Rethinking the VC Pitch Process for Women Founders
The current reality of venture capital: women-owned businesses currently receive an estimated 4% of VC funding in Canada. And it doesn’t get better as you zoom out, with just 2.8% of VC funding available worldwide going to women.
Yet, this funding landscape is starkly contrasted by the performance and influence of women in our economy: companies with a woman founder perform 63% better than all-male founding teams, and women influence a staggering 85% of consumer spending with their annual $20 trillion expenditure.
It doesn’t make sense to us either.
What’s happening in pitch rooms that can explain why women receive such a small (nearly nonexistent) piece of the funding pie?
Understand the Biases
Women founders are not to blame for the systemic barriers that have held them back from achieving success and securing funding.
Biases in the VC world run deep and are multifaceted. Studies show that women are often perceived as less competent, even when pitching identical presentations as their male counterparts. This perception bias is compounded by the fact that the majority of VCs are male—an overwhelming majority of investors are male (with 70% of these being white males)—and tend to invest in founders who remind them of themselves.
What You Should Know:
Women make up approximately 11% of investing partners at VC firms
When a woman is on the investing team, a woman entrepreneur is 70% more likely to be funded than if no women are on the team
VC firms with 10% more female investing partner hires make more successful investments at the portfolio company level, have 1.5% higher fund returns, and see 9.7% more profitable exits
But rethinking the VC pitch process isn’t about trying to out-pitch bias. Rather, we need to address the systemic barriers by challenging the systems that have enabled them to persist.
Forging meaningful connections and leveraging the transformative power of community is necessary to move the needle. Look for investors with a track record of supporting women-led businesses, as they are more likely to understand the unique challenges you face and provide the support needed to overcome them.
Finding funds or nurturing communities that focus on women and minority-led startups can make a world of difference for enduring success and opportunities.
Master the Pitch
Outside of navigating the current landscape and working to reshape bias, what can women and gender-diverse founders do to receive critical funding to scale their ventures?
Let’s unpack pitching: a critical skill that can make or break a founder's chances of securing VC funding. Here are some tips to ensure your pitch stands out:
Tips to Strengthen Your Pitch:
Know Your Audience: Research and really know the investors you’re pitching to—understanding their interests, values, and previous investments. Tailor your pitch to align with their focus areas.
Start with a Strong Opening: Demand attention right from the top by starting with a story or hook. This could be a surprising statistic, your connection or passion driving your idea, or a bold statement about your mission.
Be Clear and Concise: Help your investors understand where you are in your journey and how they can join you. Investors hear several pitches, so clarity and brevity are essential. Clearly outline your business model, market opportunity, and unique value proposition.
Use Visuals Wisely: VCs spend an average of three minutes and 20 seconds reviewing seed pitch decks. With less than four minutes to capture their attention, enhance your presentation with impactful visuals. Use charts, graphs, and images to illustrate your points and help your audience retain key information.
Practice, Refine, and Practice Again: Rehearse your pitch multiple times. Practice in front of a mirror, record yourself, and use your family, friends, or mentors as a sounding board to listen to your pitch and get feedback.
Sell Your Story
Your pitch needs to tell a compelling narrative beyond the numbers; it’s not about statistics but the impact of the statistics. Highlight the problem you are solving, your unique solution, and the impact your business will have.
Is your solution targeted toward women? Be ready for the likelihood that male investors may not relate to or resonate with it. Take the time to clearly outline the problem or pain points your target market faces and why your venture is the solution.
“Great founders are great storytellers.”
— Stefanos Zenios
Strategically crafting your story is personalizing how you communicate your business. Storytelling builds relationships, which are at the foundation of all businesses—with customers, employees, business partners, and investors.
Major Questions to Answer When Storytelling to Investors:
How big and important is the problem? Clearly define the problem and your solution.
How much do you know about the problem? Use data to back up your claims and demonstrate market potential.
How do you explain your understanding of the problem? Emphasize social proof to highlight the legitimacy and need for your solution, showcasing customer testimonials or pilot results to show traction.
Why are you the right person to solve this problem? Highlight your team’s expertise and unique qualifications.
Prepare for Tough Questions
We know that women founders may be building solutions that may not resonate with the traditional male investor, but it’s also important to note that women founders often face more challenging questions from investors compared to men.
A study found venture capitalists pose different types of questions to men and women entrepreneurs, asking men about the potential for gains and women more about the potential for losses. The negative focus on risk and prevention orientation can make substantial differences when raising: entrepreneurs who field mostly prevention questions raise an average of about seven times less than the average raised by entrepreneurs who are asked mostly promotion questions (in that particular study, that’s $2.3 million in aggregate funds versus $16.8 million).
Be prepared to defend potential concerns about your business, but work to reframe your responses to highlight your traction and current and potential growth potential.
Challenge the Status Quo
Navigating the VC landscape isn’t easy for any entrepreneur and presents even more challenges for women and gender-diverse founders. The path to true gender parity lies in actively reshaping the industry through inclusivity and championship.
For women founders: recognizing these biases is the beginning of learning how to overcome them through reframing and challenging the status quo.
For investors everywhere: this is a call to check your unconscious biases at the door and start asking fair and balanced questions, working to level the playing field and ensure deserving businesses get the capital they need to grow.
Movement51 is here to eliminate gender disparity in financial knowledge. We’re committed to affording people of underrepresented genders opportunities to learn about and activate their entrepreneurship and investing potential—ultimately advocating for systemic change within the industry.
Join us in addressing these challenges head-on and supporting each other to work towards a future where women founders and investors are not just a minority but a thriving norm in the entrepreneurial world.
About Our Partnership with Small Scale Food Processor Association (SSFPA)
Aligning the intention of impact investing to our mission of affording people of underrepresented genders opportunities to learn about and activate their investing and entrepreneurship potential, we’re thrilled to partner with the Small Scale Food Processor Association (SSFPA) on their Venture-Capital Ready: Investment Training for Women Entrepreneurs program.
Venture-Capital Ready is aimed at food industry women/intersectional entrepreneurs ready to present themselves and their business for investment and scale up to meet market demand.
Within the two-year program, M51 is facilitating a four-module investor curriculum to guide participants through the fundamentals of early-stage investing with a focus on impact investing and the Canadian food and agriculture sector.
Keep an eye out on our blog and social media to follow along with the modules and as we share more resources around impact investing, food and agriculture, and building the world we want to live in—today and for future generations.
