Fundraising · Cofounder

Interested in experiences of women founders

Lydia Loizides Founder and CEO @GGGrit

June 4th, 2013

I have been picking up the pace on fund raising and I am coming up against some interesting resistance. I have seen this before in my ten+ years in other environments but this is my first foray into fund raising as the Founder/CEO. I am curious about experiences that other female founders have had during the fund raising process. And men, if you have something to add - please do! I am looking for insight and perspective from everyone!

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Hi Lydia, 

Thanks for raising this issue. Also kudos to all the guys on here participating in the conversation and providing great suggestions. I love it! 

By my photo you can tell I am a woman and a person of color - a double "minority" as they say. I've never faced overt racism or sexism but I did get some funny looks when I was pitching pregnant (smile). 

In my experience, being "different" affords great exposure but also greater scrutiny/barriers.  You take the good with the bad.  I think it is pointless to debate whether the root of it all is prejudice, sexism, no matter how overt or covert. The answer is likely somewhere in between. The bottom line is people like doing business with people they know, like and trust.  Men, particularly, "nerdy men" understand, like and trust other "nerdy men" and currently they are who control most of the VC purse strings. 

My advice: 

1. Turn your liability into an asset. Turn what makes you different into a selling point for why you are the best person to run your business and kill it.  Someone who has done this well is the LearnVest CEO - Alexa (NY based). She came up with the idea for a financial literacy platform for women - she pitched at TechCrunch Disrupt in her early days and she took some very hard questions from the judges who were mostly men and just didn't get the need for something beyond Mint or the other more generic platforms. She knew her strength was in understanding the unique issues women face with gaining confidence with managing their money. She owned her story and uniqueness and really killed it. Here is the link if you'd like to watch. She has since raised over $20M+ by the likes of Accel, etc.

2. Know which VCs fund your type of business. Another poster mentioned this. Not all VCs are alike. This is something I had to learn myself. We are innovating in the relationship tech space creating services for couples - not singles. Lots of VCs don't get this. In fact, talking about relationships makes them uncomfortable. If you look at the history of online dating - the founder of eHarmony himself had a hard time raising money despite 35 years under his belt as a relationship/marriage counselor.  Now online dating is a $10B+ industry. Again goes the pattern recognition point - VC invest in what they know and understand or what is deemed "hot" (read: Bitcoin). I would suggest that you spend some time on AngelList and see what other companies are like yours that have gotten funded in the past. Reach out to those Founders and see what their funding story is. They likely have a list of friendly VC's who get what you are trying to do. 

3. Be Better. I hate to say it but as a women I really believe you just have to be better. Bring your A game all the time. It might be worth investing in some pitch coaching sessions to get some candid feedback on your pitch and things you might not even know you are doing to make it harder for yourself.  I participated in Astia and had a great session with CEO Coach "Mac".  He is awesome and might be worth reaching out to.  Below are his LinkedIn details, he's helped tons of Founders raise millions and has connections with VCs coast to coast. Also, I and other women on FD would also likely be willing to give you candid feedback as well. 
  • www.linkedin.com/in/mcadorylipscombjr
4. Realize that Most Companies Don't get VC Funding, So Have a Plan B. 
VC funding is one path to growth but there are several others.  Self funding through revenue is one that is often overlooked. In fact, a lot women run companies start off self-funding then seek venture once they have expansion needs and a proven business model.  I think it is humbling to realize that on average only 1,001 first time companies get VC funding each year and only 1% of all funding goes to companies with women CEOs. (this is all 2010 data - the latest available).  So, have a plan B. Anything that you are doing to execute on your business will also make you more fundable. Got Revenue? That's definitely attractive to a VC. Got paying customers? Ditto. Whatever you do, keep iterating and moving the business forward. 

I hope some of this is helpful. ...and I'm serious, ping me if you'd like candid feedback on your deck, pitch, etc. 

Best of luck! Keep us posted.

Zuhairah

*please excuse any typos, written on the go..!
**If you're interested, I've also blogged  about some of my thoughts/experience being a female startup CEO here

Anonymous

June 4th, 2013

Paul,  I think it is a refection on their (investors) relationships with women rather then ability of women..

Frankly it just annoys me.  But if the investor is stupid enough not to invest in some because of their sex, gender, race or culture.. well I hope they get lots of opportunities and then not invest and those teams make it big ;-)

Fundraising is so often who you know, not how good you are, or the team or even the idea. So it tends to be cronisim or nepotism.

Finding the right investor is important, matching on values is as important as the financial agreement itself

Lona Duncan

June 4th, 2013

Lydia,

I know exactly what you are talking about and it is precisely for that reason "interesting resistance" that this time around I decided to not raise right away and finance my company myself.  If you send me a message with your email address I can connect you to other female co-founders that have raised funding who have also run into the same unfortunate but very real resistance.

Paul Travis Multifaceted Online Executor: Product Marketing to Program Mgmt. to Business Development

June 4th, 2013

Sorry Lydia, I definitely can't say I've encountered that kind of prejudice before.

But as a short man, I've encountered the "look down the nose" from a table of 6'4" VC's.  

And I know the power of the "cow in the kitchen" -- that objection will cause your time to be wasted if you don't address head on.  So my recommendation would be to smoothly and concisely incorporate it into your pitch:

Take 15 seconds to add in your Team slide, "Now I know some investors are stuck in the 1900's and only invest in male CEO's, but for those of you who recognize a savvy leader who can build a team and bring home the bacon, let me tell you who else is on board..."

Anonymous

June 4th, 2013

You should check out and connect with other women founder at:

http://www.women2.com/

They have an awesome monthly Founder Fridays event that usually sells out.

Candice Hughes, PhD, MBA

June 10th, 2013

Lydia,

In general, I have observed that some VCs do seem to feel more comfortable or confident dealing with other men (most VCs are male).

However, I try to turn being a woman to my advantage by pursuing investors who are specifically interested in helping women. There are quite a few of them out there. Also there are non-profits who want to invest in women.

The other action I've taken is to bring in male advisors. I am working in a field that merges medical and IT technology. While I have the medical/science background, I don't have the IT background. There are more men than women in IT. Thus, it naturally happened in seeking out high profile advisors that I now have respected men endorsing my firm and my abilities.

Finally, I addressed the main complaint I heard some years ago from VCs. I went to conference after conference and was told I lacked a solid business background despite having working at management level, being an intrapreneur at a VC backed firm and working in a wide range of functional areas. So I went back to school and got an MBA from a top-tier business school. I haven't heard that complaint recently. If I do hear it, I can point to the MBA on my nametag and say that combined with 20 years of industry experience provides as much proof as anyone could possibly need that I have a solid understanding of business.

Michael Brill Technology startup exec focused on AI-driven products

June 4th, 2013

For those of us that get their venture news from tech blogs and directly from investors, "sweetheart" seems so crazy over-the-top that it's hard to even process that. And I thought ageism was the new sexism after my last venture pitch ended with "so gramps, wouldn't you rather be playing with the grandkids?" ;-) In any case, sorry to hear that and I'll avoid trying to offer advice where I have zero experience.

Lydia Loizides Founder and CEO @GGGrit

June 4th, 2013

Well, being addressed as 'sweetheart' for one ;) Lack of eye contact, questions about why now with two kids do you want to do this? ...  I have had a long and successful intrapreneirual (startups inside corporate companies) so I know the drill.  I guess was hoping to get a sense of other's experiences.

Brendan Duffy Product Manager

June 4th, 2013

Hey Lydia,

As I'm sure you know, the name of the game for early-stage investors is pattern recognition. That approach to vetting investment prospects cuts both ways. If you're well-aligned with conventional wisdom-- that is, if you're a white nerd with a technical background who went to an elite college--you may find the fund-rasing process easier than your idea/company would otherwise warrant. (I've seen this in action--it can be kinda humorous.) On the flip side, if you're poorly aligned with conventional wisdom--say, if you're a woman, who has kids and no technical background--you may get dinged for things that have nothing to do with your business.

Here's a quote from John Doerr that drives this point home (excuse Doerr's odd phrasing):
“That correlates more with any other success factor that I’ve seen in the world’s greatest entrepreneurs. If you look at Bezos, or [Netscape Communications Corp. founder Marc] Andreessen, [Yahoo Inc. co-founder] David Filo, the founders of Google, they all seem to be white, male, nerds who’ve dropped out of Harvard or Stanford and they absolutely have no social life. So when I see that pattern coming in - which was true of Google - it was very easy to decide to invest.”

So what to do? Find investors who weight the variables differently. If KPCB weighs male-ness and nerdiness heavily, they're not for you. Find firms that have invested in female-founded startups, and focus on them. As Paul said, you're sure to get plenty of "no's" along the way, but if you focus on firms that operate on a different paradigm than Doerr's, at least your time will be well spent.

Anonymous

June 4th, 2013

Investors don’t trust women, WUSTL study finds

Male-owned firms attract more investment dollars, despite proven success of female CEOs

http://news.wustl.edu/news/Pages/6414.aspx