4 Tips for Women Entrepreneurs to Tackle the Fundraising Monster
Startups and young companies do not have it easy when trying to raise funds. Except when you are from Y Combinator.
Seed funding and early stage financial aid help companies get started and meet their expenses until they are able to reach out to the wider market and drive sales.
There are varying opinions as to when and how you need to approach the early investors. Seed funds refer to the earliest investment made in a company, usually in return for a stake in equity, and help take the company from the early idea stage to actually get down to building something impressive enough to wow the potential market as well as the future investors.
But with a better investment climate and more funds flowing into startups, the competition for investment dollars has grown more fierce and intense. If you want to complete a successful round of funding you better be an early-stage business with some momentum going for you. If you have achieved milestones like a product launch, or have started charging customers for your service and built up good traction, you’ve surely got something to speak about to your potential investors.
And since you are a woman entrepreneur you have some additional issues to deal with as well. Anyways, those who have gone down the road earlier have plenty of tidbits to share, and here you can find a few solid tips to help you with your first round of fund raising.
1) Funds Won't Come Easy, and That’s for All
Most investors practice and thrive on herd mentality; they go where others in their community are going. So make a list of the investors you will be approaching on your investment drive, and put in proper planning and research into getting a good list ready.
As much as you may like to bag your investors as soon as possible, it may take quite some time for you to get a lead investor. Once that is established and you have a fund or an individual willing to stick his head out for you, the rest will come comparatively easy. As stated earlier, lemming mentality persists and investors follow each other.
Fund raising is an uphill task and may even take as long as 6 months to raise a $1million kitty. But don’t stay on the market too long and become the ‘business struggling to raise funds’. You don’t want to build a negative investor sentiment around you, do you?
Also keep in mind you are not out in the market to try and convince skeptics, you are out there trying to find a reliable and rich person who believes in your idea and is ready to buy into it. Don’t bash yourself up into pulp if it isn’t going well initially. Smile and bear it and keep knocking, you will definitely find one that opens wide.
2) Talk the ‘Guy' Talk
The percentage of female investors and VCs is alarmingly low. Also the number of female entrepreneurs having a successful round of Series A or Series B is also alarmingly low, though the graph is slowly nudging in the right direction.
So if you need to alter the system you need to land yourself absolutely right in the middle of it.
Talk numbers when you are pitching your company to a group of potential investors. Straightforward and aggressive number crunching will get them to sit up and take notice. Lay out the long-term plan ahead for them.
You should be able to explain your business model crisply, clearly and concisely.
Chalk out your future actions, the milestones you have achieved and the numbers you have raked in. All of this should also be spelled out in monetary terms and you should be able to explain a good exit route for the potential investors as well.
There may be niggling doubts in the minds of some “What if she takes a maternity break right when things are looking up?’ or “How long does she plan to stay plugged in without the domestic pressures affecting her?” They may seem downright sexist, but women entrepreneurs do list these as investor concerns! So keep calm and address them.
You are the leader and the founder of your business, so you need to stamp your leadership style on your pitch as well. You have to come across as no-nonsense, credible, inspiring, far-sighted, entrenched in your industry/vertical and willing to give all that it takes to see your business succeed. You have to keep your chin up and carry the company on your back past the finish line, and remember the three C’s an entrepreneur must absolutely have.
3) Get Your Financials Right
You will have the upper hand while speaking about your business, future plans and the important milestones you have achieved. But get down to your market stats and financials, and very soon the VCs will shred you apart. Attend the meeting well prepared and leave no room for error. There are twenty other guys who are going to come in on the same day as you, and you have to win your money from them.
The VCs obviously are the experts when it comes to finance, but when it comes to your company you must be ready to fend off any question that comes your way, and be ready to be analyzed and dissected on every estimate you state.
4) Get Your Support Lined Up
VCs may call up your ex-boss or the strong influencers in your ecosystem who have a clear idea about you and your company. Be sure you get a good word in. Also, if the VCs are going to speak with your angel investors, make sure no discrepancies creep in.
You will also require strong referrals to set up meetings with the best VCs. Referrals from entrepreneurs who have had successful fund raises or made good exits will get you attention from the relevant people. Stay away from shady characters who want equity or other forms of compensation in return for introductions. Make sure you have a reliable and reputed group of advisors and mentors who will give you the necessary intros.
Setting up a business and seeing it through the early stages is never going to be easy, things work out much easier as your progress and grow. But deal with your setbacks and plough on, because that’s how all battles are won. So there ladies, go for it!
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