If you’re a woman trying to raise venture capital, you might start to feel like you’re living in a man’s world.
Research shows women investors only make up 4.4% of the industry, which may be partly to explain why women-led businesses only get 4.2% of venture capital funding. But research also shows that male entrepreneurs are 40% more likely to get VC funding than female founders.
While the stats prove the entire industry still has a long way to go, not all female entrepreneurs have had a difficult time raising venture capital. Below, six women who have successfully acquired funding explain how they did it, what problems they ran into, and what advice they’d give to others.
Founder of luxury hair distribution company VIXXENN
With her busy lifestyle, good, stylish hair has always been a concern for Sanchez. Her company, Vixxenn, partners with hair stylists to offer high-quality hair extensions to clients. While the black haircare industry is estimated to reach $761 million by 2017, according to market research firm Mintel, the projection leans closer to $500 billion when taking into account things like weave extensions, wigs, styling tools and appliances, and more. Still, Sanchez sometimes found it challenging to explain the concept to investors since most aren’t familiar with the space.
However, fundraising gave her more clarity about the business objectives and what she needed to do to succeed. In the end, her route to VC funding was all through “relationships, relationships, relationships.”
“I met my lead investor, Charlie O’Donnell of Brooklyn Bridge Ventures a year before I started raising,” recalls Sanchez. “We kept in touch and he had a chance to see my business evolve. My biggest advice is to invest in relationships, seek people for advice and not funding, and you’ll build the relationships that will make you well positioned for a raise.”
Cofounder and CEO of uBiome, a platform for microbiome sequencing
Founded in 2012, uBiome raised an Angel round, then joined Y Combinator and became funded by venture capital firm Andreesen Horowitz. The company has raised $6.5 million total, but it didn’t come without some lessons.
“We had a lot of crazy experiences, including when this one angel invited me up to his place for a late night meeting and I showed up with my cofounder, who is over six-feet, five-inches and built like a tree,” she says. “It was kind of awkward for him, I think. He kept on trying to be flirty and then sending my cofounder these weird glances. The worst, though, was when people would ask me, ‘So what do you do there?’ and I would answer ‘I’m the CEO’ and they would have this weird look on their face like ‘you’re the CEO?’”
The hard thing about being a female entrepreneur, says Richman, is that people will assume that you’re not technical or smart or aggressive or competent enough and you’re going to have to disprove that kind of thinking pretty early on.
“Lead with the credentials you have, whether that’s an undergrad in a relevant field, domain experience, a high-powered MBA, or whatever,” she suggests. “Talk about aggressive things you’ve done. You don’t have to say it in an aggressive way, but let them know that you are a former wrestler, that you traveled around the world by yourself, that you started a company in high school, or whatever you have done that they will think is badass. You don’t have to be defensive or have a chip on your shoulder, but I think you need to disarm those assumptions up front.”
For other female entrepreneurs, Richman advises to talk to hundreds of people when raising capital. “Really, if you talk to 50 people and they all say no, you’re only about one-sixth the way through of the total you’ll need to talk to. It really is a slog,” she explains. “Iterate on your pitch, listen to what investors are saying, but also just keep going.”
Cofounder of developer tool Branch Metrics
As the only woman on her founding team, Seghete always had questions about gender norms, such as whether she should behave differently in a room filled with male investors. But since successfully raising $3 million in September from NEA, Greylock, Lightspeed, Redpoint Ventures, and a few angels, Seghete’s best advice to other female entrepreneurs is “to not focus on the fact that they are a woman.”
While Seghete does admit that it’s more challenging for women to raise money, she says it’s more of a confidence issue than anything else.
“I have watched guys and girls pitch in my classes at business school, at launch competitions, and startup weekends and most times the guys are more confident when they pitch,” she says. “I think if we solved the confidence issue and start believing that we are no different, our chances of raising money will become just the same. It’s a self-fulfilling prophecy.”
Instead, Seghete advises to focus on “having a kickass product that solves a real problem” and an idea that’s big enough to take on market opportunities.
Founder and CEO of JOOR, a private online fashion marketplace for wholesale buying.
Bijoor believes that it’s very “en vogue” to invest in woman right now, so if your company can show “positive metrics,” then asking for funds shouldn’t be more difficult if you’re a woman.
“Venture funding is about trends,” she tells Fast Company. “VCs like to invest in trends.” While you’re raising money, figure out what kind of partner you want. “Do you want partners who are going to help with strategic and operational issues or partners who will let you run the business and stay out of your way?” says Bijoor. “There is merit to both, but knowing what you want before you start to raise capital will help you to not be disappointed with the outcome.”
Entrepreneur, managing partner at Vista Venture Partners and lecturer at Stanford Business School
As an entrepreneur, Mandelbaum has never had issues raising money and says it’s critical to convey confidence.
“To raise money, you need to be a great leader, a person who inspires others,” says Mandelbaum. “A founder needs to attract the best people, since it’s your team that is critical to build an awesome company. Confidence and passion are key.”
As a VC, Mandelbaum advises founders to “assemble an incredible team” and “know who will be your next hires.” She also suggests talking to other entrepreneurs–both men and women–about the fundraising process.
“Learn as much as possible about the VCs you will be pitching,” she explains. “Pitch VCs who understand your space and who will add value. Know your business inside and out. Product market fit is key. Be a good listener, answer questions directly. Have a clearly articulated business model. Understand the financials.”
And when you do become discouraged, remember that you will raise money. It may take a little longer, but it’ll happen, says Mandelbaum. Just look at recent fundings for startups like Accompany, ClassPass, Branch Metrics, and Ditto or later stage companies like EventBrite, Minted, and Medallia, who all have female founders.
“The more women we have running successful companies, the easier it will be for other women to raise money,” she says.
Cofounder and CEO of VIDA, an e-commerce platform that aims to connect designers, artists, producers, and consumers.
Last month, Mendhro and her cofounders closed $1.3 million in seed-stage investing that included backers from Beehive Holdings, Google Ventures, The Valley Fund, Slow Ventures, Universal Music Group, Nanon, among others.
While Mendhro admits that it is “a bit tough” to raise money, she says this challenge is experienced by “e-commerce companies across the board” because it just takes longer to scale the e-commerce businesses.
As for the gender issue, Mendhro says raising money might be more difficult for women, but simply because women have a hard time asking. “There’s this idea that we don’t ask to get a higher salary. We don’t tend to negotiate. Statistically speaking, we tend to kind of feel that, if we’re doing a great job, it will be recognized.”
But when you’re fundraising, you’re having to go out, ask for money, and know that you’ll be in an uncomfortable position because not everyone is going to think your idea is great. This experience might be more difficult for women to accept than men, says the Harvard Business School grad.
Mendhro advises all entrepreneurs to only raise money when you know people actually want what you have to offer and the market is ready for it. It can be easy to think that people will want your product simply because it’s your product, but this isn’t always the case.
While the stats do show that things are easier for men in the VC world, the examples above prove that ease shouldn’t stop you from doing what you want. It might take a little more effort–more time to network, more quickness in learning–but certainly the road less traveled will lead to endless opportunities and, hopefully, a successful funding round or two.
Correction: A previous version of this article didn’t mention the further projections for the black haircare industry by market research firm Mintel.