By Caroline Winnett, Executive Director, Berkeley SkyDeck
It’s not easy being a startup founder – and the job comes with multiple challenges. But if you are a female founder, you might find the road ahead to be even more rocky.
Female entrepreneurs are often at a disadvantage when it comes to accessing the support they need. Silicon Valley has long been infamous for its lack of diversity when it comes to the face of executive leadership, but it might surprise you to hear that access to capital is still largely skewed towards companies with male founders, too.
According to PitchBook data, $330 billion in venture capital was deployed in 2021, and only 2% of that number (only one in every 50 ventures as reported by TechCrunch) went to companies founded only by women. Additionally, only 15.6% went to teams with both women and men on their founding teams.
Despite the lack of support, startups founded by women have outpaced their male counterparts in terms of financial performance. A recent report from DropBox’s DocSend indicates that founding teams with both men and women attracted the most funding, raising an average of $970,000. At the same time, all-female founding teams raised an average of $800,000, while all-male founding teams raised only an average of $770,000 in comparison.
While many VCs are now working hard to bring greater diversity to their investment teams and to their portfolio companies, numerous factors make this proposition seem elusive. At the same time, there are still multiple stumbling blocks facing female entrepreneurs today.
Knowing this, what can you as a female founder do to tackle this persistent issue and create a higher level of opportunity and success? Here are three things to keep in mind.
Make Your Purpose Crystal Clear
A Harvard Business Review article discusses the bias that persists during the VC pitch process, whereby women can seem to undervalue their accomplishments and come off to potential investors as “less sure of themselves”. This perception may be, as the article suggests, attributed to differences in pitching styles. VCs who are scouting for extreme outperformers may be underwhelmed by women’s pitching style that sometimes uses a measured approach focusing on the metrics to sell the story. Men, on the other hand, tend to hone in on the vision or big picture.
This reminds us that before being able to communicate the value of your company to investors, it is crucial to find a purpose in solving a problem you have experienced first-hand or one that you know others have experienced. Next, you must articulate it well.
Akin Mental Health, a startup that I helped advise as part of the Berkeley SkyDeck program, had two founders with their own experience of family members who were suffering from mental illnesses. Akin was created to link people with similar experiences of caring for loved ones with mental health disorders and help provide needed, science-based information and action-oriented ways to better support and strengthen family relationships.
Another startup, Ontopical, found its purpose in helping businesses ultimately build better partnerships between local governments and businesses by finding relevant government initiatives, which in turn could help them better serve communities. While the founders weren’t trying to solve a personal problem, they recognized a real need.
Starting with a purpose allows you to explain your vision to investors as effectively as possible. The question you must answer is not just why they should invest, but more importantly, it’s also why now.
During an investor’s evaluation process, when other factors are equal, especially in highly competitive or emerging industries, this can be what tips the scales. It’s this strong sense of purpose, which you put front and center in your pitch, and ultimately will communicate to your customer, that will mean the difference between success and failure. Some of the largest companies in the world started out on the other side of trying to convince and inspire people to join their company, investors to provide financing, and customers to stay for the long haul. Their success has been born out of a clearly-articulated purpose, which might be as simple as trying to give patients with diseases the gift of more time with their families – or completely rethinking how we buy something online.
Emanate World Conquering Confidence
I come across a broad range of personalities, pitch decks, and presentations daily. Here is one of the biggest mistakes that women founders, and founders of early-stage startups in general, make when they are out raising capital. They tend to only focus on their specific industry niche or the modest accomplishments they’ve made. When you are in front of an investor who wants to see huge potential for growth, going bold and being unapologetic is key. Many times, this is the quintessential element that separates the winners from the losers. Investors instinctively look for ambitious, expansionist companies that aren’t afraid to take risks in pursuing growth.
The founders that dazzle investors are the ones that are audacious, demonstrating that they are ready to take on the world. They talk boldly about how they’ll reshape the industry and demolish competitors. You don’t need to change your personality to do this. Be your authentic self. Your most confident and bold authentic self.
Your initial pitch isn’t the only opportunity to communicate that your startup possesses these qualities. As they say, the devil is in the details – how you go about maintaining their interest. The next step is arguably even more important – it’s all about keeping the communication flowing to create ongoing excitement and interest.
Find the Right Mentor
Finding a good mentor is not only a nice to have – it’s a must if you are hoping for success.
A good mentor can help stack the deck in your favor – they understand the landscape and are connected to the right people with whom you’ll need to build relationships. They can introduce you to new hires and potential investors, increasing your chances of success by design versus leaving it up to chance.
Unfortunately, finding one isn’t easy – they don’t advertise. But the good news is they are out there. Whether you join a community, head out to local events or increase the time you spend on LinkedIn and Twitter, there is no shortage of opportunities to build relationships and secure valuable introductions.
Through this process you will eventually find just the right fit and connect with someone whose experience you’ll come to trust and rely upon.