So you’ve started a company and it’s growing. Great! If you’re like many start-up founders, that might not be enough. You may feel the deep desire to push through and reach new heights.
If you can do this without external funding, go for it. But if you require an external round of funding and are getting ready to fundraise from VCs, ask as many of your founder friends for their advice on how to tackle the process. Founders like Eropa Stein (CEO of Hyre), describe the process as time-consuming, exhilarating, and at times, demotivating.
As a young female entrepreneur without much experience or reputation, fundraising can be a very stressful process. It can be even more intimidating if casual sexist undertones are felt during the investor meeting. These situations are extremely disheartening and yet, women often need to hold back and keep the conversation moving towards a positive outcome.
In fact, female founders may feel like they have a lot to lose if they call out this inappropriate behavior. And so… the unfortunate cycle of underfunding women or devaluing their company continues.
So, what do you do?
What to expect when fundraising
This is a scenario that Eropa has faced several times throughout her career, especially during her funding round for her employee scheduling platform. It is unfortunately quite common for men and women to get asked different questions while battling it out in the shark tank.
Harvard Business Review conducted research specifically on how male and female entrepreneurs get asked different questions by VCs and how it affects their funding. Women get asked questions about the potential for loss, while men get asked about the potential for gains. These are called promotion questions vs. prevention questions.
Many women founders in Eropa’s network have shared experiences of getting bombarded with risk questions by investors without getting the chance to share their vision of their company. The founders that were more assertive were labeled as aggressive. Others who were meeker were described as lacking leadership skills.
But what can you actually do about it?
Here are some questions to ask yourself when answering a sexist question:
How does your response fit in with your long-term goals and where you want to be?
There’s no doubt that it is wrong for women to get different treatment from men. However, you must keep your eyes on the prize and not react impulsively. Show that you are competent by weaving in your vision to your response, even if the question doesn’t specifically ask for.
For instance, for a question about your daily or monthly users, you can respond first by how you plan on acquiring customers and then where you are currently. Or when asked about churn, try speaking about customer retention. Prepare ahead of time for undermining questions so you can be level-headed and respond in a way that puts you in power.
“When investors asked me about customer churn before I even got a chance to present our growth, I was ready to redirect them to our customer success stories. I jumped to a slide that showcased how much Hyre reduced our clients’ employee turnover; and thus, was able to maintain high retention rates. This immediately redirected the conversation and got us back on track.” — Eropa
Yes, it’s unfair. Remember, just entering the dragon’s den, means you are already making a difference in its culture. As you get further ahead in your career, you can wield even greater influence on your industry and the culture.
What is the takeaway you want investors to have from your pitch?
Focus on the strongest points that you want investors to take away. What you and your team bring to the table should be clear in every answer. Even if questions directed towards you are more negative than the ones towards your male counterparts, it pushes you to work harder to avoid giving them something to latch on to. This requires careful preparation and a strategy.
According to the Harvard Business Review, 85% of entrepreneurs respond to a promotion question with a promotion answer and a prevention question with a prevention answer. Doing this leads to a confirmation bias, so you must change the way you respond.
How to prepare your pitch for strategic answers
You definitely need to practice your pitch with your team. If possible, connect with mentors or peers in your network that can share feedback based on their experiences. You need to hone in on your answers no matter what questions are asked. It is important you roleplay the questions and answers for worst-case scenarios. Schedule time in your calendar for all of the individual steps below, and practice your pitch.
1. Make a list of potential questions
What are the questions you love getting and the questions you dread? Put them both on your list. Ask your peers what questions they have been asked in the past that they weren’t expecting which you can add. It helps to do your research and reach out to other startups who have pitched to those investors before.
They may be able to share questions they were asked and more insight on your specific investors. Building your network will help you as well in the future. Once you do receive help, make sure to pay it forward when you are in a position to help.
2. Make a list of everything you want to convey
Turn your vision into bullet points that can go into different categories of questions and responses. Practice different ways of capturing a statement that can weave into other answers. You should have 3-5 points that illustrate your vision ready of varying lengths. If there are points you want to make that aren’t being asked, practice adding that into another response.
3. Reminders or Affirmation
Write down a reminder or affirmation on what you want to get out of a meeting and where you want your career to go. Every meeting you go to with an investor should serve multiple purposes. It’s obvious you want investments, but there are other things to be gained.
First, it is an experience you can learn from to perfect your pitch. No matter what happens, this is just one meeting of many over the course of your career.
Second, it is another connection to make. Even if an investor is showing you through their questions that they are not the kind of investor you want, they are likely well-connected. Perhaps they know of other investors that may be a better fit.
Plan for your pitch
With a plan in place, you are likely to garner 1.6x the amount of funding by responding to prevention questions with a promotion answer. It’s time you got the funding you and your team deserve. Female entrepreneurs own 38% of businesses in the U.S. and deserve a bigger cut of the funding (we’re at 2%). It’s unfortunate that currently, women and men investors are likely to show the same bias in the questions they ask. However, times are changing, and many investors will be more empowering.
Good luck with your pitch, and keep practicing. If you found this article helpful, feel free to let Eropa, CEO of Hyre know! She can be found on LinkedIn where you can keep up on the latest updates on Hyre’s temp staffing and workforce management software.