The comment came from Debra Walton, Chief Product and Content Officer, Financial & Risk of Thomson Reuters, who was speaking, last week, onInternational Women’s day, at a gathering of investors and entrepreneurs to discuss equal opportunity for female entrepreneurs to source financing but also how to attract more women to the investment world to fund those businesses that need them.
Debra Walton, Chief Product and Content Officer, Financial & Risk of Thomson Reuters
Women have the capabilities but frequently lack the confidence.
“If we can tackle the issue of women confidence and we can tackle the issue of unconscious bias, I truly think we can change the world,” Ms Walton says.
Fortunately, some female tech entrepreneurs, like Sarah Wood, co-CEO and co-founder of Unruly, are leading the way and showing that it’s possible to ‘raise funds like a girl’. The leading video ad tech guru has successfully raised money to grow the business, which was recently sold for £114 million to News Corp.
Sarah Wood, co-CEO and co-founder of Unruly
As an ambassador of female tech founders, Ms Wood was at the event, hosted by Thomson Reuters, and organised by Claire Cockerton, CEO of ENTIQ, an innovation consulting, in partnership with the UK Business Angels Association, to launch Fin4fem, a short and practical course to empower women to source the right financing while also creating a platform for them to thrive.
Ms Wood and her two co-founders bootstrapped until they have proven they had a great product-market fit and became profitable. But in 2011 when they wanted to grow and expand internationally, they had recourse to fundraising. She was shocked to discover that the investors they met, rarely directed their questions at her but instead asked the male co-founders. She struggled to get herself heard but she learnt to play the game and shares five tips to raise funds successfully:
1. Preparation. Make yourself known to Angels and investors before you need the money. Meet them to discuss what they are looking for and have relaxed conversation. Building relationships is crucial in this process.
2. Planning. Do a lot of research and identify the investors you want to have on your board. Use Crunchbase or similar databases and the contacts made previously to find out their expertise and focus.
3. Pitching. A good preparation maximises the success. Most of the female led business are innovative and profitable, so that should play in your favour. Put your team at the forefront of your pitch. Make an emotional connection; after all, investors are humans too and you can leverage on the fact that they are a parent, sister, brother, you’ve read the same book or have the same passion.
4. Decision making. Bring the potential investors in your office to meet your team and show your environment
5. Deal making. Don’t be afraid to ask what you need and be firm or walk away. Think through the deal structure and don’t appear to be desperate. The best time to fundraise is when you don’t need it.
There is a lot of money accessible to entrepreneurs.
£1.5bn is invested in small businesses, every year, by private investors but only a small proportion go to female led businesses, says Jenny Tooth, chief executive of UK Business Angels Association. Men are 86% more likely to be VC funded than women, according to Fin4fem findings.
“Women need to gain the skill, the knowledge, the confidence and the courage to come forward and take a piece of that money which is available for all stages of companies,” Ms Tooth says.
Another challenge is that out of the money coming from investors, only a small proportion comes from women.
Ms Tooth wants to burst the myth that one must be rich to become an angel investor. Knowledge and expertise can be of an enormous value, so there is a need to educate people to understand what it means to be an investor.
Also, you don’t need to have a background in finance to be an investor, says Bridget Connell, Board Advisor & Angel Investor of Angel Academe and a member of the panel of investors led by Axel Threlfall, Editor at Large at Reuters.
Anyone who has a bit of spare money can become an investor, Ms Connell says. And it can be done collectively with other investors who have complementary skills to put a good deal.
“It’s fascinating and you get to meet amazing entrepreneurs,” she says.” It’s like a mini MBA.”
A total of 762 women-led businesses have made between one to 250 million in revenue last year, adding £2bn in economy growth in the UK across sectors, says Irene Graham, CEO of The Scale-Up Institute.
We are terrific in the UK at starting a business, we are the best in the world, but not much to help businesses grow and develop, Ms Graham says. But with the right support, more female-led businesses could spring up.
In her scale up report on UK economic growth, Sherry Coutu, Tech entrepreneur and investor had identified strategies to boost the high growth companies’ capabilities which includes access to finance.
Ms Tooth also says that the efforts should not only be about women investing in women but encouraging men and women to fund diverse, men and women, teams. Having a diverse mix of investors might give the confidence to more women to raise equity funds and feel less intimidating.
But what investors are looking for in the ventures they back up?
Investors’ panel. From left to right: Moderator Alex Threlfall, Erin Platts, Bridget Connell, Simon Thorpe
“I am looking for entrepreneurs who have unreasonable optimism,”says Simon Thorpe, MD of Delta2020 and Angel Investor, who has invested in 25 companies of which seven are run by women.
Ms Connell needs to believe that a founder and the team can succeed, scale and pivot before she puts her money in the business and open her network to them. It’s not just about the idea but good execution. “There are massive ideas out there, very few people can execute them,” she says.
To find the right investor, networking is vital. Yet, many women don’t work their network hard enough, says Erin Platts, Market Manager at Sillicon Valley Bank.
“If you really leverage your network, you should be able to get a warm introduction to 80% of the people you need to know.”
Finding investors is about getting warm introduction to them, don’t go cold, she says. Another skill female entrepreneurs need to develop, according to Ms Platts, is to be ruthless with their time and be quick to decide who is interested in their business and has the resources to invest. Sometimes, people don’t want to hurt the creator’s feelings and tell them they are not interested. But the co-founder needs to ask though qualifying questions, Ms Platts says.
But here again, females in general want to be liked and understood and are reluctant to be forthright, which can cause them to lose an invaluable time.
“Spotting the right investor is like marrying someone”, says Ms Connell, “because you’re going to be with this person for a long time and keep going back and ask for more money.”
Entrepreneurs must decide if they want a passive or an active investor, Mr Thorpe says, and determine if they want them to be actively involved in the business or not.
To encourage private investment, the UK government has created the Seed Enterprise Investment Scheme (SEIS), a tax incentive for investors but Mr Thorpe affirms that the main motivation of a business Angel is not for tax reasons but to contribute to the development of the venture and add value.
The three females on the entrepreneurs’ panel, led by Julia Groves, founding chair of UK Crowdfunding Association, all agree that raising funds as a woman has been a tough exercise and men often underestimate their ability.
Entrepreneurs’ panel. From left to right: Leanne Kemp, Claire Flynn Levy, Janet Thomas, Julia Groves: moderator
Janet Thomas, president of Women in Banking & Finance, has turned down an investment from investors who reminded her too much of former colleagues in investment banking.
Claire Flynn Levy, CEO and founder of Essentia Analytics, a skill-based investing platform, advises to focus on generating revenues and get to profitability before raising VC money.
When asked whether you have to ‘fake it until you make it’, Leanne Kemp, founder and CEO of Everledger, a permanent ledger for Diamond certification, says: “I don’t sleep until I make it.”
“If we can achieve gender parity by 2025, we would add something like US$28 trillion to the global economy, which is like adding the size of the US economy and china economy to the world economy,” says Ms Walton. “Any programme that helps women with confidence is powerful.”