Raising money as a woman in 2022 – 6 tips from an investor, entrepreneur and scientist
Between the pandemic changing our ideas about “work”, an increased focus on values, and the resulting “great realignment” of careers, more and more women are becoming entrepreneurs. The World Economic Forum A 2022 study of the gender gap reports that “women created 49% of new businesses in the United States in 2021, up from 28% in 2019.”
Unfortunately, the path to raising capital for these female entrepreneurs is an obstacle course at best, as female founders only receive about 2.4% of venture capital funding, according to a recent study. Pitch book report.
There are many more female investors and investors looking to invest in women-founded companies than before, but the criteria they use are the same. This doesn’t seem to reflect how women “do” entrepreneurship, or what women value – or, in some ways, where the workplace and business have evolved in a post-pandemic era, 21st century, an economy centered on ESG. ESG focuses on the environment, social and governance, which relates to impact, responsibility and transparency, as well as the diversity of ideas and teams.
Business is still business and the purpose of business is to raise money, so female entrepreneurs who want to raise outside capital to grow faster need to know the ropes.
Here are six tips on how to prepare to pitch investors, from a female investor who has been there as an entrepreneur and a scientist, and is now part of the management team of a venture capital firm. , Ginger RothrockPh.D., from HG Ventures (from an exclusive interview on Electric Ladies Podcast):
1. “Do you understand what customers are looking for?: Rothrock advises asking this question as you prepare your fundraising approach and pitch deck for investors. She suggested understanding, “What are your customers saying?” She warned that many people don’t listen enough to what their customers really need. This is where the lean start method of customer discovery can help a lot.
2. Find the small niche to gain a foothold“If you’re targeting a market that has really long lead times,” Rothrock advised, “are there any smaller niche markets where you could get in faster?” She added that “there almost always are”. This includes understanding the supply chain and sales cycles.
3. “Do you know where you want to go? » Understanding how you make money is the first job. Then predicting what your finances will be over time, or modeling, can be the biggest stress point for entrepreneurs, especially women who tend to think they have to know exactly how to get to each step. way (you don’t know). Rothrock says to approach it in two ways: “The financial model is often the digital side of your story. It’s storytelling through the numbers,” she said. One approach is: “What are the key milestones you could achieve in 18-24 months? … Maybe it’s a pilot project with a company, maybe it’s manufacturing he on a certain scale, maybe it’s like building a team of a certain size….You have to have like a very firm goal post there.
“Then you take the opposite approach. Like, okay, if I had $2 million, what would I do with it? If I had $5 million, where would I go, if I had $10 million?…if I raise that much now, where would it take me?”
4. “You must list each hypothesis you have”: What is your supply chain? What are your fees? How will the market evolve over time? What will happen when the price of oil goes up or down? What new legislation or regulation will affect your business, anyway? What changes do you see in the market? How will the SEC’s new climate risk disclosure rules affect your opportunities or risks?
5. Tell your story: Tell your company’s story in words and numbers, advises Rothrock. “People have to get creative with their business model or their focus areas, their go-to-market strategy to try to show revenue upfront because ultimately, yes, we’re looking for returns,” explained Rothrock. “We want to see that you have a path to…real growth. And sometimes that growth isn’t limited to just one market. Often you stack the markets on top of each other to lead the way and tell the story, because it’s all about the storytelling. Explain what customers are telling you that verify this scenario, the “early signals that these are also real markets”. They may be smaller than what you are ultimately looking for, but your business growth story is a process.
6. Research the investor in advance and interview him as well: You also decide who you want to work with, pointed out Rothrock. She said the top entrepreneurs they spoke to were prepared to have done their research on her business and understood what they wanted from the business besides money.
“What would you do if you weren’t afraid?” What choices would you make? What steps would you take?… We (women) outperform men, we get better grades. We learn that hard work leads to results… (we often make) career choices because of a perceived need or what I’m supposed to do… (But) what if I could do whatever I wanted? is the ultimate question Ginger Rothrock wants us to answer.
Listen to the full interview with Ginger Rothrock on the Electric Ladies podcast here.