I was at the So You Think You Can Start Up pitching event recently and was struck by how few women were in the room – and the fact there were no women pitching for funding.
Following the event, Private Media CEO Marina Go (also publisher of Women’s Agenda and StartupSmart which was running the event) wrote about fear holding women back from chasing their dreams.
So why the lack of women at this particular pitching event?
There are a few things at play here: some women are hesitant pitching to men for funding, they don’t have enough awareness about funding options and / or, they don’t see funding as relevant to them for a variety of reasons (relying on organic growth, too much effort, lack of time, etc). Research on female entrepreneurs and funding finds that women will have to overcome this hesitation if they are to succeed. From personal experience, I know many women who wouldn’t hesitate to pitch to men and just as many who will hesitate.
Seeking funding is intrinsic for business growth in most cases. Especially in Australia which has been a hotbed for women entrepreneurs for a while now and is only getting better. The Gender-GEDI report highlighted that for every 100 businesses started by men in Australia, 85 businesses are started by women – 4th highest out of 17 countries. And, statistics published by AWCCI state that the number of women starting businesses has doubled since 2007.
However, in a stark contrast to this growth, GEDI also reports that women receive only 5% of Australia’s venture capital (VC) funds. The situation is no different in the US where only 16% of start up/ pitching for funding was women-led in 2012 and, of that, only 25% secured funding according to the Center for Venture Research at the University of New Hampshire.
Women need to overcome what could be an inherent hesitancy in seeking funding for their killer ideas. Given women angel investors and VC’s are a minority, there is no choice but to be brave and ask for more money. One of the best ways to break down gender stereotypes in the male dominated VC space will be to see more women entrepreneurs pitching confidently for funding.
The below pointers could help:
Illustrate the opportunity and talk about the vision: It is important to pitch passionately and discuss current growth; but more so to illustrate future potential and the vision. Especially when women start a business that reflects their personal interests and have to pitch to men who lack those interests. I recently came across feedback from a male VC to a woman who had pitched to him: “Your pitch was all about how you’d get to base camp, but didn’t tell me what the top of the mountain looks like.” When the entrepreneur shifted her pitch to talk about her vision, what the view looked like from the top of the mountain and her plans for scaling the mountain, VC’s clearly saw the $50 billion baby and kids e-commerce market and how her company could get sales.
Be confident: This goes beyond taking a few deep breaths and connecting with everyone in the room. Confidence in pitching for funding also stems from visualising why women entrepreneurs are successful. A 2012 study by Dow Jones reported that 61% of start-ups with five or more females were successful and only 39% failed. Etsy hired 500% more female engineers in 12 months to reflect the 80% female customer base. Forbes recently highlighted that VC firms investing in women-led businesses performed better than all men-led businesses. This could be linked to other reports that women are better money managers than men. Take strength from these numbers and build your case. Research success stories to take pointers and be inspired. It could be the neighbourhood childcare centre owner or Oprah Winfrey – all successes have a story to tell.
Failure is good: Most women tend to take failure personally and get disheartened – which could affect their next pitch. Women should instead view failures as the opportunity to get feedback on their process and use it to nail their next pitch. It’s like being on holiday with a male partner in France. Women tend to try and get the right phrases using limited French while the man will just jump into conversations (often with less command over the language) with no concerns of failure. Women are more risk averse then men and only when we cross this barrier and accept failure as part of constant growth will we succeed.
Know your negotiation boundaries: Men come across as better business negotiators although women are well known to drive a hard bargain on a personal front. Before you go into a pitch, know your negotiation baselines and don’t compromise beyond what you can’t or don’t want to. Investors will push to gauge commitment and determination and the pitch process is their first exposure to how you manage under that pressure. Don’t undersell the value of your business, its current success and the IP the team brings to the table.
Use numbers wisely: I’ve seen women overuse statistics and metrics to support every point they make and from a belief that that’s the language male VC’s and investors understand. Numbers are only your proof point that supports the vision and not the pitch in itself. The pitch can be peppered with stats on customer acquisition, costs, unit economics, etc., but they need to flow into the strategy rather than becoming the strategy in itself. The core story of how you generate more money can only evolve from selling the vision.
Showcase a clear ability to exit: Your exit strategy shows the strength of your financial plan and how soon investors can realise returns-on-investment (ROI). It’s fine to have the business as a hobby and something you will continue working on for a lifetime. If not, be sure to include your exit strategy highlighting how you’ll make $5 million in five years if that’s your vision. Investors will then be confident in your ability to deliver ROI as you are bound by a timeline.
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