Perspectives on frequent questions from Female Founders
As part of a recent Female Founders Office Hours event we spoke with more than 14 female founders over two weeks. It was great to be connected on a personal level with so many founders in such a short space of time.
Whilst the stages of each business varied, the founders were all impressive women and many were struggling with similar issues. When we reviewed the sessions and compared our notes, certain questions cropped up again and again.
So, in case it can be a helpful or more timely resource for female founders in between our events, we have written up our reflections here and offer some helpful links and resources.
If you missed our Female Founders Office Hours event, and would like to sign up to the next, then please use this link.
Any comments or suggestions for additions to this piece, please reach out here on Medium.
Aleks and Jen
To help navigate, this piece covers the following ten questions.
Q: How do I sell myself to VCs without sounding arrogant?
Q: How will I make my start-up financeable by a VC? What are VCs looking at in the business model?
Q: How do I expand my network for business development and fundraising during times of Corona?
Q: How can we fundraise from funds we don’t know yet during times of Corona?
Q. How should I diligence potential investors?
Q. What networks should I join, where can I find more founder support?
Q. My idea is really big but I don’t feel ready to raise a lot of money, what should I do?
Q: How do I sell myself to VCs without sounding arrogant?
Aleks: This is a very common concern especially amongst women. Whatever you do, do not undersell yourself and stay confident about your achievements. There is wording and tone you can use to convey the message without sounding arrogant. There is a way to do this in a humble yet confident way. I like to use humour, don’t take yourself too seriously and it’s always ok to swoop in something like: ‘it was not easy and it took me a while to get there as well or I have tried different things, some of which did not work out’ — it brings out the human in you and will come across more authentic. If you are specifically asked to talk about your background then you can go through that matter of factly — nobody can blame you for giving facts about your bio when you are asked for it.
Jen: I think a good test for this is to ask a male friend or colleague the same question, this might blow away some self-doubt and help you realise this is a worry you can let go of. Another idea is to pitch those same friends or co-founders to help you nuance your tone of self-assurance without arrogance. Another consideration here is cultural nuance, confidence is perceived differently in the USA compared to France for example. Don’t forget to pitch to your audience.
Q: When is the best time to fundraise? We get a lot of inbound interest from investors, how should we manage that?
Aleks: This depends on your situation — can you afford to continue the business without further funding? At which point would you benefit from an input (other than just money) from a professional investor? If you do not need to fundraise then I would focus on growing the business and developing the product, which will put you in a stronger position further down the line when you want to raise a bigger round at a higher valuation. However, do not underestimate warm and casual relationship building with VCs early on, sending them updates of your progress and staying in touch lightly will make the process much faster once you are ready to fundraise. Conversely, do not wait to fundraise at the last minute, you want to negotiate from the position of strength and not desperation.
Jen: Do you want and need to raise funding externally? You should be certain this is right for you and your business before diving in. There are alternatives such as revenue based financing to consider too. When to raise? When you can tell a compelling (i.e. validated) story about your market, product, team and customers which fits a VCs mental map. Try to get it done six months ahead of when you actually need the money.
Inbound interest can be incredibly alluring but don’t let it distract you from building your business and hitting your milestones. Be deliberate about the meetings you take. Cultivating long term relationships with VCs can have real value but you need to focus on those who are most likely to fund or assist you. If you’re not planning to raise for another year or so, perhaps meet only with those with whom you are deliberately investing in long term relationships. Align the majority of meetings to your funding timeline, if you’re raising in six months for example then some relationship meetings now with the VCs you rate makes sense, with a following in three months for example to launch the raise.
The single most important thing is to create and continue a long lasting positive (ideally singular) impression of you and the business. Revert to this inbound with your yes/no to a meeting swiftly and warmly whatever you decide. You must do what you say you are going to do. If it’s a meeting or a follow-up email in three months, diarise it. A great idea is to put investors onto your investor mailing list, that way they can stay in touch and you can keep them keen with limited extra effort. VCs who are really keen will react well to this kind of approach, they may start offering network or assistance. Make them work for it!
If you do take meetings, manage that first impression and the information flow. It’s better not to take the meeting than to create a bad impression, so plan upfront and make real time to be on your best form. Be prepared to give some metrics and a real sense of where you are, this helps the VC work it if you are in or out of scope (less time wasting for both of you) but don’t give too much away, certainly no laundry on show!
You want the VC to walk away thinking she is killing it, executing well and hitting milestones but never over-do it or overpromise, be grounded to reality in your messaging.
Some resources:
- Y Combinator — A Guide to Seed Fundraising
- Ophelia Brown, when and how to approach investors.
- Finn Murphy — Frontline Ventures — All Aboard the Hype Train
- Try to understand how VCs think https://www.nfx.com/post/how-vcs-think-investing-decisions/
Q: How will I make my start-up financeable by a VC? What are VCs looking at in the business model?
Aleks: This depends on at what stage a VC fund is investing.
At an early stage arguably the most important aspect is the team — is it a strong team with prior relevant experience, subject matter expertise, complementary skills and ability + hunger to execute on their vision.
What is important at any stage are the following:
- Does the problem you are trying to solve have a big enough market?
- How do you differentiate yourself from competition, are you 10x improving the way things are done now?
- Traction — if you already have some, is it paid? Is it growing? What are the unit economics like and can they be improved? How have your KPIs evolved?
- Scalable business model, often meaning the potential for strong unit economics and a repeatable and recurring nature which can support significant growth
I always suggest with small rounds, pre product or traction, to go for Angel investors or maybe pre-seed VC investors — high quality angels and pre-seed VCs will not only help with financing but also with opening doors and adding credibility for your next round. Be strategic about who you want in your Angel investor group.
Once you have an MVP and some initial PoCs you can aim for the seed round. Once you convert those PoCs, have some recurring revenues, growth numbers and a clear go-to-market strategy then a Series A is viable.
It is not a perfect science and differs from team to team. The stronger the team the more likely you are to get institutional funding with minimal MVP/traction, but of course the best position to be in is to tick all the boxes.
Jen: I think the above is spot on. Perhaps I could add that when thinking broadly about suitability to VC finance is understanding VC economics as well. Matching with a VC is also about fund size, targeted investment returns and investment philosophy. There are some relevant writings on this point here and here.
If you’re really struggling, ask others to help you. Track down mentors or advisors who have done it before.
There are some great resources out there which go into more detail on this
- See Sequoia’s list of what makes an enduring company
- Check Warner’s Seed investing framework
- https://nituno.com/home/startup-funding-europe-strategy/
- Series A checklist: https://www.nfx.com/post/fundraising-checklist-13-proof-points-series-a/
- https://online.hbs.edu/blog/post/market-validation
Q: How do I expand my network for business development and fundraising during times of Corona?
Aleks: I think that people are now more open to replying via LinkedIn or cold e-mails as the notion of networking has changed drastically everywhere given the unique circumstances we have found ourselves in. The message should be short, to the point and clearly highlight what it is you are e-mailing about/what you want to have a conversation about.
Another one is to participate in things like Webinars, Podcasts, Clubhouse sessions — online but interactive and if you follow up with someone after hearing them speak and refer to it, then they tend to be more open to engaging in a conversation.
Also, leverage your existing network. Do not be afraid to ask for introductions. If someone does not wish to do it or does not know the person well enough then they will tell you and it’s always worth asking.
Jen: Looking on the bright side of this virtual world we’re living in, everyone’s in the same boat. I think that makes some people more open to connecting than perhaps previously. I love to offer up relaxed coffees, or drinks over zoom and when I do this, I love to make sure my coffee or wine is in view to help create an informal atmosphere.
Another tactic, recognising that many of us are experiencing shrinking networks and social contact, is to set something up yourself. Why not offer an online event such as a deep dive into the field or issue your start-up addresses? Invite friends, contacts and other experts and cultivate a rich and informal conversation. This is a great way to network whilst establishing you as a leader.
Have a look at this great piece on Femstreet.
And this great piece from Greylock.
Q: How can I better manage my time to stop putting out fires and have more time to strategize?
Aleks: Block your calendar for thinking time. Be disciplined about it. Only do meetings when they are necessary, otherwise use other means of communication that might be quicker to convey a point. Make meetings efficient by introducing an agenda and sticking to it. Finish quicker if the full meeting is not necessary. I would make meetings 25mins long to have a 5min buffer but psychologically have people prepared to time their input according to the meeting time. Learn to let go of control and delegate — it’s an important but sometimes difficult skill to master.
Jen: Another area to think about here is why this is happening. If you, the Founder, is needed to put out fires continuously what’s the root cause you need to address to break free of this? It is not a sustainable approach for you nor the business, which needs to scale. I think the ‘seven why’s’ framework is incredibly useful in this organisational situation. Is it that you’ve not delegated the task? Then ask why? Is the team not performing, why? Do you need to hire, why haven’t you already? Identify what it is and put it in place.
Don’t shy away from analysing yourself when asking why is this happening? Sometimes it is our need for control or perhaps our comfort in operating where we feel most secure. This can hold us back. If the root cause might be you, find a coach or mentor to help you break out of these habits.
Remember the phrase that as Founder and CEO you should be allocating more and more time to work ‘on your business rather than in it’. So do put aside the time to put building blocks in place, including where those building blocks are you and your wellbeing.
Q: We have a geographic expansion strategy but we get inbound customer interest outside of that. Should we stick to our strategy or remain opportunistic?
Aleks: I would stay focused on your strategy — the point of a strategy is to have focus within the company and not spread already scarce resources, running the risk of doing more but in a less effective way. It is very tempting for an early stage company to jump at every opportunity available but by showing that you are busy you can also create FOMO.
Jen: If you have stated/agreed milestones you have to execute on those first and foremost. There are always exceptions though and i think one is around company survival and/or pivots. If you have low conviction in your strategy and the market is pulling you towards monetisation in a way that is different to your expectations, listen to that and consider testing it.
Q: How can we fundraise from funds we don’t know yet during times of Corona?
Aleks: Ask for introductions through your network and existing investors, warm introductions are always more effective — this may include their existing portfolio companies. If that is not available then write a catchy message via linkedin or e-mail — short, to the point and eye catching (for the right reasons).
Jen: Also consider ways to drive inbound attention, select events or awards for example, content marketing, hiring a PR agency, ask existing backers to help you get more coverage. Simple things like ensuring your company crunchbase profile is present and up to date with things like email addresses and phone numbers can also help.
Q. How should I diligence potential investors?
Aleks: Speak to their portfolio companies, they will be able to give you the best feedback on them. Also, take a look at which companies they have historically invested in, at what stage, whether they did follow on rounds and whether they were on the boards.
Jen: I also advise speaking to past as well as current portfolio (if available) to get a sense for the fund and individuals across the full lifecycle. Try to get a sense for how they perform in the difficult situations which can arise such as co-founder issues or transition, Board member difficulties, equity / cap table disputes, failed financings or client losses.
Another element to bear in mind here is the fund organisation and the individual. Both are important. Is there a large organisation involved and how does it think/operate? The individual VC can be right but the wider organisation wrong.
Be particularly diligent when diligencing investors who will have a seat on the Board. Speak to other companies where they hold the same position and if you get anything other than enthusiastic references think twice.
Q. What networks should I join, where can I find more founder support?
Aleks: There are plenty of organisations, here just a few. You can either go gender specific or founder focused:
https://www.femalefounders.global/
https://www.femalefounderinitiative.com/
https://technation.io/programmes/founders-network/
Here is a nice list: https://www.wrike.com/blog/top-networking-sites-startup-founders-infographic/
What I find super useful is the idea of a mentor — I would always try to have one throughout my career — they can not only be your voice of reason, brainstorm buddy and personal advisor but also make very warm introductions to relevant people. I find these one on one interactions to be most beneficial.
Jen: Couldn’t agree more. If you already have an MVP you could also consider incubators or accelerators. These can be a great source of motivation and network.
Sifted and Seedtable just released nice lists on European incubators and accelerators. I also really like Femstreet for network, I always find really helpful insights there too across many of the questions covered so far.
Q. My idea is really big but I don’t feel ready to raise a lot of money, what should I do?
Aleks: Raise a small round to begin with to reach the next milestone/value inflection point. That way you can raise your next round at a higher valuation and smaller dilution. VC investors will also judge you based on how capital intensive your business is and how much you can achieve without a lot of money. Every big idea has to start with something small — I would approach it in stages.
Jen: I agree completely with Aleks here. I would look into how I can break-down the idea into hypotheses. I then look at what I can test / validate without funding and get cracking on those. When i’m left with hypotheses which require money to validate, I look to raise money to test the lowest hanging fruit first.
