You may know what New York fashion rental company Rent the Runway is now, but back in 2009, when Jenny Fleiss and Jennifer Hyman were starting up, it was challenging to describe--particularly to the male investors they were pitching.
"Men couldn't grasp the emotional connection that women have with fashion," said Fleiss, who is now co-founder at personal shopping service Jetblack. She was speaking on a panel alongside Birchbox's co-founder, Katia Beauchamp, and Sutian Dong, a partner at venture capital firm Female Founders Fund at a Visa-sponsored event dubbed Female Founders Day, in New York City last week. "It's not about the cost, or the convenience, or why we are crazy enough to need hundreds of items in our closet on a regular basis," she added. "It's about this emotional feeling where you feel like you can take on the world when you put on something great."
While there are plenty of men who may have a more intuitive grasp of women and their needs, plenty more don't, said Fleiss. To be successful, she noted, you'll need to steel yourself against doubters who won't understand the business problem you're solving as well as you do. Here are five money-raising tips for women entrepreneurs.
1. Show rather than tell.
At the time Fleiss and Hyman were meeting with potential investors, they were also running pop-up shops where women could try on their rental dresses. "You could just see [how customers] would transform when they put on a great outfit," recalled Fleiss, noting she decided to film these customer interactions and play them at the beginning of every investor meeting she had. "What we found worked really well with investors is showing rather than telling," said Fleiss.
Once you get your product out there, you can start collecting and analyzing consumer data to back up your pitch, she added. Until then, if there is any kind of visual element to your company, show it at the outset, advised Fleiss.
2. Let your co-founder pitch your accomplishments.
Pitching to investors is as much about selling your company and the market potential as it is about selling you as a founder. Sometimes, however, entrepreneurs have a hard time doing it and end up glossing over their achievements, noted Dong from Female Founders Fund.
When you're pitching investors, it's not only OK to toot your own horn, it's recommended. You'll need to convince them you're the right person to solve the problem you're seeking to address. If touting yourself is difficult, "a really good practice is to have your co-founder pitch you for you," said Dong from Female Founders Fund. That outside perspective can help you paint a more thorough picture of your own capabilities, she added.
3. Get the right person in the room.
Recruit well-connected people who will evangelize on your behalf. While explaining what you do and why you're doing it will be challenging, it's less so when you have a trusted intermediary helping to make the case. "Early days in Rent the Runway, there were specific investments that we did not get because we didn't have the right person in the room," Fleiss added.
4. Think about funding as a courtship.
Founder-investor relationships are long-term, seven-to-10-year commitments, Dong pointed out. "They're marriages." Seek out investors who are a good fit for your business and with whom you can have a good working relationship, she said. You also want to make sure you both share the same vision for your company's future--or you might find yourself filing for divorce.
5. Don't brush aside debt.
Entrepreneurs can get caught up in the idea of raising venture capital as the goal, warned
Birchbox's Beauchamp, whose company raised nearly $90 million and was once valued at $500 million before it sold a majority stake to one of its hedge fund investors for $15 million last year. "There are probably a lot of great ideas that don't need that kind of initial capital," she said.
Debt comes with tradeoffs, Beauchamp added. There are cash implications in paying interest, for example, but the upside is you're retaining ownership of your startup. "I learned a lot bringing debt into Birchbox later on," Beauchamp said. "I was like, 'Wow, why didn't we do this sooner?'"