Most entrepreneurs know that capital is the lifeblood of their business. Without capital, an idea simply remains an idea. As the founder of a startup, you’ll quickly find that raising capital is one of the most important efforts to keep your business running – if you run out of money, your business could be over; if you do not get the money you need to jump start your business, your idea could remain in the box forever.
Raising capital for a startup is no easy feat for any entrepreneur. However, as a woman, those challenges tend to be magnified. With women making up only 20% of all startup founders and only 11% of investment partners in the US, female representation is severely limited in the entrepreneur and venture capital space, adding additional challenges to the already daunting task of fundraising.
While we’ve seen progress in the number of females represented in early-stage companies and venture capital over the past few years, there is still plenty of room for improvement. Jumpstart Foundry Managing Partner Eller Mallchok was joined by Bette Parolini, CEO of VidaFuel and Caroline Beckman, CEO of Nouri to discuss their experiences, share their strategies, tips, and advice that can help other female founders navigate the complexities of raising capital.
Highlights from the Webinar
Fundraising Strategies: Advice From Two Successful Female Founders
With no background and training in entrepreneurship or business development, Bette Parolini started her fundraising efforts for Vidafuel through local angel investments in Nashville. In 2018, Bette’s startup received seed-stage funding from Jumpstart Foundry, which was the first traditional VC to invest in Bette’s healthcare business. Currently, Bette has multiple strategic angel investors and two VCs investing in her company.
Caroline, who has successfully fundraised for businesses in the past, is now focused on raising capital for her current startup, Nouri. While she has been successful in her fundraising efforts, she notes that “it is one of the most difficult if not the most difficult things an entrepreneur can do.”
To navigate the path in landing the next top investor for your startup, Bette and Caroline discussed in full detail the following tips from their experiences that can be helpful:
- Do your homework.
- Determine exactly how much capital you need to raise to reach your next major milestone.
- Do not raise more capital than you need.
- Be clear and specific about what you need.
- Be organized with your documents and the execution of the process.
The Challenges of Fundraising as a Female
There’s no question that fundraising as a woman comes with it’s own unique set of challenges. Caroline pointed out that can women tend to be more relational than men, and because of that, she found that in some of her initial conversations with investors, she was more focused on building the relationship and being “nice” rather than being direct about her ask. She recalled an instance where she invested a lot of time and money flying back and forth to meet with an investor, all for it to never come to fruition. By being direct and upfront at the initial meeting, she could have avoided a lot of expensive mistakes.
Bette highlighted some of the inequalities women experience every day in both business and in raising capital. She pointed out that as a female, she received many personal questions like “do you plan on having a baby?” “Are you married?” “When you have a baby, will you lose interest in the company?”
While it is illegal to ask those questions, it still happens. So, it’s important to anticipate the possibility that they could be asked so you can properly prepare for how to respond and shut it down.
The Advantages of Fundraising as a Female
Fundraising as a female isn’t all bad. There are actually quite a few advantages that women experience when raising capital. Caroline noted how women tend to be more organized than men at times, which is a quality many investors appreciate, and it also makes it easy to quickly pull together the documents investors need to invest in a deal. In addition, for Nouri specifically, Caroline points out how she herself represents their target market. She states, “I am the consumer, so the fundraising process and the story behind it is very in tune with her consumers and resonates well with investors.”
While women are underrepresented in the entrepreneurial and investment space, Bette noted how there are people in the industry that are working hard to change that. In fact, there are now funds that have been created to specifically invest in women as well as funds that have increased initiatives to invest in women-owned businesses, giving women an advantage that men would not have otherwise.
Leveraging Relationships and Networks in Fundraising Efforts
For Caroline and Bette, one key factor for the success of both of their fundraising efforts is the powerful connections and networks they had established. Caroline points out multiple times how relationships are the best place to start and are so important when raising capital. She says, “Especially in 2020, when we are fundraising 100% virtually, if we didn’t have any relational equity in any type of lane or avenue where someone could vouch for us, it would make [fundraising] even harder.” While random outreach can be successful, Caroline believes that the power of networking in helping raise capital for female founders is unmatched.
In addition to making connections to raise capital, Bette pointed out how she had wished she had enjoyed the fundraising process early on. Instead of being discouraged by the no’s, she advises that you have fun as you meet new potential investors and realize all the people you are talking to are a unique subset of people who are usually very passionate about changing the way things currently are. It’s important to realize that even if they don’t invest in your company, they are great people to meet and could point you in the right direction to others who could be a better fit for you and your company.
Grow Your Connections with the Jumpstart Refinery
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