As an investor, there are many factors that I consider when working with founders. Along with pitching a good idea, I’m also thinking of the biases that exist within venture capital to ensure I’m actively investing in diverse companies. Knowing that diverse teams perform better, we need to have seats at the table for a broad range of people to bring their fresh perspectives and innovative solutions.
With that, investors should also keep in mind that while founders are pitching them, they are also strongly considering an investor’s values to judge whether they want to enter into a business relationship with them.
Two of the founders that I have invested in—Katherine Regnier, founder of Coconut Software, and Alicia Soulier, founder of SalonScale—have shared their thoughts when seeking out investors.
“Even though a lot of women may need reassurance, you are not going to get that during a pitch. You have to know that going in. My strategy was to book meetings with as many investors as I could so that I could practice for the pitches that I wanted. And then I would tell those investors, I want to work with you and here’s why.” — Alicia Soulier
Facing biases during pitches, such as being asked different questions than men during the process, has a huge effect on confidence and leads to potentially undervaluing a great company. Investors need to adopt a more gender-balanced approach to evaluate pitches.
“It is very common that I will ask a potential VC firm what their philosophy is around diversity. It’s very obvious to tell if they are thoughtful and being intentional about it or if they stumble and it’s an afterthought. It’s been proven that diverse teams produce better returns. Women are not a charity or a checkbox, it’s good business sense.” — Katherine Regnier
While founders are pitching their ideas, they’re also critiquing the investors across the table. Diversity is about much more than just ticking the boxes of gender, race, and background; the best companies and business relationships are built on foundations where investors genuinely value and recognize the heightened success that comes with diverse teams.
“Not to stereotype, but I don’t think the majority of male investors are as empathetic to female CEOs. Many of them did not need to kill it all day in business meetings, raise a round of funding, get kids’ homework done, and also make sure supper was on the table. I appreciate that we are trying to change that model.” — Katherine Regnier
It’s a fact that startups founded and cofounded by women are significantly better financial investments: for every dollar of funding, those startups generated 78 cents, while male-founded startups generated less than half that, at just 31 cents. Taking that comparison into account, there are areas of focus that women founders address that lead to increased revenue.
“To get around a lack of women in VC, I started asking male investors to talk to their wives about our product. There can be a huge advantage to getting them to consider a female perspective when you are raising.” — Alicia Soulier
Investing in gender diversity opens up doors for huge opportunities. Considering women drive 70-80 percent of all consumer purchasing, more investment dollars going to female-founded companies will lead to products and services that meet universal demands.
“One of our strengths as women is our vulnerability and our passion. That’s the thing you need to be the loudest about. Be clear that this is my story to tell. You’re not going to tell me how to tell my story, you’re assisting.” — Alicia Soulier
There have been too many negative experiences for women raising capital based on outdated preconceptions and the lack of female funders. Closing the funding gap for female founders requires male and female VCs to adjust the lens of decision-makers and view unique strengths as opportunities.
“I’m looking at your company as hard as you are looking at mine to see if you provide value, including race and gender representation. You could be missing out on our company which is killing it because you are not being intentional or thoughtful about diversity. It matters to all of us at Coconut.” — Katherine Regnier
Bottom line is that firms need to revisit their values and ensure they are taking action on their side of the table. Losing out on a company because they don’t see the benefit of building a relationship with you could mean missing out on the next big thing.
As much as founders are seeking capital, they are also looking for investors who understand, respect, and value their company. In the male-dominated world of venture capital, people gravitate and invest in founders that are familiar to or resemble them—mostly white men.
Diversity and women investing in women is crucial for the future. We need more women in senior partner ranks, and we need to embrace their views and strategies. More diverse funders and founders equate to stellar returns and better outcomes—a win-win all around.