Relative to global entrepreneurship, the proverbial glass ceiling has seemingly been shattered. This amid reports revealing statistics that nearly half of entrepreneurs worldwide—252 million—are women. As impressive as that metric is, it’s curious that Census Bureau Annual Business Survey reporting cites that a mere 20.9% (1.2 million) of U.S. businesses are women-owned. On a worldwide scale, just 4.7% of American business owners are women. Whether considering statistics at the global or U.S. national level, the disparity begs the most fundamental question: “Why?”
Perhaps one glaring reason is lack of capital since women reportedly receive less than 3% of available VC funding. Other findings show that, in 2019, only 2.8% of venture capital in the United States went to women-led startups; it dropped to 2.3% in 2020.
These numbers reveal that, despite the hustle, heart, and high revenues, women are suffering adequate and equitable access to capital. What’s more, the ripple effects of the unprecedented global pandemic on companies with female founders may actually exacerbate the funding gap. This, as many women in the workplace, are wincing from the pinch of being asked to get more accomplished with less.
But, all is not lost. There are ways the startup funding process can be democratized to help better position women to navigate the shifting capital landscape. Here are three.
- Fix Your Expectations of Fairness
If you’ve ever heard the phrase “read the room,” then you’ve also heard the phrase “know your audience.” In fundraising–at any round–there are a few universal truths to recognize. Many investors use pattern recognition. In other words, they believe that by investing in the products or people that are most similar to their past successes then they will have a greater probability of future success. This pattern is based on an unconscious bias and reinforced by influences that cannot be controlled, such as one’s experiences, childhood upbringing, and environment.
Thea Myhrvold, CEO, and Founder of GetBee—a female entrepreneur who recently raised $1.8 million from top venture capitalists—recounts her own experience with bias. “From my own fundraising experience, without fail, there were questions hurled at me that I don’t believe would have been asked of a male founder, such as ‘how will you make sure not to lose key clients?’ or ‘how will you prevent bankruptcy?’ It’s not that I was asked these important and fundamental questions, but rather that they dominated the conversation.”
Based on Myhrvold’s track record and professional pedigree—having received LinkedIn Power Profile and Cartier Women’s Initiative awards; amassed a world-class client list and logged more than a decade of front-line tech experience—she had expected a different line of questioning. “I anticipated having to respond to questions about the market, my balance sheet, my projections, and strategy,” Myhrvold said. “The skepticism about my expertise and experience in this space shook me. I expected questions that were clever and thought-provoking. They were neither. They were, however, quite effective at distracting me and derailing the conversation. I walked away disillusioned.”
This was until Myhrvold discovered Dr. Dana Kanze’s TEDxPeachtree presentation, “The Real Reason Female Entrepreneurs Get Less Funding” from which she says she learned three simple truths: unconscious bias exists, deal with it and get on with it.
Take a listen to it. You’ll gain clarity on how unconscious bias plays out in daily life. This includes the idea that unconscious bias is simply a function of our brains searching for patterns. Because we are bombarded with millions of messages that our brain is working to organize and translate, your brain will take shortcuts. Sometimes those shortcuts short-circuit opportunities for meaningful interactions. So, before you step foot into a pitch meeting again, or for the first time, spend some time reflecting on the details of your presentation so you can discover your own fundraising-success correlations. That way you can effectively circumnavigate the punch of a potential investor’s unconscious bias.
- Tweak Your Fundraising Mindset
Simply having a great business idea is not enough to get a venture capitalist to invest millions in your company. Back in the day, VCs were in a race to discover the next Facebook, eBay or even Spanx, but now they’ve cooled their heels and are becoming increasingly selective about the companies they invest in. Studies show that the average deal size has shrunk as well as the number of seed-stage deals.
If you’ve ever watched the TV series Shark Tank, you’ve watched the Sharks circle the water and go in for the kill with anyone who dared to step into the proverbial tank without a strong sense of sales, marketing, and other key financials and data. It makes for good reality TV and it is a lesson for us in real life. Where do you start, or level up?
Fans of the British-American author and speaker Simon Sinek know any great endeavor starts with knowing your why. How does this translate within your own pitch? For every point you make in your pitch deck, you must be able to respond to any form of the “why” question that a prospective investor might throw at you. You might be asked: Why do you perceive this or that to be a problem in the market? Why do you believe you–or your team–are bringing a viable, sustainable solution to the market? Why now? Why this amount? Why is this problem you identified and are building this business to solve relevant today, or critically important? You should spend time crafting responses that not only reinforce what drives and scales your business, but also why your investors should go beyond the usual level of care and concern about your success.
“Fundraising process is hard!” laments Nancy Korayim of Metrospeedy, a businesswoman who recently raised five million dollars. “Raising our seed round initially involved much research, networking, strategy planning, pitch preparation, and endless back-to-back Zoom calls. We received our fair share of noncommittal investors until we pitched to our existing investor group which shares our vision, and growth plans and believes in our ability to execute. Focus on approaching investors who are interested in, and know your industry. Find common ground with them, be authentic and highlight your company’s innovative game-changers.”
Indeed, a key aspect of your fundraising mindset is also knowing your own value. In your quest for likeability, do not trade or discount the value of your business for it. Your business’s value proposition is like an uncut diamond. Your singular task is to slice and dice the numbers so that all the facets of your idea shine brilliantly. Just as you would conduct A/B tests of your product marketing, platforms such as Docusend and CRM tools such as FounderSuite can prove priceless for helping you assess and refine your own story’s key messaging.
Alicia Hanf, Founder and Managing Partner of Dear Mama Ventures adds, “My fundraising mindset evolved from who is giving me money into who do I want to make money for … and why are we mutually a good fit for each other? This paradigm unlocked how I now examine and discuss each investment opportunity. Your startup offers everyone who invests in it a chance to multiply their investment significantly, and you are giving them as much of an opportunity as they are giving you. This awakening challenged me personally as well, to know my “why.” To not only understand the significant value my business brings to the market, but also the impact my business has on the communities I serve. Make your mindset shift to a personal masterclass in rare grit, embracing each obstacle as an opportunity to be better and, above all else, knowing why and how you are adding value to the market. This will fuel you to keep going and, in the end, may be your biggest competitive advantage.”
- Find Your Voice & Turn Up the Volume
Simply put, speak to everyone … speak up for yourself and those women coming behind you. “Some of my best funds have come through warm introductions and others have come through by striking up what felt like random conversations while waiting in line to order a cup of coffee,” Myhrvold adds. “One time, I was attending a conference and slipped away on a break to find a cup of coffee. As I was waiting in line, I noticed the guy next to me and I was wearing matching red trousers. I thought about breaking the ice by making a simple joke about what great minds think alike. We laughed, which sparked a good chat. I learned he was a senior executive at a tech company with a household name. We did the networking dance, exchanged business cards, and promised to stay in touch. I did. I brokered a few introductions to people that he mentioned he was interested in meeting. He followed me on LinkedIn and kept up with my postings. One day, he suggested we collaborate. Jackpot!”
On any given day, you never know who you might meet. You never know who is listening to you and organizing the information their brain is receiving to form a judgment about whether or not to help you. Be genuinely curious about the people around you and invest in your relationships. One of the best ways to accomplish this is to actively look for ways to be both a giver and a gracious receiver. Be sure to be clear in your ask from your network and offer to support them in return.
We all operate at some level based on unconscious biases. Your mission is to examine them. And, while the odds might seem like they are stacked against female and minority founders, I encourage you to speak up, share your stories and pay it forward. It is up to all of us to change this narrative.
According to Neetu Puranikmath, a venture capitalist investing in seed and Series A companies, “we must know how to work within a flawed system even as we lobby to improve it. You can start by checking your own expectations of fairness in the fundraising process and adjusting your mindset accordingly, making sure you know your stuff and raising your voice in support of other female founders.”
Of course, funding challenges are not unique to the VC community. Terica Kindred of Kindred Mortgage Group recalls that “despite a track record of having successfully and profitably flipped 400 homes, it took many years to find consistent capitalization sources l that would put trust in me.”
My hope is that the modern investor community will advocate for inclusive growth and capitalize more equitably. Deploying dollars for the benefit of female founders is a clear-cut way to boost the global economy, certainly as we recover from adverse pandemic impacts.
And for the women. It still will not be easy. Business fundraising even in the best of circumstances is challenging. When you find yourself “swimming upstream,” these mindsets and maneuvers can help position you to win while also better aligning the venture capital landscape at large.
Forbes Business Council, Newsweek Expert Forum and Rolling Stone Culture Council Member Merilee Kern, MBA is an internationally-regarded brand strategist and analyst who reports on cultural shifts and trends as well as noteworthy industry change makers, movers, shakers and innovators across all categories, both B2C and B2B. This includes field experts and thought leaders, brands, products, services, destinations and events. Merilee is Founder, Executive Editor and Producer of “The Luxe List” as well as Host of the “Savvy Living” lifestyle TV show that airs in New York, Los Angeles, San Francisco, Miami, Atlanta and other major markets on CBS, FOX and other top networks; as well as the “Savvy Ventures” business TV show that airs nationally on FOX Business TV and Bloomberg TV. As a prolific lifestyle, travel, dining and leisure industry voice of authority and tastemaker, Merilee keeps her finger on the pulse of the marketplace in search of new and innovative must-haves and exemplary experiences at all price points, from the affordable to the extreme. Her work reaches multi-millions worldwide via broadcast TV (her own shows and copious others on which she appears) as well as a myriad of print and online publications. Connect with her at www.TheLuxeList.com and www.SavvyLiving.tv / Instagram www.Instagram.com/LuxeListReports / Twitter www.Twitter.com/LuxeListReports / Facebook www.Facebook.com/LuxeListReports / LinkedIN www.LinkedIn.com/in/MerileeKern.