In the fundraising game, every entrepreneur expects difficulties. This is the Age of Startups, after all, with an ever-rising number of entrepreneurs competing for investor dollars. When I began fundraising for my PR software startup, I encountered a range of responses to, well, me. In talking to other women founders, I learned that I may have actually had it easy.
Given that fundraising is typically a long slog of uphill climbing and a good dose of rejection, I was prepared to take a beating. There were, however, some moments that made a grueling process much more unpleasant. What these moments taught me is that there is still a bias that exists, and I’d like to do my part in figuring out how to level the playing field.
Let’s review a few facts on women raising money. According to the Kauffman Foundation, male entrepreneurs raise 60 percent of their startup funding from outside sources, such as bank loans or angel investors, while 48 percent of women entrepreneurs do. One study found that even when test pitches used identical slides and scripts, male founders were 40 percent more likely to receive funding from venture capitalists than female founders. These are interesting statistics considering well-known Silicon Valley venture capital firm, First Round Capital, reviewed 300 of its portfolio companies and almost 600 founders, and found that the teams with at least one female founder did 63% better than the all-male founder teams.
One theory holds that men tend to fund ideas they can relate to, as well as people they feel comfortable socializing with. And most venture capitalists are men; only 6 percent of VC firms have women partners.
The numbers show that women entrepreneurs are already facing bias when they begin their fundraising journey. When investors carry old assumptions about women, it shows up during the investment process. This can make it that much harder for women to stay confident in a world where they’re already facing an uphill battle.
To underscore my point, I’ll share some of the gems I heard when I was raising capital.
• Are you single? I think you’d be great for my grandson.
• Does this mean you’re back to work full time? He was referring to the fact that I’d had a baby more than a year earlier.
• You’ll be the prettiest founder in my portfolio.
• Are you raising money to open a strip club? (My favorite)
I’ve heard other women echo that their looks will often come into conversation during investor meetings. One woman told me that an investor turned her down because he felt she was too good looking to be aggressive.
Can I offer two guidelines? 1) If you wouldn’t say or to a man, don’t say it to a woman. And 2) Assume that we’re not using our bodies or faces to run our businesses.
So yes — dinosaurs still roam the earth, and some of them bankroll startups. Any of the above comments could have been clichéd dialogue, laughed off as a joke. It’s time to realize that these jokes aren’t just uncalled for, they’re harmful.
Flip the Conversation, or Flip Them the Bird
In my experience, people don’t know they’re being offensive in these situations. A lot of these men (and yes, women) genuinely believe they’re being hilarious or charming, without any idea that their comments can undervalue and undermine the entrepreneur. So what’s a girl to do? Here’s my advice for women founders seeking funding:
• Nail your story. You’re job right now is to be a convincing storyteller. If you can’t get investors to buy into your vision, you won’t get employees and customers to either.
• Believe that you can raise more than you think (and you’re going to need it).
• Spend less time on a lengthy business plan and more time on the top metrics for your industry.
• Seek out women investors.
• If you hear someone make an off-color comment, even subtly, even in the form of a “joke,” speak up. Tell them it’s not cool.
• If you find yourself faced with someone who’s out and out sexist, move on. Trust me, you don’t need their money that badly.
P.S. Nothing about this advice changes if you’re a man seeking funding.
Take a Lesson From The Orchestra
In early ’80s it became clear that there was a severe unbalance of men and women musicians in most orchestras — only 5 percent of the members were women. In an effort to eliminate the obvious prejudice, the community implemented the blind audition, making applicants play behind a screen to ensure selection was based on talent alone. This practice is still widely adopted today.
How are you going to ensure your startup community doesn’t fall into the bias trap? It’s hard. Just look at all of the women only events and awards that are based on skill and gender. How does that really look? Having balance on paper doesn’t necessarily mean you are creating a balanced workplace. As leaders in your communities, you have the power to enact real change.
For the most part I got really lucky. My amazing investors haven’t exhibited a shred of sexism, and for the most part, the entire fundraising experience was enjoyable for me. But that’s not the case in all regions. If we want a startup landscape that’s equitable for both men and women, the fundraising journey needs to be neutral and welcoming — a place where every entrepreneur is judged on their business merit alone.
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