5 Truths About Negotiation and Closing the Gender Financing Gap

Founder Lab

Jun. 13

As an entrepreneur, there will be many times you’ll need to negotiate, whether it’s with an investor, vendor, or employee. Negotiating can be challenging, but the silver lining is that you can develop these skills with practice.

Here are some truths for founders heading into negotiating grounds and tips for working out a deal with a counterparty.

Quote by Christine Tsai reads “In life, you don't get what you deserve. You get what you negotiate. So don't be afraid to ask—the worst you can hear is ‘no.’”

But First, the Hard Truth: Gender Bias Still Exists

Before getting into the list, here's the hard-to-swallow truth: gender bias remains a big problem.

Globally, 20% of startups have at least one woman founder. As that number grows, the gender financing gap doesn’t improve, with male founders raising more capital than their female counterparts. When women pitch their ideas to investors for early-stage capital, they receive significantly less—a disparity that averages more than $1 million—than men.

And yet, businesses founded by women ultimately deliver higher revenue: for every dollar of funding, startups founded or co-founded by women generated 78 cents, while male-founded startups generated less than half that at just 31 cents.

A prime example of gender bias at work is how, in pitching rooms, investors tend to ask men more questions about the potential for gains, whereas women are asked more questions about the potential for losses. In some instances as women climb societal ladders, the perception of them as a threat increases, prompting protective responses to safeguard existing gender norms.

1. Truth: Embrace Authenticity

Women founders have some natural characteristics to help during problem-solving scenarios. Research has found that “women possess unique advantages as negotiators, including greater cooperativeness and stronger ethics. But often those strengths are overlooked or severely undervalued.”

Authenticity is a powerful asset in negotiations. Leveraging your strengths and embracing your true self makes for a better bet to set you apart and build trust with potential investors and partners. Authenticity involves being honest about your goals, values, and vision. When you stay true to who you are and what you want, you are more likely to attract like-minded individuals and secure deals that align with your mission.

Tips to Embrace Authenticity

Know your story: Be honest about your company journey, your mission, and what drives you.
Communicate openly: Articulate your goals, values, and passion clearly with potential partners and investors.
Build genuine relationships: Focus on creating meaningful connections rather than transactional interactions.

2. Truth: Understand Who You’re Doing Business With

Successful negotiation takes a deep understanding of the other party's interests, motivations, and constraints. Building rapport with your counterparty can help you do that, so don’t be shy about showing your personality (see: embracing authenticity) or spending time finding common ground.

Establishing a good relationship from the get-go and knowing who you’ll be striking a deal with allows you to tailor your approach and ensure your values and goals are in alignment—not only increasing the likelihood of a favourable outcome but also making it easier to smooth out any potential disagreements down the road.

Tips to Understand Your Counterparty

Do your research: Dig into the background, values, and interests of the people you’re negotiating with.
Ask lots of questions: Engage in conversations to peel back layers and uncover their priorities and concerns.
Actively listen: Pay attention to verbal and non-verbal cues to gain insights into their perspective.

3. Truth: Confidence is Key, But Preparation is Crucial

Confidence plays a huge part in the outcome of a negotiation, but it must be backed by thorough preparation. Full stop.

Being well-prepared demonstrates professionalism and competence, boosting your confidence and credibility. Research the market, understand the value you’re bringing, and anticipate counterarguments. Preparation not only enhances your knowledge but also empowers you to negotiate assertively.

Quote by Carol Frohlinger reads “Don’t bargain yourself down before you get to the table.”

Tips for Effective Preparation

Know your numbers: Have a clear understanding of your financials, market position, and growth potential.
Anticipate questions: Prepare answers to potential questions and objections.
Practice your pitch: Rehearse your presentation to lock it down for clarity and persuasiveness. Also, try practicing both sides of a negotiation since perceived power can be different from each perspective.

4. Truth: Practice Resilience and Persistence

We’ll say it again: negotiating is hard. It often involves setbacks and rejections—hearing 'no' repeatedly or not getting the outcome you hoped for. It's as exhilarating as it is disheartening, so having grit is a must for a founder. Developing resilience and persistence is essential for overcoming these challenges and continuing to pursue your goals.

That said, part of resilience in negotiating is accepting what you can. By speaking up for what you want and being accommodating and reasonable, you set the standard for your counterparty to reciprocate. Balance persistence with goodwill by meeting them halfway or proposing alternative solutions.

Tips to Build Resilience

Stay positive: Focus on your long-term vision and maintain a positive outlook.
Learn from experience: See rejection as redirection. Reflect on past negotiations to identify areas for improvement.
Seek support: Surround yourself with mentors, peers, and allies who can offer guidance and encouragement.

5. Truth: Know Your Worth and Advocate for It

As a woman founder, it can’t be stressed enough to know your worth and advocate for it to ensure you receive fair terms and recognition. Understanding your value and being aware of your options empowers you to negotiate from a position of strength.

You may not get everything you want in a deal; you may come across situations where it’s best to walk away. But there will always be more opportunities. Keeping alternative options in mind allows you to hold steadfast in what you believe your company is worth, assess the pros and cons of other partnerships, and understand what you might be giving up or gaining—enabling you to negotiate the best deal for your business.

Tips to Advocate for Your Worth

Be clear on your value proposition: Articulate the unique value your business brings to the table.
Leverage market data: Use industry benchmarks and data to support your valuation and terms.
Be willing to walk away: If you can’t come to agreeable terms, be prepared to respectfully say no. Clearly explain your reasons, commit to maintaining confidentiality, and avoid using it solely as a bargaining tactic.

Regardless of gender, negotiating requires embracing authenticity, understanding your counterparty, being well-prepared, practicing resilience, and building confidence.

For women founders, here’s to continuing to advocate for our worth and continuing to close the gender financing gap as we do so. Whether you're pitching to investors or negotiating a partnership, remember that your unique perspective and strengths are valuable assets. Embrace these truths and let them guide you to successful negotiations and securing the support needed to drive your business forward.

Woman founder pitching at Founder Lab Demo Day

Did you know? ‘Negotiating as a Founder’ is one of the newest modules added to our Founder Lab. The lab helps startups navigate fundraising and become venture-ready through 11 weeks of learning from experts (think: pitching, governance, due diligence, and more).

Learn more and join the waitlist for when we open applications for the next cohort.