I'm not here to stir up controversy so I won't go into the fact that recent studies have shown that women investors have out-performed their male counterparts by a decent margin over the past few years. I will let the Economist and USA Today speculate on the reasons why. I am much more interested in hearing from these women investors and using their knowledge and advice to help startup companies get ahead of the curve when it comes to getting their company funded.
The Pitch Deck podcast has had some phenomenal female investor guests over the past several months and the wealth of information and advice they have presented should not be over-looked. Here is a short list of some of the most helpful advice for startup founders when it comes to engaging investors:
Pitch to the Right Investor
Julie Larossi is an Angel Investor, mentor, and a Professor of Entrepreneurship. She says that startups should research potential investors and their interests before setting up meetings. "It is important for founders not to just schedule lots and lots of meetings but make sure that people have some interest or some connectivity to what they are doing," said Larossi. "I will be very up front with somebody and say this is not an area that I'm interested in." Knowing this ahead of time will save everyone time and energy.
What Problem Are You Solving?
Sapna Shah, an Angel Investor with Red Giraffe Advisors, wants to know right off of the bat what problem you are solving and is it something that needs solving? Shah says, "A trap that some companies fall into ... is that they see a need and a lot of time it's a personal need and not necessarily a need that a broad audience has." She says to make sure to validate the idea and make sure there is actually a customer base. "Without the customer, you don't have a business..." and without a business, you will not get funded.
Project Your Message Clearly. Be Authentic. Don't Over Sell
Alicia Syrett is an Angel Investor and entrepreneur on the board of the New York Angels. Syrett says that the ability to project your message quickly and clearly and to show excitement without being too "sales-y" always catches her eye. Be clear in your message and let your passion guide you, but don't let it overtake you. She is usually turned off by someone who comes in talking about how they have "the greatest opportunity ever" and they are "going to make tons of money" and you don't want to "miss out." "If that was really true, you wouldn't have to market it so hard," says Syrett. Go into an investor meeting being able to clearly convey your message in just a few minutes. You risk losing the interest of the investor otherwise.
Building the Right Team
Angela Lee is the founder of 37 Angels, which is an angel education program and network of women investors funding male and female-led startups and she is also the Assistant Dean of Teaching Excellence at Columbia Business School. Lee says that building the right team and recruiting is of utmost importance. "A lot of people tend to bring on their friends as early hires or co-founders and there's a lot of data that show that it is not the best way to hire." She says that just because you like someone doesn't mean they are the best fit for the job. Bringing on the right people in a business can mean the difference between soaring or flopping and investors will expect that the team you have built is the right team for the job.
Customer Acquisition Plan
Lee also wants to know if your company has done its homework on customer acquisition. She says that a company, "really has to know the answer to exactly how they are going to acquire customers...They need to know that flow backwards and forwards and if they don't know that question, to me they're not ready to be pitching, me as an investor or us [37 Angels] as a network. He a clear line on how you plan to grow your business and the costs associated with customer acquisition.
Know Your Competition
Syrett is adamant that you MUST know who you are competing against. "It is a red flag when [a founder] says thy have no competition," says Syrett. "It may not be what you consider a viable competitor but it certainly exists... and it is naïve to say there is no competition." If you are a spreadsheet, your competition might be a ledger book. But that is still competition. If founders assume there is no competition, investors will assume they haven't done enough homework.
This advice is solid, regardless of your gender or your business. Take heed. It may mean the difference between getting funded and getting laughed at.
For more advice from this impressive group of female investors, as well as other investors and founders who have successfully raised capital, check out The Pitch Deck podcast and follow on Twitter: @the_pitch_deck.