Female founders: let’s talk fundraising

A couple of weeks ago we brought together a group of 50+ founders, investors, and advisors from across the startup community to discuss fundraising — particularly to discuss the challenges female founders face when raising, how they can be overcome and ultimately what needs to change.

It’s well documented how much harder it is for female founders to access capital than their male counterparts. So what needs to change? And what’s the best way to successfully secure capital? We asked a panel made up of investors, founders, and an advisor for their view, experiences, and lessons learned along the way. Our Partner, Stefania Ponzo, spoke to:

✨ Katrin Herrling, CEO & Co-Founder at Funding Xchange

✨ Maren Bannon, Co-Founder and Managing Partner at January Ventures

✨ Sarah Crawley, COO at SymTerra

✨ Stacy Kim, Partner at Wilson Sonsini Goodrich & Rosati

Here’s what we learnt:

1/ There is still a long way to go to tackle the gender funding gap at a VC level

It’s clear the VC industry needs to do more to change the distribution of capital. In 2021, female founders secured just 1.1% of all VC investment in Europe, and 8.8% went to mixed-gender founding teams. There is only so much female founders can do to solve this issue, the VC industry needs to work harder at tackling this issue from within, particularly ensuring a diverse composition on their investment teams.

2/ Be bold and lead with your vision

“It’s not over selling it’s painting the big picture” — Stefania

Female founders can be more risk averse than their male counterparts, often holding back from fear of overvaluing, overpromising and underdelivering.

When pitching, VCs want to picture you running a 500–700 person company, and they want to see you as that person who could lead that big business, says Maren at January Ventures. She advises not being held back by what you think you can safely achieve. Instead, communicating a big , and leading with it when pitching. She adds that, if a founder doesn’t get to the vision in the first minutes, often people assume it’s not there and lose focus. Failing to convey the big picture may narrow the subset of VCs that are going to be interested in investing and your funding rounds are going to be much harder to raise. And the more time spent fundraising, the less time you can spend building your business.

“One female VC once took me aside and said: I don’t care about your product, I care about where the product is going to take us. You’re selling me the here and now, sell me the future” — Sarah

3/ Speak the VC language but be authentic

Our panel agreed: learn to answer the questions that investors want to have answered in the first five minutes. Use simple language, avoiding sector jargon that people will not understand. Maren said to forget the script, and not use the exact same language as someone else. Be yourself but be sure to clearly articulate your vision. Katrin agreed, emphasising the importance of being authentic in ensuring investors know you can be trusted to deliver.

Founders on the panel reflected on lessons learned:

“Our information wasn’t succinct, or clear and we just got lost in translation and I think that was a huge thing. We needed to sort out our messaging in a way that better explained it to people that knew nothing about the sector, and in a way that didn’t require 45 minutes to get it out of us.” — Sarah

“In our early days, I was guilty of using of using 45 minutes to try and evangelise the product, where actually, what I should have been doing is speaking the language of the VC and answering the questions that they want to have answered in five minutes” — Katrin

4/ Don’t give too much away

The panel stressed the importance of not selling too much of your business at the beginning of the journey.

Stacy pointed out that less equity for the founders means less of a pay-out on exit day — and that’s not only a shame for the founders but its also a risk for incoming investors. How can they know that the management team is properly incentivised to stay with the company and build and work really hard if they’re not going to have their payday at the end?

“So when faced with a situation where an investor is asking for more than you’re comfortable with — it’s a valid to raise this because actually everyone should be on the same page. It’s in an investor’s interest to think about enabling this company to be able to take on new investment even if that means taking a smaller stake at this point.” — Stacy

5/ VC is not the only way

There are other ways to raise, and VC funding might not be the right option for everyone. Maren pointed out that if you raise VC, you need to be comfortable with the fact that you’re going be on a very steep growth trajectory, and that you will have to exit at some point.

“Make sure you are excited about building that type of business versus building something that is smaller, slower growth but could be just as fulfilling and financially successful for you. I would think through all of those trade-offs before you get on the VC treadmill.” — Maren

If VC is your chosen path, Stefania emphasised the importance of choosing the right investors. It is a long term partnership after all and its important for founders to choose investors who are aligned with their best interest. If someone else is going to have a big say in how you run the business, you’ll want it to be someone you work well with and who can help you grow.

“It is not just about raising the money, it is more about who you raise it from. Founders should do their own due diligence too — too many businesses fail because they get the wrong investors on board.” — Stefania

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