Raising Funds as a Female CEO of a Tech Startup
Lately as I have been fundraising for UShift I have come across some very interesting statistics about success of women tech entrepreneurs in fundraising. At a time where VC investments are booming and reached a decade-high $155 billion, only 3 percent of that was invested in tech companies led by women. According to Pitchbook Data Inc, a venture capital tracker, there are only 6.3 percent of women have board seats in American venture capital firms. In Asia, that number is even more depressing and to compound this sorry state of affairs, only three of the world’s top 10 women-owned VC funds are Asian.
According to CB Insights data, venture capital funding in Southeast Asia achieved a record high of over $19.3 billion in the second quarter of 2017, beating the $18.4 billion funding received by North American companies for the first time in history. However investments in female tech entrepreneur was lowest in the world. Gender disparity is wider in this market and on several occasions I was told by my well-wishers that raising funds without a man by my side will be next to impossible. ‘Man by my side’ meaning a CTO or a COO, who may or may not be as competent or capable as a CEO (in this case me), was still a must have to unlock VC doors.
However after my month long road show extending across Europe, Middle East and Southeast Asia (Singapore and Jakarta), I figured that stereotypes do exist but there are several ways to circumvent it and carve a niche for oneself. From my month long efforts I have learnt a few very valuable lessons which helped me tremendously and helped to gain significant success in my efforts.
First and foremost build your own profile as a CEO. VCs predominantly invest in people, hence you need to build a name for yourself and gain recognition. As a first time entrepreneur or CEO it is important that you give people a flavour of who you actually are. Increase your own visibility by participating as a key note speaker at media and business conferences, universities or colleges and events organised by startup communities in your area. Engage in PR activities and communicate more about yourself and your team through leading media platforms. This will put you and your business on the map and allow people to reach out to you for enquiries. This will not only bring more fundraising leads your way, but will expand your network as well.
I also learned that your network is your net worth. Utilize your network throughout the fundraising process. Reach out to them for feedback on pitch decks, potential leads and general advice. According to a Harvard study, an entrepreneur’s likelihood of success surges from 30 percent to 80 percent when paired with a mentor. Use your network to identify people who could help mentor you on the way to success. I actively searched for women leaders who had gone through several iterations of what I was going through, and they helped tremendously in streamlining my thought process while suggesting a more targeted approach to identifying investors.
Secondly, build, qualify and map your investor leads. There are online sites which you can scrape to find investor leads. AngelList, Foundersuite, Crunchbase, LinkedIn and PitchBook have large databases with smart search and filtering options. Once you have compiled a list of leads, prioritise which ones to approach first to avoid wasting time on investors who have invested in your competitor, are not interested in the industry, this particular fundraising stage, the geographical location you are in, or simply have a bad reputation. Next, use LinkedIn to map out how you are connected to each investor. Aim to reach each of the investors via a warm connection; it will lower an investor’s defences if a mutually trusted friend can make the introduction. Line up as many meetings and conversations as possible to generate the momentum, upping the ante for investors and making them fight one another to get a share in your startup.
Pitching to them during meetings takes practice at the start, and it is a good idea to start with lower priority investors to refine your pitch and materials. One aspect that gave me maximum jitters was the actual pitching. I worked and practiced on my pitch extensively by scenario painting. I revised the narrative to an investor’s perspective. F2or example, to one investor I did not just explain how attractive the sector and business model was, but I also mentioned how they can leverage the synergies with their other portfolio companies. It also lightens the mood and softens a presentation packed with hard numbers and cold facts. The investors will also remember you better when it comes to the final evaluation of all the pitches, as you are associated with a unique value preposition.
Last but not least fundraising is a tiring and a cumbersome process. It can be very frustrating to hear a million rejections and feel dejected. However as a leader, it is vital that you remain resilient, calm, composed and optimistic at all times. In fact, studies have shown that the yield rate, that is the amount of opportunities resulting in an investment, is considerably higher for female entrepreneurs (25 percent compared 21.6 percent for male entrepreneurs). Even if a potential investor turns you down, use their feedback constructively and refine your pitch moving forward. After all when you want something and pursue it wholeheartedly, the entire universe conspires to help you to achieve it.
