Why You Can't Get Funding: It's Not Because You're a Woman
The perennial debate has lit a firestorm, again: Do female tech founders have less access to VC funding?
For the most reasonable and probably smartest answer to this question, skip down below to the four mistakes that befuddle both genders when it comes to asking VCs for money. For the latest in Silicon Valley gender spats, read on.
Penelope Trunk stirred the pot when she wrote a guest column on TechCrunch recently in which she said the reason there are so few women founders is because they’d rather have babies. And besides, she says, a lack of funding isn't really something most women complain about.
TechCrunch’s Alexia Tsotsis responded by saying she wanted to punch Trunk’s blog in the face. “The sad part is that Trunk, who lives in Wisconsin, seems to have never talked to any other women ever. ‘Women are not complaining about the lack of VC funding in the world.’ Ha. Oh yes they are, all the time, to me,” she wrote.
Then a guy got into the fray.
Vivek Wadhwa—tech entrepreneur, academic, and known provocateur when it comes to the topic of women and tech start-ups—told a TEDxBayArea audience that he’s talked with dozens of women in Silicon Valley who say potential investors treat them differently because of their gender, and they have to fend off questions about their reproductive plans, or what they’ll do if their husband has to move because of his career. He also called Steve Jobs a sexist.
Back to the question of whether women really do have a more difficult time getting funded...
It's not your gender; you're just doing it wrong
One female founder I asked had some interesting answers. Patricia Handschiegel created and later sold Stylediary, the first social media company for fashion. Now founder and CEO of a company called 9 that makes multi-platform content franchises, she has ties to the investment markets in Silicon Valley, New York, and Los Angeles and has spoken at MIT Futures of Entertainment 4, South By Southwest Interactive, BlogHer, Women 2.0, Writer's Guild of America, Digital Hollywood, and dozens of other events about the Internet, business, and funding issues.
Her take: Getting funded is hard for anybody, and she doesn’t care what your sex is. (And for the record, no investor has ever asked her about her plans for having children.)
If founders—men or women—can't get money, they're probably making one of these four mistakes:
Mistake #1: Pitching an idea that doesn’t fit the VC model. And what’s that, you ask? Investors like scalability, she says. Facebook is a perfect example.
“The cost to acquire the user is relatively low and the ability to acquire mass users is really high. That’s what VCs like to see. If it’s something that’s going to take a lot of work to generate a product or acquire a user, it’s likely not going to be very appealing to a VC,” she says.
Mistake #2: Pitching feelings, not cold hard cash. A lot of women pitch their start-up by talking about how they feel about their product and how great it is, in essence “clogging it up with themselves.” And men do this too.
But what a VC wants to see is how it’s going to make money. “It’s all about the money, and that’s really the end of it. When you’re looking at investment capital, they’re in it to make money so the play is the money,” she says.
Mistake #3: Thinking you need venture capital in the first place. There are many ways to finance a business, such as small business loans, friends and family loans, incubators, and working a second job to make ends meet.
“I would actually rather bootstrap my start-up, grow it for the first year and then explore my financing options. Investment capital has a place, but entrepreneurs need to understand that just because venture capital is sexy right now doesn’t necessarily mean it’s the right model for them, it’s the right financing for them, or that they have the right company for it.”
Mistake #4: Thinking you’re ready for investment capital, when you’re not. A lot of entrepreneurs, men and women, misunderstand where they’re at in the funding stage. “VCs don’t typically do under $1 million. If you have a company and you don’t need a million dollars or if you’re in a seed stage of your business, you’re not going to attract that kind of investment capital. Period. The trick is to look at the financing available, figure out how it works, and then work into it.”
So are women discriminated against when it comes to securing funding for their tech start-ups? At least one of them out there thinks not.
To the contrary, Handschiegel is extremely jazzed about how far women have come in the last 30 years. Follow more of her musings at her blog.