8 Women in Venture Capital Share Their Best Fundraising Advice for Female Founders

March 8, 2021
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Statistically, women-led and owned businesses make more money but they’re still woefully underfunded, especially when it comes to venture capital. And, unfortunately, those stats aren’t improving year-over-year. A recent report published by Fortune discovered that companies founded by women received less VC investment in 2020 than in 2019. By the numbers, female-founded companies raised $3.31 billion in VC in 2020, or 2.2% of the year’s total sum, compared to $3.5 billion and 2.6% in 2019.

So, we reached out to eight women in the venture capital industry and asked them to share their best fundraising advice for female founders—and they didn’t hold back. From what you should (and shouldn’t) include in a pitch deck to how to identify the right investors for your business (spoiler alert: they need to bring more than just money to the table), scroll on for their words of wisdom, including insight into how they choose which companies to fund. Needless to say, if you’re an entrepreneur who’s thinking about bringing VC into your business, you’re going to want to heed their advice.

Sarah Kunst, Managing Director, Cleo Capital

How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur? 

I look for founders with an incredible amount of grit, coachability, subject matter expertise, and resilience. I look for businesses in large markets that I’m excited about. If I can find all of those things in a pre-seed startup, I’m likely to invest. 

What are three crucial elements everyone should include in a pitch deck when raising money and why? 

Make sure you explain the problem you’re solving (and the solution you’re building!), why your team is the right team to solve the problem, and why the market is large enough to build a billion-dollar company. 

What are some of the most common mistakes people make when raising money and how can others avoid these mistakes? 

Mistakes to avoid are bad decks and pitches. There are tons of resources available from simple searches about what a good pitch deck looks like and how to pitch angel and pre-seed investors effectively. Make sure you’re putting your best foot forward by preparing both your pitch deck and pitch meeting speech.

What advice can you share for entrepreneurs on partnering with the right investors? 

If the terms are clean and the money is green, they are most likely the right investors. At the earliest stages, most founders won’t have a surplus of options so making sure you can live with the investment terms is very important so you can raise money and keep growing your business. Resources like CooleyGO and YC have great examples of boilerplate investment terms. 

What is your #1 piece of financial advice for new entrepreneurs?

Save money on things that don’t matter. Fancy offices or expensive business cards likely don’t matter, great employees do. 

Jaime Schmidt, Co-Founder, Color

How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?

My fund Color invests in things people buy, and the places people buy them. This includes personal care, food and beverage, retail, publishers, tech-enabled marketplaces, and e-commerce platforms. 

To make an attractive investment, first and foremost the product must offer a clear solution to a problem, and provide for a timeless need versus a fleeting trend. I look for brands that start out catering to a niche customer base, but that can show a clear path to reaching the masses. I’m excited about founders with an authentic passion for what they are building and who can make a case for why they are the right person to be building it. 

What are three crucial elements everyone should include in a pitch deck when raising money and why?

It’s important to show a clear understanding of the competitive landscape and how your product and brand will add value to the category as a whole. Show who the existing competitors are, those on the rise, and where your brand fits amongst them. The best pitches focus not on how a product is better, but on how it is different. 

Investors will also want to see your distribution strategy. Lay out your plans for where the products will be sold, whether that’s through your website only or across different retail channels. This requires knowing what customer demographics you are targeting, too. I’m personally drawn to brands with an openness to exploring sales channels otherwise overlooked by competitors in their space. For example, when I was building Schmidt’s Naturals, I wanted my products available to the mainstream consumer, where most of my competitors in the naturals space catered to a more niche market.

Show images of the standalone product, plus pictures of it being used. This might sound obvious, but so many decks are lacking bold, high-quality photos. These are especially important in the earliest slides, so the investor has a clear understanding right away of what you are selling. The deck should include colors and design elements of the brand, too. This shows that you care about how your brand is represented and that you understand its unique positioning in the category. Make it pretty!

What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?

The biggest mistake I see is founders raising too early.  Fundraising means giving up equity in your business, so the earlier you raise money, ultimately the more it will cost you.

Media often paints a picture that landing investor money means a brand is positioned for guaranteed success. But this isn’t necessarily true, and founders don’t always spend investor money wisely. I like to encourage founders to bootstrap for as long as possible—this teaches you how to be scrappy and intentional with your spending, which will serve as a valuable skill throughout the growth of your business.

What advice can you share for entrepreneurs on partnering with the right investors?

The right investor will ask smart, relevant questions and show real enthusiasm for you and your brand. Be wary of those you suspect might have different goals for your company. Listen to your gut, and don’t settle for partners you aren’t excited about working with.

Not everyone will get what you’re trying to do, and that’s okay. Be patient, and believe in yourself. I recently tweeted: “10 yrs ago I started a business that, as a VC, I probably wouldn’t have invested in. As a founder, I was all in, but as an outsider, there was good reason to be skeptical. 7 yrs later the company sold for $100M+. The rejection you might see today is no indicator of your potential.”

What is your #1 piece of financial advice for new entrepreneurs?

Allow yourself to be simultaneously frugal and willing to spend by knowing where to cut corners to invest in things that matter most. This takes some of the rigidity out of financial management, while still providing boundaries for responsible spending.

Sydney Sykes, Co-Founder and Co-CEO, BLCK VC

How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?

I look for a combination of two things: vision and numbers. If an entrepreneur has an incredible vision for her company and she’s been able to motivate others to believe in her but the numbers aren’t incredible, I may be willing to invest. On the other hand, if an entrepreneur has incredible numbers, but the vision of what the business will be in the future is still developing I may also be willing to take a chance. Ideally, she has the perfect combination: an incredibly strong vision with economics or growth that is starting to show traction.

What are three crucial elements everyone should include in a pitch deck when raising money and why?

1. Why your problem is important? Why should you/I/the customer/the employees care about this? You should be able to easily convince me about this. It means this is an important issue that needs to be solved and you’re the person who understands that best.

2. Any traction. This comes back to the numbers. What indications are there from the market/customers that this will be successful? It could be sales, but it could also be customer conversations, conversion rates, or engagement.

3. Growth projections. How do you predict sales to grow and how many customers will it take to get you there? This helps me (and you) understand if these assumptions are reasonable. It also helps me understand if this is a long or a short run investment? Some companies need a little bit of money to go really far, and others need a lot more. Neither is right or wrong, but I need to know if your expectations for the business align.

What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?

A lack of focus on the target customer. Especially when seeking venture capital investments, entrepreneurs frequently aim to have the largest TAM possibly and therefore try to expand who their target customer is. However, these two things aren’t inherently linked. There can be a large total addressable market, but your product needs to appeal to individuals — and you need to know exactly who those individuals are.

What advice can you share for entrepreneurs on partnering with the right investors?

Look for someone who answers your calls and texts. You should feel comfortable asking them questions and reaching out to them, even if they may not have the answer to your problem. This free communication can set the tone for the relationship.

What is your #1 piece of financial advice for new entrepreneurs?

Make sure the unit economics makes sense. Especially with consumer companies, there needs to be an understanding of how each customer could be profitable. Ultimately, incredible growth is unsustainable without strong unit economics.

Jesse Draper, Founding Partner, Halogen Ventures

How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?

We invest in consumer technology so I start there. The three main things I look for in an entrepreneur are: 

1. Founder, founder, founder. Why are you the best person to run this company? Are you going to take it all the way? Are you in it for the quick exit or the 10-year marathon? Do you know your strengths and weaknesses? And mostly, is this someone I want to get into business with?

2. Product. How is your product a unique offering? Is it defensible? If it’s a busy space, why is yours the one that will stand out?

3. Traction. This could mean $1 million in revenue, 100,000 users but don’t let those numbers dissuade you, many people especially in hardware need to raise capital to get their product to market. If that is the case, show me some research or data that there is a need for this.

What are three crucial elements everyone should include in a pitch deck when raising money and why?

A. Know your market size. Make sure you are going after a billion-dollar market. As a venture capitalist, my business only works if you sell your company for a billion dollars, I have many investors who I need to pay back. If you are going after a $50 million dollar market, my business model doesn’t work. I often have to say to founders, go find the bigger market here and come back to me.

B. What problem are you solving? The best businesses are built out of a need. Be clear about what your solution is and why you are building this company. 

C. The ask! I am always perplexed when this isn’t in the deck. What are you looking for? $1 million? Advisors? Put the ask in the deck and it’s much easier to ASK for an investment, etc.

What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?

Founders who think they have all the answers. I certainly don’t have all the answers and I don’t believe anyone should ever think they are the smartest person in the room. Whenever I see a  founder who tells me, “This is the only way it will work.” that is a big red flag and I usually run in the opposite direction. The best companies are able to pivot and evolve when needed. It’s never a straight line up a mountain, there are ups and downs, and who knows, we may end up in an international pandemic!

What advice can you share for entrepreneurs on partnering with the right investors?

Remember one thing, not all money is good money. This is a long-term relationship. A marriage you cannot get out of. It will be a 10-year partnership. Do your research. Call their other portfolio companies to see that what their work ethic is like, how they partner with founders, are they in the trenches with you, or hands-off. One bad investor can poison the well. You will find the right capital for your company even if it takes a little longer because you have to turn some down. Be diligent and selective. 

What is your #1 piece of financial advice for new entrepreneurs?

Fundraising is a grind. Don’t get discouraged by the “no’s.” I often have founders say, “Well, everyone said ‘no.’” And I say, “Who is everyone?” And they respond with, “Well, I talked to eight  investors!” That is NOT a lot. Plan on having 100 meetings because you have to cast a much wider net to find your investors. If you plan on having 100 meetings, you will be pleasantly surprised because it probably won’t take 100. Also, ask for more. Get clear on the number you think you need and double it.  It is what I like to call a “misc” category. If your goal is to raise 1 million, go for 2 million instead. It always takes more money and more time than you think. Set yourself up for success. 

Arielle Loren, Founder, 100k Incubator

How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?

The most successful and scalable businesses place a heavy focus on their analytics and numbers. They pay attention to their mistakes, learn fast, and are quick to pivot to where they’re seeing traction, whether that’s an increase in their user base, higher revenue, or increased profitability. We love women entrepreneurs who are obsessed with those details, and who aren’t afraid to get creative to reach their growth goals. We don’t expect things to go smoothly, but we do expect for the bumps to be measured.

What are three crucial elements everyone should include in a pitch deck when raising money and why?

Know your conversion rates before going after large amounts of capital. If I give you something small like $10,000, could you take 10% of that ($1,000), invest it in an ad campaign, and turn it into $2,000 in sales? Can you go granular and know how much it costs you in ad spend just to get one customer? Could you measure and see how quickly a first-time customer makes their second purchase? Too many entrepreneurs get caught up in creating a perfectly branded pitch deck when really the decision comes down to proof of concept and real-time data. Gary Vee posted a great quote recently that said, “When you overthink, you slow down and you get passed.” Not every business can start small, but the vast majority can. Get a small amount of capital, start testing, collect your data, know your conversion rates, and then think about an investor (if that’s really what you want to do).

What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?

There are so many entrepreneurs not taking the time to get educated on all of their funding options, and part of that is because angel investors and venture capital have become so popular in the media, that entrepreneurs jump to make that their desired funding vehicle. The vast majority of entrepreneurs do not need venture capital; we teach and help entrepreneurs access 11 other types of funding. When our members first enter the 100K Incubator app, they’re asked to take our 50-video boot camp on how to prepare for funding, what their funding options are, and how to use funding to scale to their first $100,000 in annual sales. And for the entrepreneurs who are already earning over $100,000 in annual sales, they still find extreme value in the boot camp, because it breaks down funding and scaling in a way that most of them have never heard. Getting the funding is the easy part, they actually have a lot of options, but learning what drives and scales their business, getting into the data, that’s where their true talent, grit, and creativity is tested as a business owner.

What advice can you share for entrepreneurs on partnering with the right investors?

When partnering with the right investor, it’s more about having an honest conversation about what they expect in terms of a return on their investment, how fast they want it, and how much control they expect to have in the business. Then it’s making sure that you have a skilled lawyer to put those terms into contracts so that there’s little misunderstanding down the road. Most small businesses don’t need investors. What they really need is access to capital, customer acquisition and retention process, a deep understanding of how it works for their own business, and how to scale that into a six and seven-figure in sales with a healthy profit. The TV and social media world have made angel investors and venture capital funding sexy without telling how much stress it puts on founders, and how much it costs financially. At a minimum, make sure your investor is bringing something to the table other than money because if your company is successful, that investor capital you took in exchange for your equity will end up being the most expensive type of capital you’ve ever taken.

What is your #1 piece of financial advice for new entrepreneurs?

Make your move, learn from your mistakes, and trust the process. How much you raise in funding is nowhere near as valuable as what you learn along the way. And while helping women get access to funding is rewarding and an accomplishment in itself, it’s far more exciting to help them use that capital to create real sustainable six-to-seven-figure businesses that change their lives, their families’ lives, and their futures. We love to be the catalyst and support system for more women understanding the complete cycle of entrepreneurship. Getting funding is truly just the first step.

Elizabeth Edwards, Managing Partner, H Venture Partners

How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?

We’re looking for next-generation, iconic consumer brands that we can help scale from $0 or $5 million in revenue to $10 or $50 million in revenue within a handful of years. These are products in your home that you use every day, like your Peloton bike, baby food, or skincare. We look for brands that are fundamental to life, better for human health, and better for the environment, and we like to support underrepresented founders and consumer groups of all kinds. 

In particular, we also like businesses that have one or more of the following in the business model: superior products, scientifically-proven claims, intellectual property, network effect, owned channels, the convergence of media/retail/brand. We tend to lean towards inclusive brands vs. exclusive, and we’re particularly strong with omnichannel brands that are going to ultimately scale in retail.

What are three crucial elements everyone should include in a pitch deck when raising money and why?

The pitch uses a combination of stats, calculations, product photos, and charts to tell the following story: 

What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?

Not using DocSend is a common mistake; it’s industry standard in venture capital, and anyone who tells you otherwise is suspect. There was a Twitter controversy over this not long ago, but as Ronald Regan said, “Trust but verify.”  There are a lot of thoughtless (or bad) actors out there, who will forward your deck on without thinking – because it’s not their business, it’s yours. If you’re sending your business plan to strangers, DocSend is a good way to track and control it. If you are sending it to a current investor in your company, go ahead and bury them in PDFs of decks and attachments. But there’s no reason to do that with strangers.

What advice can you share for entrepreneurs on partnering with the right investors?

Make a big list and do your research. You should be putting a list of 100 investors together based on stage, sector, and geography focus. Crunchbase Pro is relatively cheap, and you can get access to thousands of VCs this way. Then, put together a “Perfect Triumvirate” of three venture investors that complement the weaknesses of your management team; those that can help you with strategy and open their network. It’s important to have three deep pockets in any deal. It’s tough for the entrepreneur, and the investors, if there’s only one set of deep pockets when times get tough — as they invariably do.

What is your #1 piece of financial advice for new entrepreneurs?  

Cash is king. Spend your venture capital money like you don’t have any money. Growth hack, test, iterate, and once you figure out a way to get a 7x LTV/CAC, go for it. Raise more money, hire the absolute best talent money can buy and your cap table can bear, and then change the world.

Maria Salamanca, Investor, Unshackled Ventures

How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?

We are sector agnostic. We know founders see the world differently than everyone else so we are open to all sectors. Like most VCs, we look to invest in companies that can grow at “venture scale” in large market opportunities.

What are three crucial elements everyone should include in a pitch deck when raising money and why?

Answering the question: what is new about your solution that others haven’t tried before (what’s your secret sauce/unique insights), why is this the right team to tackle this, and why is this a massive opportunity?

What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?

Founders don’t always do their homework on the competitive landscape, many times only focus on big older companies but the real competition is often from peers only a few steps ahead or behind. 

What advice can you share for entrepreneurs on partnering with the right investors?

The right investor will be a combination of “they get what I am trying to do” and “they push me to think deeper about the problem”

What is your #1 piece of financial advice for new entrepreneurs?

Figure out what is the best form of capital that will help you scale and why (VC, loans, bootstrapping, PE, etc) because this impacts how you think about company building. There are many ways to build a profitable business and venture is not always the right capital to get you there.

Maya Baratz Jordan, CEO and Founding Partner, Founders Factory New York 

How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?

As an early-stage investor, I always weigh the team’s DNA heavily when considering an investment. A business at the startup stage will go through many changes—and will look and be as different two years in as a newborn is from a toddler. It takes a lot to keep a business not only alive but thriving. That’s why over 90% of startups fail. The consistent piece is the team. Does the founding team have the unique superpowers required to get their specific company off the ground, along with the experience to allow them to stay the course and attract the best talent and returning customers as they grow? 

The second piece that’s important is the market: Is the ultimate market this business is targeting large enough to be investible? For a business to be investible, it needs to generate returns for investors that make it well worth the risk and opportunity cost. There are a lot of great examples of successful businesses that are not investible, but still wonderful businesses. For an investor, the potential reward needs to be multiples higher than the risk—which often means that the company can serve a very large group of people. 

The third piece that’s important is the problem that’s being solved and how it’s being solved; this is the glue that bridges together the first two pieces (i.e., the founders and the market); it’s what dictates whether or not the business is truly fitting the needs of the market it is targeting.

What are three crucial elements everyone should include in a pitch deck when raising money and why?

What you put in your pitch deck will depend on the stage of the company. The general areas you’ll want to cover include, but aren’t limited to, the problem you are solving, how big that problem is (market), and what it is about your company that puts you in a position to win. You’ll want to weave them all into a story with a natural arc; it needs to flow in a way that would answer someone’s questions as they listen to your pitch. 

If you’re an early-stage business with little or no traction to show, you’ll want to highlight what it is about your business that will defend it over time and help you win the market over, despite current or future competitors who enter that market. Sometimes that defensibility relies on the experience of the founding team, if relevant. For instance, if you know that the CEO of a wildly successful venture is now starting a new company in a related space, their experience and learnings from running their previous business will likely help them in their new venture. You ideally want to focus on the things that differentiate your company from competitors, specifically zeroing in on the aspects that can’t be easily replicated by others and that are necessary for the business to grow and be successful. 

If you’re a company with traction that shows you’re growing quickly, a so-called hockey stick growth chart can help tell the story of why you are already running a rocket ship. Every company should have its own way to express its ultimate “right to win.”

What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?

One of the mistakes I’ve seen founders make when pitching is speaking but not truly listening. Partnering with investors is a two-way street. The questions and feedback you will get will help guide you to refine your pitch as you go, and perhaps even help your business. And you never know when you may get a “no” from an investor now and perhaps that turns into a “yes” in a later stage of your company. Relationships matter and you can use the fundraising process to grow relationships, even with investors who say no. It’s likely that, especially if this is your first time fundraising, most of your pitches will end up with rejections, so you may as well use each interaction as an opportunity to learn. You also want to know your pitch like you know your business; don’t memorize it or it will feel unnatural. The best pitches feel like conversations.

What advice can you share for entrepreneurs on partnering with the right investors?

Partner with investors who can help you beyond writing you a check and help in the areas you actually need help in. Try to avoid bringing on partners who either don’t know your market or haven’t invested in companies that are in the same stage your company is in. You’ll want to partner with investors who are empathetic to the journey you’re on and can be helpful in the right ways when you need help, whether that means giving you the right advice or making the right introductions. This is why former founders or operators within startups make great angel investors; they understand the challenges of building a business and know the importance of helping a company beyond the capital they put in. You’ll also want to partner with investors who generally agree with the path you’re going on so they can best support it.

What is your #1 piece of financial advice for new entrepreneurs?

Your biggest financial job will be ensuring there is ultimately more money coming into the company versus out. It sounds simple, but if you have this mandate in mind, you’ll be protective of your runway when you need to be and push your company to grow in a long-term, sustainable way so you can ultimately be independently profitable. You don’t want to spend money on frivolous, performative things upfront. Think about your runway as fuel; if you’re close to running out of it, the company can quickly grind to a halt. Spend money where it’s truly needed and understand exactly how every dollar you spend will ultimately get your company to your long-term goals. Most people in successful early-stage companies wear multiple hats and have the urgency/scrappiness to pull things off with limited resources for this reason.

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