Fundraising is very difficult for female entrepreneurs, and it is much more difficult for Black female entrepreneurs.
It’s a bold, even condemning remark, but it’s one I made at a recent meeting in which we speculated about the future of women-led enterprises in 2022, including myself.
As one of the few Black female CEOs in the developer tools industry, I’m often asked for my thoughts on large-scale, collective societal concerns focused on technology. It’s a lot to bear, but I recognize the need to raise these problems, and my voice, whenever I am able, on behalf of all of us. Despite this, although I’d want to provide specific answers, I have many unanswered questions.
Tech innovation < social progress
In the realm of technology, we want to be a part of the following digital product that takes advantage of first-mover advantage and impacts the industry’s future as a whole. If you are looking for financing, this is very important to remember. And although we’ve seen some significant improvements in the developer tools area, with funding VC-backed following suit, I’m concerned that we’re in danger of mistaking technical advancement with the social development that we desperately need. Women continue to lag. Why?
In the software industry, there are several outstanding female entrepreneurs, like Nora Jones of Jeli, Window Snyder of Thistle Technologies, Edith Harbaugh of Launch Darkly, and Jean Yang of Akita Software, to mention a few. There are also some fantastic female angels and venture capitalists. These are the kind of women I look up to as industry leaders – individuals who have overcome the obstacles of donating or seeking money while keeping true to their own identities.
No matter how hard we attempt to establish ourselves in the dev tools area, the truth is that this industry is dominated by white males who hold positions of power. To merely survive, those of us who do not fall into those gender and racial categories must devote more time, energy, and attention to detail than is usually feasible.
We must level the playing field by recognizing the existing conditions under which women must struggle to prosper. We need to ask ourselves some difficult questions.
The fight to be taken seriously
After all, we want to raise money from other individuals who look like us. On the other hand, many female investors are battling just as hard to be regarded seriously as the female entrepreneurs they are attempting to fund. If we’re all dealing with the same societal constraint — the need to show our legitimacy — we’re likely all maintaining the same level of danger aversion.
A negative feedback loop is created in which female investors take fewer risks, primarily when investing in female entrepreneurs, and get less money than their male counterparts. What can we do to end this vicious cycle?
Limited partners should invest in more female venture capitalists, and funds should treat women with the same courtesy and tolerance as they do males. Female venture capitalists should be elevated to partnerships, where they will write significant cheques in a short period.
I’ve personally observed the incredible outcomes of empowered female angels and venture capitalists networking with others to help female startups; the feeling of community and sisterhood they engender has the potential to transform the industry as a whole. This is the kind of thing we need to grasp and scale.
The fight to overcome ingrained psychological barriers
According to a widely held perception, women are seen to be less proactive in the process of confirming around today, both as founders and as venture capitalists. As a female founder, I’ve been informed that my male colleagues are better capable of committing more significant sums of money more quickly — that women seem to be more risk-averse, going more slowly through the process and seeking fewer resources.
So, what is it that is driving ladies to take a breath? Although it may seem to be the most apparent response, we are, in reality, facing a higher chance of rejection throughout the grant application process. Our links to the venture capital world are likewise limited, and the “rules of VC,” which govern what to do, say, and how to behave in this environment, are sometimes unclear and counterintuitive. No other resource compares to the concise instructions on how to write a decent piece of code.
The fight against the numbers
Consider the following scenario: you have 1,000 prospective investors, but only 10% of them are interested in firms that provide technology similar to yours. Finally, only two percent of those investors make investments in startups at your stage, and only five percent of those investors have identical philosophies to yours — and you can only contact a small fraction of those investors. Put yourself in such talks with the idea that we are ultimately individuals selling to others and that you must “click” in a conversation that is all too frequently all too short.
You’ll be tied to this investor for the next decade or more in terms of your professional relationships. You’re navigating the statistics against you while also trying to understand the history, personality, and opinions of the venture capitalist (VC) who has invested in your company. What caused them to be burnt in the past? Can we empathize with them about their previous enterprises while also assuring them that our company is a worthwhile investment… all in 30 minutes or less?
So, how can women successfully fight for funding?
The short answer is that we cannot accomplish it on our own, as is true of most professional efforts, obtaining money benefits from the support of a social network. While I wish I could claim that women are born with all they need to succeed in the world of venture capital, I feel that we need allies and support that goes beyond simple networking and across all lines of race and gender to be successful.
The struggle for women requires the participation of everyone with a stake in the outcome, with particular emphasis on the obstacles women of color face, and we must rally everyone to our cause. Working from a survival mentality poses a significant risk to female founders and investors. We must recognize this and equip them with the coaching and assistance they need to enter financing negotiations rehearsed, prepared, and ready to speak on behalf of a firm with more power.
For the most part, we must place our faith in the competence and potential of women on both sides of the transaction, with no conditions attached.
Founders and investors throughout the world, my last question is: Are you willing to join us in our fight?