momentum back and make the decision whether we need the venture capital. We raised less than $100,000 in order to do that.

Do you ever tell founders they don’t need to raise venture capital?

BARNA: All the time. The venture-backed startup path is such a big part of society in this zeitgeist right now that it’s attracting people that it’s not the right fit for. There’s a lot of really good businesses that can be built without venture, and you never want to be misaligned with your investors. I make it very clear that we’re interested in investing in companies that can be $1 billion or more one day.

This means I say “no” all the time to founders who are working on businesses that could be really great “couple hundred million dollar” companies. My least favorite part of this job is saying “no” all the time. I feel like I’m constantly breaking up with people.

So you want to be the type of investor that avoids leading founders on because of your experience at Birchbox?

BARNA: Exactly. I have made a few pacts with myself in how I interact with founders. I will try my best to avoid slow no’s because those are the worst. When I say no, I do try to give specific feedback in terms of what I liked, but also why we’re passing. I will never pass and say, “You’re too early, but let’s stay in touch.” I like to make a final, very clear decision. Unless your business model changes, it’s a “no.”

Industry-wide, female founders received 2% of all venture funding last year. With Birchbox, you’re one of the founders who managed to raise a significant amount of capital. What was it like pitching a subscription cosmetics company to predominantly male investors?

BARNA: It was fun because our business was doing quite well. Of course, there were some funny situations where no one wanted to touch the product. I remember one pitch where Katia and I did the whole thing, it was all men around the table, and then we’d leave and look at each other and realized that we honestly could’ve been saying anything and the only thing they heard come out of our mouths was “lip gloss, lip gloss, lip gloss.”

Some of them definitely thought that we were in the business because we like makeup. That’s the complete opposite reason of why we started — we started because it’s an amazing business model.

Do you see yourself starting another company in the future?

BARNA: Maybe. My whole career has been a surprise. I was not that girl who knew what she wanted to be when I grew up. Part of the reason I chose to do this job is because I really care about the tech community, and I want there to be more female investors and more female founders, and I am committed to making a difference.

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