Jan 4, 201505:00 PMOpen Mic
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6 key strategies for women entrepreneurs seeking startup funding
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According to research from MIT, only 7% of startups that receive venture funding have a female founder. As the founder of CareBooker.com, I know firsthand the difficulties women face when raising money for startups. However, the opportunities are improving for women seeking funding for their ventures.
Here are six key strategies female entrepreneurs can use to raise money from investors:
1. Think big: Investors will only want to invest in you if they can truly believe that in three to six years you might have an exit (sale, IPO, or other event where they could get their money back) and that they could get at least a tenfold return on their money.
If your business is expected to make $500,000 in revenue by year five, it might make more sense to get a bank loan or borrow from friends and family. However, if your company has the potential to make $50 million in five years, then investors will take your company seriously.
2. Start small: Start with immediate connections such as friends and family, using LinkedIn to see if anyone in your network (or extended network) is interested in hearing more about your company. Getting the first money in a round of funding is always the hardest part, so doing this as soon as possible will give you a longer runway for closing the rest of the funds you need to execute your big plans.
3. Seek meaningful recognition: Consider joining an incubator/accelerator. Many incubators value diversity and would like to have women included in each “class.” If you can get into a well-known incubator like TechStars or YCombinator, you’ll not only learn a lot, you’ll also gain a powerful network with plenty of investors ready to join your round.
Here’s a full list of incubators/accelerators from across the U.S. Another great resource for women is Women 2.0, which selects 10 top female tech CEOs to present on their main conference stage in front of a panel of investors and a big audience of female entrepreneurs and angels. My company, CareBooker, was named one of the top 10 companies in 2013, and the brand name and recognition helped us close our round faster than if we hadn’t had that seal of approval.
4. Do your research: Research funding options, including female-focused funds. Every founder should create a spreadsheet to keep track of the potential funding source, including contact details, a high-level overview of what would be interesting for each contact to hear about, and notes from any interactions you have with him or her. It’s important not to reach out to any funding sources that don’t make sense for the business you’ve created. For instance, you should not send a health care-focused seed fund an email about your retail tech solution.