Women entrepreneurs have long gotten a small slice of the venture-capital funding pie.
Female VC leaders are trying to change that.
In fact, opportunities abound for “wontrepreneurs,” said Julie Sandler, managing director at startup studio and venture capital fund Pioneer Square Labs, based in Seattle. She spends most of her time running the VC arm, PSL Ventures.
“First, the financing market for startups has truly never been more favorable to founders than it is today,” she said.
“Second, there has never been a moment in this generation that has created as much change or opportunity for innovation as what we are experiencing in the world right now, coming out of the pandemic.”
In 2020, all-female founding teams got 2.4% of all venture capital dollars in the U.S., down from a high of 3.4% in 2019, according to business platform Crunchbase.
One of the challenges is the base of investors making the decisions, since many tend to invest in founders who remind them of other founders who have been successful, Sandler said.
“The problem is you have an entire industry that only invested in men, generation after generation,” she said.
“This is one of the reasons it is so important for diversity in the ranks of decision-makers in venture funds to accelerate.”
Only 13% of decision makers at U.S.-based venture capital firms with greater than $25 million in assets under management are women, according to All Raise.
Advice for women entrepreneurs
Due to that disproportionate representation, women may need to change their way of pitching their business to VCs.
One of the most important things Sandler tells female founders is to bring their most boastful, bombastic version of themselves into the meeting. The vast majority of their competitors are pretty close to the “Silicon bro” profile — a 35-year-old white male who’s been conditioned to pound on his chest.
“If you are going into that pitch feeling like the most obnoxiously confident version of yourself, then you haven’t even come close to what the entrepreneur before you did,” noted Sandler, who said the majority of investments during her career were in women-led businesses.
Women should also take a multi-tiered approach to fundraising, said Lindsey Taylor Wood, founder and CEO of New York-based The Helm, an early-stage venture firm that invests in female founders.
In addition to approaching firms that have the ability to back your business, get creative with the type of angel investor you are willing to take on, she said. Look at a variety of paths, including equity crowdfunding or a small-business loan.
“If you can bring in a number of strategic investors with smaller checks, it may be a pain early on but, if you need it to get off the ground, that is what you do,” said Taylor Wood.
Her firm is focused not only on funding female founders, but bringing in women investors, as well. Last month, The Helm launched a membership program that allows its investor community to make investments into early-stage female-founded companies for an annual fee of $750.
If you get rejected, don’t let it stop you. Instead, remember that it is a sign of progress because it means you are getting feedback, Sandler said.
“If you don’t put yourself out there, if you don’t ask for what you really want, the answer is no anyway,” she said.
“So collect a bunch of ‘nos.’ Be proud of collecting a bunch of ‘nos.’ Then, the better the ‘yes’ will be when it comes.”
Opportunities
Women should be starting businesses in every single category, for every single customer, Sandler advised.
That said, there are certain areas that are ripe with opportunity. One focuses on easing the burden on women family members trying to juggle work and home life, Sandler said.
“Responsibilities in families need to balance out,” she said. “In the meantime, new technology can help build toward that balance, making communication, schedule management, household and financial tasks easier to see and coordinate.”
Sandler also sees room for new business in the “wildly massive and wildly underserved” female technology category, such as reproductive health. That includes puberty, fertility, pregnancy, childbirth, menopause and beyond. She also sees room for new ventures in mental health and holistic wellness.
Women of color and LGBTQIA (lesbian, gay, bisexual, transgender, queer/questioning, intersex and asexual/aromantic/agender) individuals have been the most adversely impacted by the lack of resources in this area, Sandler said.
“The opportunity for entrepreneurs to create rich solutions is not only relatively untapped, it’s huge,” she said.
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