Statistics reveal that a mere fraction of women-owned businesses gets a chance to enjoy the venture capital backing. In 2017, women-led companies received a little over 2% of the total funding, while the rest were given to men’s businesses. Unfortunately, the trend hasn’t changed, and women-owned businesses continue to receive a tiny part of the big pie.
The above stats are pretty disheartening. But what makes it worst is the fact that women-led start-ups garner more interest and produce better ROI in the market. In terms of numbers, women-owned businesses generate as much as 78 cents per dollar spent; the same figure for man stands at 31 cents. So, why do women entrepreneurs fail to attract the attention of the VC firms? Studies reveal that there are umteen reasons behind it. Of course, not everything is under the control of women founders. For instance, structural inequality, unconscious bias, and social-conditioning cannot be controlled by women.
However, certain activities are under the direct control of women founders that can be improved. These include things like financial literacy and delivering a perfect sales pitch. Financial literacy can be taught using online resources, but delivering a sales pitch requires passion, dedication, and a lot of practice.
Here are five tips from top women entrepreneurs worldwide to help women founders create the perfect sales pitch.
1. Choose the Investors that Matter
It is essential to choose investors wisely. As per Christina Calje, founder of Autheos, a lot of founders do not understand the importance of researching on the investor pipeline. Finding and winning over an investor who fits within the business values and plans completed a successfully funded start-up puzzle. Calje recommends focusing one’s time and energy on the goal of creating a list of top 100 investors who have the same values as the business and then approaching them in ranked order of preference. As a general rule of thumb, consider the following 4 factors while narrowing down the investors:
- Does the niche of the companies in the VC’s portfolio match to that of yours?
- Does VC invest in start-ups that are at the same phase of development as yours?
- Does VC have enough amount to support your plans?
- Does VC have the same opinion about the industry in general as yours?
2. Be Confident of your Product/Start-up/Service
Women need constant motivation, and this is evident by the insights shared by Mariam Naficy, founder and CEO of Minted. According to her, the confidence displayed by women and men is contrasting in her team. The women in her team are always reluctant about their ability, whereas men are confident and boldly take initiatives. Mariam says that she has to continuously talk to her women employees and keep them motivated and confident. As a founder, one cannot afford to be not sure. Investors are seasoned enough to understand when a founder is trying hard and not coming off as a natural. Moreover, women try to be modest with their projections, often presenting the conservative numbers. On the other hand, men show the best results that can be achieved, leaving a crucial impact on the investors.
One of the simple ways to gain confidence is to understand not just one’s product but also the industry. Women should spend some time calculating matrices like the total available market, market share, and market value of their own product and the ones held by competitors. The next step is to have a plan for scaling and customer acquisition in the long run. Understanding and knowing these things helps an entrepreneur present his or her plan with more clarity and conviction.
3. Don’t let the Negative Feedback Drive You
Investors who do not have the same values as the business are never going to like the pitch. Therefore, as a founder, it is vital to understand the kind of feedback that is needed. And the one that can be ignored. Eveline Klumpers of Katalysis says that learning form feedback is a good thing, but a founder should not waver in different directions by the input. A founder should ask questions where they are rejected, but rejection does not necessarily mean a bad pitch. Some investors merely reject an idea or a product because they do not feel the connection. For instance, Stitchfix founder Katrina Lake was let down by a male investor just because he didn’t think that he could be passionate about women apparel.
4. Avoid the Conservative Approach
As per Jess Less, Sequoia Venture capitalist, women entrepreneurs always undermine themselves and are found to forecast 5yrs return projection conservatively when compared to their male counterparts, who would always have an aggressive approach. According to Lee’s advice, Women need to sell their dreams.
5. Schedule the Pitch Meetings in Reverse Ranked Order
A lot of founders will recommend the new start-up owners to start pitching their ideas to investors that are their lowest priority first. Even a hundred hours of mock pitching practice will not do as much good as a live pitching session. Feedback from such investors helps a founder cut down the clutter, add more substance, and cook the perfect recipe for success. By the time the founder will meet with the top priority investors, their pitch would have become impressive and ‘best.’
As per some of the top industry leaders, an entrepreneur:
- Should never spend too much time on a slide when everyone in the audience has nodded – Josh Makower
- Should not be afraid to admit his or her weaknesses – Amy Nauiokas
- Should share the team’s background – Jenny Abramson
- Be transparent and keep the pitch crisp – Barry Schuler
- Practice a lot and showcase financial details – Victoria Fram
- Display credentials, and limit the pitch deck to 15 slides – Ita Ekpoudam
- Use tools like spreadsheets – Brett Berson
- Treat the meeting like a conversation and not a pitch – Arif Janmohamed
- Be able to explain the business in 10 words – Byron Ling
6. Invest in Skills like Storytelling
Storytelling is a great technique, and the success of Hollywood is ample evidence that humans love stories. As per Deepti Sahi, CEO of Deskbookers, empathy and storytelling are the two ingredients of a convincing pitch. Since women are naturally empathetic, they already have one thing going for them and can focus on acquiring the other skill. A good pitch includes the customer’s desires and expectations, a human connection, and a little about the team that the investors are going to back.
Apart from storytelling, a founder should also be a good conversationalist. It is essential to give an investor time to reflect upon your ideas and share his thoughts or questions about your pitch, opinion, or product. Also, have some questions for the investors. Asking questions makes a person look experienced and also helps the entrepreneur in picking the right VC. But, before the conversation starts, a founder should know what the company needs and the roadmap to achieve it. It also comes in handy when a founder has to put down the foot for the issues that matter.
7. Bonus Tip – Prepare an Elevator Pitch
An elevator pitch lasts for about 15 to 30 seconds and presents the business in a small and memorable way. The world is a little place, and founders can find themselves in investors’ company at unimaginable places. In these times, founders can make use of elevator pitches and attract some money their way. Ev Liu, founder of Straw by Straw, says that having an elevator pitch makes the founders sound comfortable and confident with their idea/product.
The next step is to prepare a pitch deck, collect financial statements, a document containing prospective terms, a plan of action, and the economic and operational breakdown of the funds. VCs usually require these documents to take a closer look at the business and make up their mind.
Men dominate the investment scene, and it is not going to change any sooner. Therefore, women must make the best use of every opportunity that they get. A perfect pitch is the first step towards securing funds for the start-up. Moreover, having confidence, empathy, human connection, and practicing the pitch increase, impressing an investor’s chances. With this knowledge and expert tips, women founders often find themselves in better shape and position. Also, elevator pitches are perfect for situations where owners get only a few seconds of investor’s attention. Do not neglect it!