Women who are building their businesses know how tough it can be to access capital. Some ultimately turn to investors in the hopes of securing funding, but that isn’t exactly easier — according to the Harvard Business Review, less than 1 percent of companies have raised capital through VCs.
If that’s the route you wish to take, it’s important to understand how to pitch your business effectively, and to make sure that your venture is right for investors. Only, where do you begin in figuring all of that out?
Perhaps these women can help. At New York University’s fifth annual Women Entrepreneurs Festival, five female VC experts — Shanna Tellerman of Google Ventures, Shana Fisher of High Line Venture Partners, Kathleen Utecht of Core Innovation Capital, Jenny Lefcourt of Freestyle and Joanne Wilson of Gotham Gal — and moderator Susan Lyne of the BBG Fund discussed what it’s like to be on the other side of a VC pitch (and offered hints on what decision-makers are looking for).
Here are five questions to ask yourself:
1. Is your business right for VC funding?
“It’s become sort of a badge of honor when you get funded [by a VC], and for many businesses, it’s not necessarily the right route,” Lyne said at the beginning of the discussion. She notes that over 600,000 new businesses are formed every year in the United States, and that “of those 600,000, a fraction of a percentage will really be companies that should get venture funding.” Later, when the panel was asked whether entrepreneurs should should seek out investors solely for networking and mentoring purposes, Utecht harkened back to Lyne’s initial point. “It’s a very specific type of business that should be venture-backed,” she says. “There are other places to get the network.” So who is right for VC money? Panelists said they particularly love fast-moving, ambitious ventures with a tech component.
2. How well do you know your industry — and theirs?
Each investor on the panel felt that entrepreneurs needed to understand both the industry they work in, and their business’ place in a very tech-savvy world. For example, Utecht says her industries of interest — including the crypto-currency space — aren’t ones that you can “throw a smart Stanford student at. We’re looking for people that have real, relevant experience, [who] understand the market and understand how they fit into it.” Business owners also need to know the person they’re pitching to — adds Wilson, “It’s important to do your homework before you go speak to people, because if you’re getting in front of somebody who’s looking at 3D printing, and you’re an e-commerce business, they’re not going to be interested in what you have to say. It’s a waste of time for both of you, on both sides of the table.”
3. Are you being persistent enough?
Tellerman spoke about the importance of persistence in entrepreneurship. “A lot of people think it’s cool to start a company, or trendy to start a company, but it’s really hard,” she says. “You go through so many ups and downs — a lot of downs. It’s really easy to give up. At the end of the day, the companies that are successful don’t give up.” And while each woman on the panel has different areas of focus, they all wanted to hear from entrepreneurs who are “going fast and furious,” as Lefcourt put it. “They’ve figured out who their team is, they’ve spoken with their potential customers. They’re going, and they recognize that they need capital along the way to fund them. They don’t view funding as [the point] when the gun goes off to start the race.”
4. Is your presentation sinking you?
When asked about a foible specific to women business owners making pitches, Fisher says, “Your voice. There are a lot of articles now about vocal habits of women. I’ve found that I’m able to look beyond certain traits … and fund a person, but once they go out and meet other people, I really do have to coach them, or in some cases, get them a vocal coach to clear up some of these habits. The texture of your voice … can actually really affect people’s opinions of you in a negative way. You have to learn how to speak in an authoritative [fashion], and deepen your voice. Really be conscious that you are talking and presenting.”
5. How grand is your vision?
Lefcourt wants to invest in people who “know that their business can be a huge business. You have to state it as such; you have to have a vision that is big and bold. A lot of women, I’ve found, are uncomfortable having a really big vision. They’ll tell you exactly what they’re going to do and how they’re going to get there, but they won’t put [the big vision] out there.” As an example, she cited a meeting with a woman business owner who only got grandiose about her venture at the end of a two-hour talk. “I asked, ‘Why didn’t your deck start with that [attitude]?’ And she said, ‘Well, I didn’t want to over-promise and under-deliver.’ I’ve heard that term from women over and over again. That is your job — when you’re trying to get venture capital money, you have to have a big vision.”
Watch the panel discussion in its entirety here: