3 Top Tips for Women-Led Start-Ups
Currently only 14% of business angel investors in the UK are women. For many female entrepreneurs the experience of raising finance is especially challenging when they have to present their business idea to a room almost entirely filled with male angel investors.
It is therefore unsurprising that the Treasury has announced that only 1p out of every £1 of venture capital funding goes entirely to women-led start-ups. Here Jenny Tooth of the UK Business Angels Association, offers some insight in how women can best approach these scenarios moving forward.
It’s an old trope: men are cavalier with money, women are cautious. I’m usually reluctant to go along with generalisations, but when it comes to the pitching room I find that female entrepreneurs do undersell themselves; asking for just enough, or even less investment than they need. I hear myself saying: “Are you sure that’s all?” Whereas with men, I’m met with outrageous requests. The truth is that neither approach inspires confidence in investors. But the trouble women face is that they are walking into rooms filled predominantly with men, for whom a cautious approach may be a red flag. Here’s how to tread the line…
1. Have a growth plan
Women lack entitlement. They want to feel that they deserve it and have proved the worth of their business before asking for huge sums – something that tends to trouble men less. This can hold you back if you go into the pitching room feeling unsure of what it’s appropriate to ask for. But walk in with a forensically thought out plan of how you want to scale your business, and you’ll prove your ambition through the clarity of your planning. To me it’s the best way to approach investment – don’t play games, and under or over sell yourself. Make a detailed, sensible, but ambitious plan of how you want to scale, and work out how much money you will need to achieve that goal.
2. Work out how to execute it
To show what a fantastic business you’re building, you need to prove that you have the capability to grow – and we know female entrepreneurs are able to do that successfully. Don’t be afraid to show what you could achieve if you had the money to take you to the next level. To get to that point, you’ll need to spend on certain things: team members, marketing output, work on the product itself. Think about what you need and ask for it. Don’t feel that by not asking, investors might respect you more – they’ll just see it as a lack of ambition and a lack of understanding about how fast you can scale. You owe it to yourself to show that you have ambition for growth – and that growth needs money.
3. Investors aren’t the enemy
Women undersell themselves because of a misconception that the amount of money they’re asking for will correlate to the number of shares they’ll have to give up, and the control they’ll be forced to hand over. Women tend to create businesses that are personal, often springing from something in their own lives, so the idea of relinquishing control is understandably distressing. But this couldn’t be further from the truth. Angel investors aren’t there to take equity or exert control, we want to align with our entrepreneurs and support them. Ask for help and show that you’re willing to collaborate at an early stage.