Breedlove's Briefing: Why Female Entrepreneurs Have A Harder Time Raising Venture Capital

September 10 - Stephanie Breedlove

Hi! I’m Stephanie Breedlove, Co-Founder of HomePay, Author and Angel Investor.

I absolutely adore taking an idea and giving it life in the form of a business, then leading it to its full potential. Nothing is more fun. (Seriously!) I’d love for every woman who wants to start her own business or move up in her career to say the same thing, so here I am, mentoring millennial entrepreneurs. When I’m not working, I like to recharge and head outdoors to hike, bike, or stand-up paddle board.

Is that list of business news and trending articles you’ve tagged still unread? I get it. Allow me to help. Take a couple minutes to read my summary of articles serving the most pertinent, actionable business topics. Or, take 10 minutes to read the full article, and put another brick on the foundation of your growing career.

This week's must-read:
Why Female Entrepreneurs Have A Harder Time Raising Venture Capital

Who it's for: Any entrepreneur looking to raise capital

Why it's important:

Although women own 38% of U.S. businesses, they receive 2% of venture financing. Yep, you read that correctly. And when women do raise money, it’s in amounts lower than that of their male counterparts.

Recent research shows that male and female investors are more likely to approach male entrepreneurs with questions about how they plan to “win,” yet these same investors approach female entrepreneurs with questions about how they plan to “avoid losing.” In short, men get preferential treatment because they tend to be seen as the CEOs of “glamorous” companies like Amazon, while women are still mostly associated with small, no-name lifestyle companies.

A study of 189 entrepreneurs at the TechCrunch Disrupt pitch competition showed entrepreneurs that were asked “losing” questions and responded with prevention-focused answers raised approximately $563,000. On the other hand, the entrepreneurs who were asked questions about how they planned to avoid loss—but who were able to shift the conversation in their favor, responding with promotion-focused answers—went on to raise an average of $7.9 million. Huge difference, right?

So what does this mean? If you’re asked questions about how you plan to avoid loss, you don’t have to take the bait. By all means, give a response and then shift the discussion to focus on how you will WIN. When investors decide to whom to allocate capital, they of course look at hard data, but research shows they also draw heavily from their perceptions of the founding team. They will overwhelmingly finance entrepreneurs they view positively, regardless of business assessment. That’s why it’s so important to stay confident in your business idea and know what you’re getting into before you pitch investors.

Top Take-Away:

Ladies, know that you are going to be asked questions focused on avoiding loss when you pitch, questions that turn the conversation into a defensive and negative one. Be prepared to re-frame and steer the discussion into a conversation about wins rather than losses. And then? Win.

Want a deeper dive into the best advice on funding? Check out these related articles:

-Term Sheet: Here Is Everything Entrepreneurs Must Know When Fundraising
-10 Sources of Funding for Women Entrepreneurs
-Why the Rise in Female Angel Investors is Good News for Women-Led Startups
-3 Proven Methods for Women Entrepreneurs to Overcome Funding Gaps

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