Early Stage Funding for Female Founders

…and the ugly number of only 2% of women receiving VC funds

Women in Product and Foundation Capital hosted another successful event “Early Stage Funding for Female Founders” on March 22nd with women leaders as speakers, lovely guests, great food and insightful discussion at Foundation Capital’s brand new office in Palo Alto. Our panel speakers are experienced female leaders at different startups and Venture Capital (VC):

Natalia Burina — Entrepreneur in Residence, Foundation Capital

Sara Mauskopf Chief Executive Officer and Co-Founder, Winnie

Joanne Chen, Partner, Foundation Capital

Meg Sloan, Marketing and Operations Partner, Foundation Capital (who has charming panel moderator skill set)

The ugly number: 2%

Data showed that only 2% of startups owned by women receive funds from Venture Capitals despite the fact that women own 38% of startups in the US. Should women change how they approach Venture Capital funding sources? Also, how can we improve the number?

It was interesting to hear different perspectives from both sides of the string. Joanne Chen shared that her experience at Foundation Capital working with female founders has struck her that women, when meeting with VCs, tend to talk more about their own accomplishments rather than about what they would be going to do next. Joanne encouraged women to have a proactive mindset in helping other people such as some efforts to introduce their personal network of investors to other people in the community, which would help to improve the situation. On the contrary, Sara took another approach and she believed that 99.9% of the time it is not women’s fault. After quitting her full time job to start her own startup Winnie, Sara knew she would receive a lot of “No” when raising funds as her petite and pregnant frame was out of place in front of investors. However, upon realizing that the challenge of being a female founder is real, what Sara did was try to keep up with her grit. She also advised that since not every feedback is helpful and right, there is no need to react to every one of them (unless the feedback is repeated multiple times by different people). Some useful tips that Sara also shared include to keep praising ourselves and our achievements, pitching more, talking with more women leaders to share sympathy and experience, and moving on.

Natalie added that changing the percentage is a long journey for the whole community and also for the society but we could make it happen by becoming a female founder ourselves and trying to push forward to get more attention about this issue over time.

How did you find the idea for your startup project?

Only when Sara became a parent did she learn about the pain points of parents. She realized the struggles of new parents such as finding daycare, learning about breastfeeding, finding good playgrounds etc, were not being addressed by any technology products. Finding a good way to learn about your target customers’ paint points and finding a good co-founder are helpful first steps. She luckily found a coworker at former company who was a parent too and shared the same concern so both of them quit the job to start Winnie. Regarding the issue of choosing to work solely in your own startup or to take another job to support you financially while running the business, Sara emphasized the importance of having a strong financial foundation or support before you quit job at that early stage.

Natalia, former founder of Parable in 2012 — a creative photo network that went viral before Instagram and Snapchat became leaders in the space, also shared she spotted the opportunity when she saw the potential in digital content and photo customization. Once she had the idea, she started to build some prototype and tested with 100 people who were either friends, family or strangers at Starbucks. According to her, one key component when starting the startup was finding users who really love your product idea. There is no one-size-fit-all formulas for founders to find those groups so that is founders’ key job to figure out who would buy your idea.

What kind of stories would stand out among the startup crowd to be chosen by VCs?

After meeting with different founders and hearing hundreds of startups pitch, Joanne shared that she usually evaluates founders is by how they tell stories. Three things about the founders’ personalities that she usually looks for are:

Having the grit to overcome challenges that come year over year and day over day

Striving to learn and to be a better version of yourself

Having skills of storytelling either to attract co-founders, investors, or customers

These traits are not easy for Joanne to spot on in the first meeting but the pattern of founders’ behaviors will become clearer throughout a short period of time.

What can be some alternative approaches for fundraising?

VCs are not the only solutions for startups. After several rejections from VCs when raising funds for Winnie, Sara focused on approaching investors in her own network who happened to be angel investors. Sara believed that investors who actually knew her personally had faith in her vision for Winnie and advised that founders should look within their own personal network before approaching VCs.

Natalia encouraged creativity when it comes to choosing different ways of getting money for your startup. She actually chose to not raise fund from VCs initially because that might require startups to follow some specific path. Instead, she focused all her early time on building the product, thinking about what kind of business she wanted to build, her path to exit, then only after that she would want to think about what VC she wanted to aim.

Two hours of discussion panel and Q&A was never enough to cover all the exciting topics in the startup world. However, the discussion with women who are truly passionate about entrepreneurship and have been resilient through their tough time either in business or personal life was a great example of women community’s commitment to improve the balance between women and men in startup fundraising ecosystem.

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