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Raising venture capital isn't all about your pitch. After juggling family, pregnancy, work and the biggest funding rounds of my career, I've realized that there's absolutely a formula to success.
7 min read
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Mustering the courage to quit your job and pursue your passions isn't easy. However, once you take that first leap, it's then time to focus on actually executing on your dream. Launching your minimum viable product, putting a solid team in place and raising capital should be your first priorities. However, if you're like most female entrepreneurs, the list doesn't stop there. Growing a family and juggling competing responsibilities can feel like carrying the weight of the world -- all while trying to fund your growing business.
I have been fortunate enough in my short, four-year startup journey to have had some significant wins and an incredible co-founder to help get me there. One of my biggest wins was raising venture capital from firms who had not yet invested in any woman-found startup, let alone one with a woman CEO, all while pregnant with my first born. In fact, in 2017, only 2 percent of venture capital dollars went to female founders. So, how did we do it? The formula is actually easier than you might think -- just mix a winning strategy, a great team by your side and a healthy dose of relentlessness.
When we first started our integrated payment technology company, Fattmerchant, we faced a number of challenges. However, my team and I were able to raise almost $20 million through three consecutive rounds of funding -- all while I was managing mom and boss life. Fattmerchant has grown from a team of two to 100 employees, proudly supports four offices across the United States, and has processed over $2 billion in payments. This is quite a list of accomplishments from a technology company with a woman at the helm, and it definitely hasn't been easy.
Many days juggling life, investors, team members, board, shareholders and your screaming 2-year-old (with another on the way) can seem daunting -- but it's not impossible. Here are my ingredients to a successful funding strategy for any founder:
Know your audience.
Do your research. Know who you are pitching and what type of investments they have made in the past. Knowing your audience is key to understanding whether you are targeting the right firms. Don't forget it's a two-way street, and to be successful, both parties should benefit.
When we first started fundraising at the seed level, we were debating whether we should pitch to local investment groups or target large venture capital firms. Regardless, most firms will tell you up front what deal size they invest in, and they usually don't go out of their bounds. So, stick to firms where you fit their criteria and make sure they also fit yours.
Network like a boss.
You can't just send cold emails to capital firms and expect to get a response regarding your business plan. They get countless proposals each day, so securing a meeting this way is an extreme long shot. Instead, get involved in your local tech scene, and start pitching your company through any platform possible. Research which channels are most relevant to your business -- chamber events, tech events and meetups are excellent places to start building connections through networking. Engaging with potential investors face-to-face makes getting a meeting significantly easier than sending that cold email you were typing before.
In the early stages of founding Fattmerchant, we got on any and all stages we could to get our story out there. Every pitch competition, networking event or meetup I could find, we were there. I credit a lot of our early success to simply being visible and showing up. Nothing beats good old-fashioned networking in the early stages of a company, and into the growth stages as well. Staying active in your community as a founder not only helps position your company as a thought leader, but helps jump start conversations with relevant investment firms.
Be prepared.
Once your meetings are set, ensure you are fully prepared to have your business plan ripped apart. It's critical you develop a thick skin before walking into the room. Don't get defensive or offended. Instead, use this opportunity to learn and take note of any holes investors find in your plan. Their suggestions come from experience -- they have heard thousands of pitches -- and more often than not, their feedback will become the basis for pivots and new strategies that you might not have considered before.
Related: How to Secure VC Funding When You're the Only Woman in the Room
The next thing you need to prepare for is the daunting question every potential investor will ask you: How does this business model scale? Investors aren't just looking to give you funds to get a minimal return; they want to ensure your idea can scale big enough to get them the multiples they want based on the risk they are taking with you, and they want to know that the market can support it.
Surround yourself with a winning team.
The old adage "there's no I in team" is never truer than when you're growing a startup. Everyone has different strengths, and it's important to ensure you surround yourself with executive leaders who complement your skills and make you a better founder. I've found this ten-fold with my co-founder, Sal, and the rest of my leadership team. They've been instrumental in growing Fattmerchant, and I've personally learned so much from having them alongside me through all four rounds of funding. I couldn't have done it without them.
Not only does a great team help your business grow, but potential investors want to see you're not biting off more than you can chew. Simply put, you can't do it alone, and investors know it. By taking the time to build a smart, supportive and diverse group of leaders for your business, you prove to potential investors that you have an eye on the future and that their investment money is in good hands.
Related: Why the Rise in Female Angel Investors Is Good News for Women-Led Startups
Tell a good story.
I can't emphasize this enough. Your pitch needs to be perfect, and that can only come from practice, practice and more practice. Get it into the hands of as many founders and mentors as you can, because they will help you navigate the story and make it relevant for your audience. Within eight to 10 slides, you should be able to share a full executive summary of what problem your company is trying to solve and what the market opportunity is. It's not enough to simply present your idea; set the scene for how your company will have an impact on your target market, how it will change the industry and how you plan to make a splash.
Back it up with data.
Sadly, however, the story isn't enough. You need to ensure you have data to back it up. What are your finances? Revenue? Targets? Industry opportunity? Market size? Cost per acquisition? Know your numbers and show investors you have data to substantiate all of your claims. Start tracking key performance indicators from day one -- nothing tells your story better than actual charts trending "up and to the right."
Don't take no for an answer.
If the timing isn't right for them, that's okay. Ask for a follow-up meeting so you can reach back out and know what milestones they are expecting you to hit. This has been one of the best tools I have used with venture capitalists. Even when the timing wasn't right for our seed round, Series A, Series B and even Series C, I kept reaching back out. Remember, as a founder, you are almost always raising capital, even when your last round finishes. You need to be thinking ahead for what's next, and every conversation matters. Keep good relations, act professional and always ask for feedback -- 98 percent of the time, it's true.
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