My Female-Led Company Raised $6.25 Million in 2.5 Years. Here's How We Did It.
The stats and stories would tell you it's not great to be a female founder looking to raise venture capital. VCs are four times more likely to fund an all-male startup than those with even one woman leader resulting in female founders receiving only 2 percent of venture funding. The overwhelmingly white male VCs like to fund white male entrepreneurs.
So, when my co-founder Anne Halsall and I decided to go out and raise our next round of funding for Winnie -- and our largest round to date -- we knew we were in for an uphill battle. Winnie has an all-female leadership team and half of our team is female. If the deck wasn't stacked against us enough, Anne and I are also moms which comes with its own set of biases. But, the real kicker: I was in my third trimester of pregnancy. We knew we'd have to work at least twice as hard.
But, thanks to some extreme hustle, we raised $4 million in funding to bring our total funding raised to $6.25 milion in the 2.5 years since we started the company. This is a lot of money in a relatively short time-frame.
So, how did we do it? Here are what I've found to be the five keys to a successful fundraise.
1. If it's not working, tell a different story.
In all our initial conversations, we geeked out about what we had build. As product people, we focused a lot on the product, how people were using it, all our cool metrics and engagement data and even had a slide chock full of quotes from our users. While this obsession with the user certainly works for building a great product, it didn't work for fundraising. At the end of the day, investors care about making money.
We decided to swing all the way in the other direction. We removed all mock-ups from our deck and didn't demo our product until people asked. Once we switched up our pitch to focus on the market opportunity and how we were going to capture it, investors started seeing green and getting really excited.
2. Build the rejection muscle.
The absolute most important thing about fundraising is to keep going. The difference between closing your round and not closing your round is always a single meeting. Even if it doesn't feel like it at times, if you have a good business the right lead is out there and the trick is not quitting before you find it. There are a million reasons unrelated to you why investors may not choose to invest in your business, but once the answer is "no," it takes something extraordinary to change their mind. Spend your time trying to influence the decisions of those who haven't yet shut the door, and keep pushing. After you get an investor to commit to lead your round, the rest of the round falls into place relatively quickly.
3. You can't manufacture urgency.
The worst advice that we've gotten is to make it seem like you have a super hot, competitive deal that is about to close. This only works if you actually have a super hot deal that's about to close. When a deal is actually super hot, people know that and they will fight to the death to get into your deal.
However, before a deal is super hot, you can't -- for lack of a better phrase -- bullshit your way there (at least I couldn't). I found that you're better off just being direct. When you don't have a lead, you can say so. If an investor isn't in a place to be that lead, it's better to find out right away and move on.
4. Everyone is someone who can give you money.
Anyone with a checkbook is an investor. Don't underestimate the power of your own network especially in the earliest rounds of fundraising. Remember, people you've worked with in previous jobs, someone who followed you on Twitter and thinks you're funny, the CEO of your previous company -- they are all people who can potentially write you a check. Don't be afraid to pitch them.
5. Don't try to raise more than you really need.
Even in the best case, fundraising is a slog. It requires a lot of time and energy and that's time and energy not going to building your business. Many businesses do not require a large amount of upfront capital to start. Ultimately, the fastest way to complete your fundraise is to raise only what you absolutely need and put the rest of your energy toward building a massive business. As a side benefit, you'll forgo dilution and have more control over the pace at which you grow -- all things that lead to healthier businesses long-term.