Statistics show women entrepreneurs get a disproportionately small percentage of VC funding--even though the companies that do get funds tend to do slightly better than their male-led competitors.
Why the imbalance? The dearth of female VCs, low numbers of women pitching, and gender bias have all been blamed, and rightly so. But there's another possible explanation: Women pitch differently from men and that difference serves to sabotage them. That observation comes from Lynn Perkins, a serial entrepreneur and founder of UrbanSitter, which helps parents in 60 cities connect with trusted babysitters through their social connections.
Perkins is a noteworthy exception to the females-don't-get-funded rule. UrbanSitter is her third startup and so far it's raised $23 million in three rounds of funding. But she doesn't want to be this unusual. She sets aside time every month for counseling other female entrepreneurs, and she's also asked the VCs she works with for their opinions as to why female entrepreneurs are less likely to get funded. Based on all those conversations, and her own observations, Perkins has come up with several things female founders may be doing wrong when they make pitches to VCs.
Here's her list. And, she says, "I hope this is an article that doesn't need to be written in 15 years."
1. They don't present a big enough vision.
"I hope female founders aren't selling themselves short," she says. But this is one reason VCs have cited for not funding more female-led startups.
It's a highly understandable problem. Planning for world domination is decidedly unladylike, and many of us have been taught not to brag, or make claims we're not sure we can back up. Then there's the issue of proportion: If you're asking for a million or two in seed funding (or an even smaller sum from an angel investor), world domination may seem like an unrealistic goal.
But look at it from the VC's viewpoint for a moment. Most of the companies they fund will fail, and of those that survive, the only ones that will allow them to recoup their investment are those that either go public or are acquired by larger companies. Neither outcome is likely unless the founder is dreaming big dreams.
So don't be afraid to think big. If you're asking for a small or seed round of funding, explain how this initial investment will let you take the first steps toward eventually capturing a huge market.
2. They want to have everything figured out before they pitch.
You know you'll be asked tough questions, so it's a natural to want to be able to answer every one of them. It's also natural to think you should have a complete plan in place before you ask anyone to bet a large sum of money on your venture.
But this kind of thinking can lead you to either never pitch at all, or else to pitch the kind of modest vision VCs don't buy. "You have to be willing to take some risks and have some unknowns when you pursue a startup business," Perkins says. "Part of being in a startup is being willing to start with an initial plan and be ready to change it. That's something you have to be comfortable with."
3. They present too much data.
Needless to say, you need to share data if you want to impress an audience of VCs, and that data had better show why there's a great market for your product and your company can sell to that market. But just as you shouldn't expect to have answers to every question, don't overwhelm your audience with more data than they can quickly absorb. You should focus squarely on the main data points and prune out the rest, Perkins advises. "Don't kill yourself coming up with 50 slides," she says. "Have 11 good slides."
4. They don't focus on their teams.
This is a big mistake because VCs consistently say that when they invest, they're betting on the team behind a company more than the company or the product itself. Which makes sense when you remember that the product itself is likely to change quite a lot between when pitching it to VCs and actually getting it to market.
Make sure to share information about your team, especially the experience you and other team members have with other startups. And try to hire early employees who bring skills, viewpoints, and personalities very different from your own.
5. They take funding decisions personally.
If you fail to get funding, it's not because you're a bad person, your idea is a bad idea, or the VCs don't like you. It's a pure business decision about allocating the VC's resources in a way that makes most sense to them and their own investors.
"Women tend to take business decisions personally," Perkins says. "It's something I'm working on every day."
6. They worry that having a family will hold them back.
"I often get asked by entrepreneurs who have kids if I am nervous about starting a company when I have young children," Perkins says. Not only is she not nervous, she raised one round of funding for UrbanSitter while pregnant with her third child.
"I think it's worked out well for me because it's forced me to prioritize," she says. "You have to take care of yourself and give yourself a break from your business. Because I have something that pulls me away from the business, I think I have more mental clarity than I did before." In a way, she says it puts her in a better position than if she had no parental obligations and was able to work all the time.
7. The let being the only woman in the room bother them.
This isn't how it should be, of course, but it's often the case that women founders will find themselves pitching to an all-male group of VCs. It's natural to feel uncomfortable about this, especially if your product is aimed at a female market. Sometimes Perkins found herself pitching her product not only to men, but to men who had never looked for a babysitter because their wives always handled child care. "It can be intimidating to be the only woman in the room," she concedes. "I wish female founders could look at the VCs as if they were pitching to a group of women."
Male VCs themselves are aware of this issue, and sometimes try to solve it by bringing a female executive into the pitch session, Perkins reports, even if that executive has no other reason to be there. "It might be the head of accounting," she says. "I can't decide if I appreciate that or think it's weird."