While women are making progress in many segments of the business world, there’s one--very important--area where they still lag: raising money.
In fact, the latest stats from funding database Pitchbook reveal that women-led companies landed a minuscule 2.19% of venture capital funding in 2016, down from the previous three years.
Speaking on a panel at South by Southwest in Austin on Monday, a trio of female investors--all of whom are also successful entrepreneurs--discussed some of the reasons those numbers have remained so measly. One issue: Female founders sometimes shy away from pitching a grand vision--or, in the words of panelist Susan Lyne, president and managing partner, BBG Ventures: “I see men pitch unicorns and women pitch businesses.” (More on that later.)
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The group quickly turned to ways to improve the stats, giving attendees a wealth of tips on how to raise funding from institutional, angel, and seed investors.
Your network is your greatest asset
Don’t know any investors? Think about your contacts who are entrepreneurs--especially if they’ve raised money themselves. “Let me tell you who VCs take referrals from,” said Sukhinder Singh Cassidy, founder and CEO of Joyus.com and an active angel investor. “They take them from the people they’ve invested in.” If one of your contacts has gotten funding from an investor you’re targeting, she said: “Go pitch that entrepreneur!”
Aspect Ventures founding partner Theresia Gouw agreed, saying that referrals from entrepreneurs she’s funded--or from investors she’s partnered with--go “to the top of the list” of the thousands of potential investments that come her way each year. “I’m 100% going to take that meeting,” she said.
Similarly, talented friends are a great gateway to angel investing, added Singh Cassidy. “If you’re thinking about being an angel investor, think about the people who are starting companies in the spaces you like and that you know,” she said. “If you have close networks, you may be able to start small, and they will take your $10,000 check--it does give a way to understand” what the angel investing world is about.
Go big
Singh Cassidy recalled learning that Lyne had turned down an entrepreneur that the Joyus founder had referred to pitch BBC Ventures. When she called Lyne to get feedback on what had gone wrong, Lyne told her: “Sukhinder, all I can tell you is that I see men pitch unicorns and women pitch businesses.”