Fundraising is hard. For women, people of color, and anyone with a visible risk an investor can see, research shows that fundraising is especially rough and can come with very little resources. As a female founder, I built Caribu, a family-friendly video-calling app that helps parents and grandparents connect with their kids, with just two and a half engineers. We’ve raised $5 million dollars since 2019.
Women: this industry might not have been made for us but we’re going to change it anyway. My book is going to be called “I Did It in Heels, Backwards and With Less Money” because that’s the story of a female founder. Here are my tips for other women ready to carve out their own paths as female founders.
Tip #1: Allies show up in an unexpected places
Power structure and struggles are common fundraising challenges, especially for women and minority founders. Underestimated and underrepresented on the funding side, we have virtually no leverage or power in the beginning. Yet allies are all around us, and they often show up in the most unexpected places.
For example, a few years ago I was on a panel where I talked about being a woman founder in a male-dominated industry. Never one to hold back, I was just as saucy to the VCs on the panel as I am in real life. I walked off thinking, “Well, none of these men are going to invest in me because I just showed them what they’re going to have to deal with.”
Imagine my surprise when this guy—a white male and an Angel with a family office—walked up to me afterward, gave me his card, and said “We should definitely talk. I’m interested.” At that moment, I knew if he could handle what he just saw from me, then he was going to be my partner and our relationship was going to be amazing. I wasn’t wrong. He’s been in every round and is now a board member.
Tip #2: Recognize the power in power distribution
When you don’t have any power, you’re trying to take power from someone who has it. But it doesn’t always need to be a struggle. Look for people willing to give up power to give you power—this holds true across race, class, privilege, sex, gender, and all the things. There’s a quiet, but undeniable power that comes from nurturing diversity.
For a lot of folks, diversity might not be an option when you’re fundraising from a place of necessity, your numbers aren’t where they need to be, and it’s summer. You don’t always get to choose your investors, but be intentional when you do. Last year we were fortunate to choose who we wanted on the cap table. Our last round was led by a Latina and the whole round was made up of women and Black men.
It comes down to this: Who do you want to make wealthier? As founders, we’re part of a cyclical power system. When Caribu sells for billions, the people who do well from it can use my business as an example. They get to go back to their teams and their funds and say, “See? Look what happens when we invest in a Latina from Miami.” Our success as women founders gives them power within their own funds to invest in more women.
Tip #3: Respond to preventative questions with promotional answers
I’ve never raised what I wanted to raise. I’ve always been told to raise less money—sometimes by women, no less. Women might be at the table from time to time, but that doesn’t mean you’re going to get a fair shake from them. They’re also trying to get more power and you might not necessarily fit how they get there.
Another lesson I learned very early on? Founders get asked two types of questions: promotional and preventative.
- A promotional question is when you’re asked something like “Oh, tell me about the market, how big it is, and how fast and far we can go.”
- Preventative is more like “Well, what’s your monthly recurring revenue?” Or another metric used to suss out some risk an investor can point to and say, “I knew I shouldn’t invest in this. It’s too risky.”
In the beginning, I had to get really good at hearing a preventative question and responding with a promotional answer. When investors asked about where I was today, I’d pivot the conversation to talk about where I’m going to be in 12 months—which is the kind of conversation they have with the men they talk to. If men get the opportunity to say, “If you give me $10 million, I can go do all these things,” then that’s my answer, too.
Brush it off with grace and remind them why you’re awesome
Fundraising is a lot like dating. Someone once said, “Men are better at fundraising because they’re used to rejection” and while I’d challenge that Bumble has been around for a while now, too, it’s all so true. I wasn’t prepared for just how awful it feels to be constantly rejected. While you can’t take it to heart, people are investing in you so it inherently feels personal.
This journey forced my already-thick skin to get even thicker. I can confidently think to myself, “Oh, well, it’s your loss,” when something doesn’t pan out. Walk away from every meeting graciously because eventually you’re going to show them what they missed out on. Walking away with grace and reminding yourself it’s their loss are my two secrets to making the fundraising process feel a little less painful as a woman.
This blog is an excerpt from a webinar hosted with Ladies Who Launch. The data discussed is from DocSend’s latest research on the Funding Divide.