How to Get Funded as a Female Minority-Led Tech Startup
Often faced with hostile boardrooms and panels that are 95 percent to 100 percent white male, it's fair to say that as a female visible minority, I've not had the easiest of rides while looking for investment since I founded my company in 2013. Numerous recent studies have found that men are able to get funding easier, despite female headed businesses generating more revenue. In fact, 38 percent of all businesses in the U.S. are owned by female entrepreneurs, yet only 2 percent of all of them receive venture financing.
Not only this, but minorities in entrepreneurship face an ongoing hostile investment environment too. A recent report from the Center for Global Policy Solutions found America is losing out on over 1.1 million minority-owned businesses due to discriminatory financing practices, resulting in foregoing over 9 million potential jobs and $300 billion in collective national income.
After being forced to face questions from male panels asking me if I had read any books on "how to be an entrepreneur" or "how to grow a business," I followed alternative funding channels to grow my completely bootstrapped business to what it has become today.
In this article, I'll share my personal insight into the struggles faced for women minorities in the tech world, and how to gain investment and overcome barriers for anyone who is not white and male that's trying to make it in tech.
1. Leverage contacts.
Utilize whom you know: friends, family, former colleagues, college alumni, especially if you've remained in the same industry. I come from a tech background after working in the hardware, software and cloud industry prior to founding my company, and found engaging my multiple networks not only helpful for customers and partnerships, but also for providing further connections and valuable feedback.
Ties built through connections made at conferences, business and alumni events can lead to great sources of new ideas and information. Valuable referrals and connections can also be provided this way. Nowadays, with an increase in coworking spaces, startup community organizations and accelerator ran startup events, it's becoming easier for founders to meet more people in the industry in their day-to-day life.
2. Be creative with alternative ways to access funding.
Apply for government grants. My company received funding from Business Development Canada -- options in the U.S. include the Small Business Investment Company Program (SBIC), Small Business Innovation Research (SBIR) and State and Local Business Assistance. We also received a grant to work with students from a local college on developing data analytic solutions and artificial intelligence for innovative mobile and software applications, from the Ontario Centres of Excellence and the Natural Sciences and the Engineering Council of Canada.
Financial institutions have more faith than investors. Banks will provide financial backing on loans to startups that approach them with a solid business plan.
There are a number of VC funds that focus on women run companies in tech. Funds such as Backstage Capital invest specifically in women and POC, and Halogen Ventures invests in female founded consumer technology.
3. Make sure you have a solid business plan that can face the scrutiny of any potential funding body.
Unfortunately, gaining $5 million in investment off the bat for a concept alone is unforeseeable for a non-white female in tech. However, by building a solid brand and broad client base, female minority led startups can prove themselves to alternative sources of funding that aren't VC.
Include hard data like revenue, facts, numbers and metrics in your pitch -- this way your legitimacy as a successful investment opportunity is less likely to be disputed.
You always have to be prepared for raising funding, but as a woman or person from a minority group you have to be 100 times as prepared. Cover all bases, have more information than they want, and show any doubters that you are the real deal.