Fundraising Advice for Female Founders

We really should not write this blog post. The right title should be Fundraising Advice for Founders.

We really should not write this blog post. The right title should be Fundraising Advice for Founders.

We really should not write this blog post. The right title should be Fundraising Advice for Founders.

Although it shouldn’t be, fundraising for female entrepreneurs can be more challenging than for their male counterparts, and unfortunately, it just seems to be getting worse.

The discrepancy is due both to investors giving less money to women; as female entrepreneurs, it’s a fact we must overcome.

Because Female entrepreneurs receive only about 2% of all venture funding, despite owning 38% of the businesses in the country, securing funding as a female entrepreneur is statistically grim.

Difficult as it may be, it is definitely not impossible. Here are some tips that can helped you through fundraising:

1. Everyone loves a good story.

Storytelling is how we make connections, and connections are part of how you secure funding. That means your pitch to investors is a crucial aspect of fundraising. It should tell the story of you and your business and have an emotional hook that will draw them in. Your pitch should make them want to be part of the company.

All that said, knowing your audience well will tell you how to tell your story. Is the group you’re pitching to passionate about investing in women? Push the female-founded story. Are they interested in tech innovation? Gear your story toward how you’re changing the landscape in tech. By catering to what they’re looking for, they’ll be more likely to build a connection with you and therefore invest in your company.

2. It’s all about mindset.

You’re not asking for charity; you’re bringing them an opportunity. Reframe the idea of feeling bad for asking people for money to feel generous that you’re giving them an incredible opportunity to bring value to themselves and others. Reframing how you’re approaching the conversation will not only bring confidence to your pitch, but it will show the investors that you’re giving them the chance to be a part of something great and worthwhile.  

Having a confident, optimistic mindset is a powerful tool that can help you achieve your goals. If you’re fearful of raising capital, remember that the only way out is through. Stepping through your fear and preparing and perfecting your pitch will ease the stress. I know if I’m unprepared, my mindset is less confident and I’m more stressed.

3. Ask for more.

Plan, forecast, and get a good grasp on what you think you’ll need to launch or grow your business. Then ask for more. The forecasts, despite the best planning, are usually never right on, and unexpected setbacks will always happen. Plan for contingencies and disasters, because Murphy’s Law is all too real, and whatever can go wrong, will go wrong.

Asking for more helps ensure that you won’t fail with the money you did secure because there was too little of it. Additionally, it prevents going back and asking for more capital too quickly after the first round.

4. Stick to your terms? No!

Setting your terms and not changing them when raising capital? I would not advise that. If it was 2 years ago, maybe. However, in this market (2022), you must show flexibility and showcasing you are ready to make sacrifices. I am not saying just change everything about the deal for each and every investor. This is a two-way partnership. If the investors are showing interest, there is nothing wrong to be flexible and get the deal done.

5. Seek Crowdfunding

For female founders, venture capital fundraising may not be ideal. Crowdfunding can be more lucrative and beneficial. According to a report from PricewaterhouseCoopers, among 450,000 seed crowdfunding ventures, women secure 11 percent more pledge dollars than male counterparts on average.

This could be because crowdfunding is more diverse compared to the “boys’ club” of venture capital firms, or that more women are in the crowdfunding arena. As a result, women experience less gender bias with crowdfunding.

Another possible explanation is the way crowdfunding is pitched. Venture capitalists are looking for a return on investment, while crowdfunding typically looks for great stories and relies on relationships. Crowdfunding donors may be motivated by cause and background, more than pure numbers. Campaign pitches use emotional hooks, and women are more effective at creating these types of emotional stories and building relationships.

6. Change the Questions

Venture capital firms tend to ask inappropriate or illegal questions of female founders vs. male founders. Generally, the questions for male founders are focused on promotion, advancement, achievements, etc., while the questions for female founders are focused on prevention, responsibility, security, and safety.

Fortunately, female founders can reframe these questions to help their cause. Respond to prevention-related questions with promotion-related answers that focus on the present and the future. For example, a question about customer retention can be reframed to address strategies for new customer acquisition, customer retention, and customer expansion.

7. Show Proof of Concept

Many businesses fail, so there’s an inherent risk in investing in a startup. Investors ask a bevy of questions to ascertain the founder’s ideas and strategic planning to determine their risk and validate the idea, so women can get far by showing proof of concept.

Not every idea is a gem, but getting feedback from potential consumers can help validate the concept and prove that people would be willing to pay for it. Market research can go a long way, so be sure to show the numbers and seek feedback wherever possible, even if it’s just in social media groups that have the target audience.

8. Leverage Uniqueness

Plenty of woman-owned businesses are marketing unique products to women. As part of the target market, these female entrepreneurs have an advantage in understanding the pain points and desired benefits alongside their audience, which can be of value for fundraising pitches.

Women may have more unique ideas that address a significant gap in the current market. In some cases, this product may be awkward or embarrassing, making it more difficult to pitch. But that’s all the more reason that it can be sold to investors, and getting comfortable talking about it is an important factor in the business’s future success. In addition, this product may have the “first-mover” advantage, meaning it is first-to-market and a huge win for an investor looking to be part of the next big thing.

9. Leverage Capitaly

We are here to change the game of raising capital, not just for female founders, but for all founders. Of course, social and gender inequality is the biggest injustice in our society. We at Capitaly hold ourselves responsible to change this.

We provide you with every single resource that you may need to start the capital-raising process by connecting you to investors, giving you all the excel sheet and PowerPoint templates, and also giving you access to our academy so you can learn and raise at the same time.

Together, we can change the narrative and help founders to get equal access to capital.