Raising capital while female. It comes with a unique set of challenges, not least of which is that the investors you’re pitching are likely to be white males with a certain sort of background. Given the tendency of people to invest in and generally gravitate towards others similar to them—a trait known as homophily—women and founders from diverse backgrounds have to work extra hard.
This is an especially critical issue when women—and women of color in particular—are a fast growing and vibrant driver of entrepreneurial activity.
Fortunately, more women investors are stepping up to the challenge. At a recent event in New York hosted by SheWorx, a global collective of female entrepreneurs, a panel of prominent women funders shared their insights and tips for raising capital while female. Here are tips from two of them.
Joanne Wilson, Gotham Gal Ventures
What she looks for: “Something that’s built (meaning not an idea), that’s filling a void, with large market potential.” Also scrappiness and resilience. “At the end of the day, I’m looking for survivors.” Angel investors are investing their own money, so Wilson wants to know, can this company be funded again?
Advice: “Be bold,” says Wilson. “People do respond to cold emails.”
And once you get a meeting, make a good first impression. “The first meeting may be your only meeting,” says Wilson, so make it count. That means doing your research: has the angel already invested in that space? (If so, they’re not likely to invest in a competitor). Be on time, she counsels, which means not too early or too late. Once you have their ear, “be thoughtful about what it is you’re doing, what the opportunities are and what you’ve accomplished so far.”
Given the horror stories of fundraising while female, she has this advice: “If a potential investor is demeaning to you, pick up your shit and leave.”
Style: Wilson invests early—“we’re often the first dollar,” she says. And if she invests in your venture, she’s all in. “I’m an angel and your investment banker and your head of HR,” she says, adding “most angels don’t operate like that.”
Hayley Barna, venture partner, First Round Capital
As a cofounder of Birchbox, Barna raised $70 million in venture capital. After stepping down as co-CEO of Birchbox in 2015, Barna made some angel investments before joining First Round Capital, which led Birchbox’s seed round, as a venture partner in February 2016. Three out of her first five investments have been in women-led ventures. The average overall for First Round Capital is about 20 percent women and minority founders, she says.
As the name implies, First Round gets in early, especially for a VC firm. Seed, pre-seed, friends & family—“no idea is too early,” the web site proclaims.
What she looks for: “We invest super early. You have to convince us there is a huge market opportunity. We need to see a clear path to a multi-hundred million dollar business and potential for a billion dollar business,” says Barna. She focuses on three factors: market, product and founding team.
Tell your personal story. “I love hearing the backstory—why you?” she says. “A personal story can make a pitch stand out.” It also helps to get your potential investors engaged. Blue Apron, for example, sent meal kits to each partner at First Round.
Advice: Target the right person. “Who in the fund is making the investments in your area? It makes a difference,” she says.
While details and metrics are important, “don’t forget to talk about your big dream—where you see the company and the market five to ten years from now,” she says. “Then tell me what you’re going to do in the next six to nine months.”
Finally, when entrepreneurs are fundraising, Barna says, “it can be easy to forget that it’s your choice.” Taking on a venture investor is a long-term relationship. “People compare it to marriage, but it’s harder to get out of!” she says. So do your homework. She recommends asking the VC for references, including ventures they invested in that did well as well as those that didn’t. And use your backchannel—ask around or scour LinkedIn for contacts who are familiar with the firm.
Barna also suggests cultivating a network of women entrepreneurs to discuss your startup and fundraising issues with. Men do that, she says, and so should you.
Style: Barna is the kind of investor that likes to rolls up her sleeves. “Have a gnarly issue? Let’s hang out with a whiteboard for few hours and let’s jam,” her team bio reads.
She recommends that founders keep their investors in the loop and use them as advocates. Send a monthly update that included highlights, lowlights, and key metrics. And don’t forget to give them some homework to do! “We hope that the money we give you will be the least valuable thing that we do,” she says.