What it takes for a woman to get VCs on-board

April 02, 2018 12:46 PM

One of the most pervasive beliefs about women in general, not just women entrepreneurs, is that women get too emotional when the going gets tough. However, a person’s ability to handle their emotions and stress has nothing to do with their gender, and everything to do with their resolve, their emotional quotient, and their acumen.

What it takes for a woman to get VCs on-board

Though 14% of companies in India are run by women, in 2017 only 2% of start-up funding went to companies with at least one woman founder. This is alarming for a multitude of reasons. First, why is it that women only run 14% of companies, when they represent half of the population? Second, how is it then that only 2% of funding is going to women instead of 14%? The answers to these questions require a deep understanding of India’s socio-economic history, prejudice, and the human psyche, and unfortunately fixing these percentages will take decades of effort from women and men in positions of power in India.

However, there are some steps we can take today. Although there are no hard and fast rules on how to raise venture capital in 2018– after having gone through this process twice for my own company, The Wedding Brigade, I wanted to share some advice that will hopefully better prepare women as they begin the journey themselves. Some steps are the same for women and men looking to raise funding (covered in Part 1) and some are topics that women in particular need to be prepared to address (covered in Part 2).

Part 1

Research, research, research

Every investor is different, and each fund has their own mandate on what types of companies, which industries and at what stage they want to invest in. Before walking into a meeting with a VC, find out as much as possible about the investor – what size cheques do they normally write? Have they made investments in companies with a similar business model? If so, at what stage did they invest? If simply google-stalking doesn’t generate any results, ask some questions at the beginning of the meeting to get a better understanding of the investor and what they are looking for.

Highlight both growth and sustainability

A few years ago, enormous top-line growth may have been the only metric investors were interested in, but with the shutting-down of many Series A-C funded companies, investors have become more prudent and expect to see margin expansion over time. Finding the balance between top-line growth and strong margins is tough, but necessary to successfully raise capital in 2018.

Have a clear understanding of the local market

This-for-that models (ex. Uber of India, Airbnb of China) are so 2014. Most serious investors are now looking for localized innovation, especially in the B2C market. Investors want to see home-grown disruption and want to hear how you have created your company based on the needs of the market. Start off with proving that you can build local, and then at the right point, scale global.

Know how your company will win

If you cannot articulate why what your company is doing is significantly better than anything else in the market, an investor is not going to invest in you. Investors are looking for outsized returns in a relatively short time frame (no one is going to wait 20 years for you to find your product / market fit!). If you can’t clearly and concisely explain how you are going to win, the likelihood of standing out from the competition and getting a cheque reduces significantly.

The best defense is a great offense

The same way investors are expert pattern-recognizers (at least the good ones!), entrepreneurs who pick up trends about the kinds of questions investors ask are more likely to get VCs on board. After a few meetings, you will notice some repeat questions. For example, if you have a background in finance but want to start a healthcare company, they might ask how you will cope without a background in healthcare. Or, if there are multiple existing incumbents in your space, they will ask how you plan to differentiate and compete with well-funded competitors. Instead of waiting for them to ask, address these questions head-on in your pitch, so they know you have really done your homework.

Staying in touch is crucial

Keeping in touch with investors is crucial but often under-emphasized. Take the time out to reach out to the investors you feel are interested in your journey and update them over time on your progress. The best way to get an investor to believe in you and your story is when they experience the highs and the lows with you and understand why you made key strategic decisions. Then, when you are ready to raise money, or if they decide to make an investment in the space you’re in, they will have much more confidence in your ability to execute your vision.

Part 2

Though women are just as qualified and capable as men of running successful companies, there are unfortunately some additional hurdles we need to overcome when raising money. Part 2 discusses just that.

You may face some questions about marriage or starting a family

The vast majority of female entrepreneurs I know have faced questions around when they will get married, when they will have kids, whether their in-laws will allow them to work or not – which basically question a female entrepreneur’s priorities and her control over her own life decisions. Be prepared to answer these questions, and at the end of the day if the investor does not believe in your ability to balance your personal and professional life, they might not be the right partner for your business.

Be prepared that someone may throw out the “E-word”

One of the most pervasive beliefs about women in general, not just women entrepreneurs, is that women get too emotional when the going gets tough. However, a person’s ability to handle their emotions and stress has nothing to do with their gender, and everything to do with their resolve, their emotional quotient, and their acumen. Understand that some investors may be operating from this bias, and speak boldly about your abilities, your leadership skills, and the hard facts about the company you are building.

Though a part of me flinches at the thought of trying to appeal to people who do not view women and men as equal, I have also realized that to change the game, you have to play the game. And as more women step on to the playing field, we step towards a future where we have to write fewer articles with separate tips for women and men who are trying to achieve the same dream.

(By Sanna Vohra, CEO & Founder, The Wedding Brigade)

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