Sheilia Lirio Marcelo knew from the start that her company, Care.com, was going to be big.
Earlier in her career, when she was working at a startup, her parents were helping her care for her son. Then her father had a heart attack while carrying her baby up a flight of stairs. Marcelo was using the Yellow Pages to try to find care for both her dad and her son, all the while working at a tech startup and knowing there had to be a better way. And she knew there were plenty of other people, in situations similar to hers, across the country. That seemed like a huge business opportunity.
But rolling out her caregiver-matchmaking solution nationwide would take money. Lots of it. In July 2007, she raised a Series A round of $5.5 million from Matrix Partners and LinkedIn co-founder Reid Hoffman. A year later, she was back for a $10 million B round, and the numbers just grew from there. By the time she took the company public in 2016, she'd raised about $100 million. That's unusual for any entrepreneur -- but especially for a female founder, given the tiny percentage of venture dollars that go to women.
Speaking in Houston last week at the Circular Summit, Marcelo talked about the early days of her company, and particularly her experiences raising so much money, while also sometimes being underestimated as a woman tech CEO. Here's her advice for other female founders who also think venture capital might be the best source of funds for their companies.
Not every company is destined for venture capital
Marcelo pointed out that even though entrepreneurs hear a ton about venture capital, and it sounds glamorous, it's not right for every startup. When she was raising money, she says, the expectation was that her company would get to $100 million in revenue in five years. Now, she says the expectation is that reaching that goal will take five to ten years.
To convince a venture investor that you can accomplish that, she said, you need to have a clear and massive market opportunity, or in VC-speak, total addressable market. And, Marcelo said, venture capitalists like seasoned teams. If you're a relative newbie, make sure to surround yourself with an experienced team.
Always be raising money for your next round
Marcelo knew that she would be raising money on a regular basis. So she had a tiered list of the investors she was targeting. When she started getting term sheets for her A round, she started asking for meetings with the folks she wanted to get for her B round. "They're going to tell you what milestones you need to hit to get from A to B," she says. Plus, it's easy to pitch at that time. "You're already in the mode of storytelling. And we know that so much of success is having that comfort with authentic selling."
Find female investors
Marcelo pointed out that funds that invest specifically in women, often run by women investors, are popping up across the country. Golden Seeds, one of the first, she says was "already a generation ahead of us." But now Susan Lyne is running BBG, or Built By Girls, which is housed within AOL, and Anu Duggal is running Female Founders Fund, in which Marcelo is a limited partner.
Marcelo said that women shouldn't assume their investment is going to come specifically from these funds, or from these women. But she says it's a good idea to make a point to at least network with female venture backers, for two reasons. First is that you just want to run your idea by as many people as possible, and women may very well have a different perspective on it than men. Second is that women venture capitalists, she says, "are always wanting to support female entrepreneurs and will recommend angel investors."
Be prepared to be underestimated
Yes, Marcelo was mistaken as an assistant in an investor meeting, as her company was preparing to go public. She had made the classic "mistake" of offering coffee to another participant in the meeting, and her hospitality was mistaken for duty.
Marcelo sounded positively zen about the whole thing. "My goal is to be more respectful and polite," she said. "I'm trying to understand the unconscious bias. If my desire is to break down that bias so that they're more respectful of a woman next time, a fight isn't going to make that happen."
In this instance, she smiled and said, "Hello. I'm Sheila Lirio Marcelo. I'm the co-founder, CEO, and chair of Care.com. I'm so pleased to meet you."
"They're not expecting that response," says Marcelo. "Then I wow them with logic and the power of my mind in the most humble way."