Starting Out

How women entrepreneurs can cut a fair share of the VC cake! 

Despite being at the helm of many Internet start-ups world-wide, women receive little or no attention from investors. In the United States alone, the growth rate of women entrepreneurs has been an astounding 400% over a decade.  

One reason for a lack of VC interest, according to analysts, is that women have made their presence in areas such as small retail trade. These areas have not been large revenue earners and VCs have been hesitant to turn cartwheels about such business models. This trend is changing rapidly, and women are making inroads into traditional male-dominated businesses like financing and even Venture Capital.

Women entrepreneurs have succeeded through the power of networking. There are collectives of women entrepreneurs who are sharing their skills and helping “want-to-be” entrepreneurs to get the attention of investors and venture capitalists. One such collective is the Women’s Technology Cluster in Silicon Valley. This organisation has built a reputation as an incubator for scouting and helping the best talent amongst women entrepreneurs. Muther, the founder of The Women’s Technology Cluster, got the idea after a visit to Bangladesh. There she saw how women’s networks had given rural women an opportunity to enter into business.

The Women’s Technology Cluster organised a conference where women entrepreneurs made presentations to an audience packed with VCs and investors. For Krishna Subramaniam, an entrepreneur who designs relationship management software, it was a chance to get her foot in the door. After tuning up her presentation with the help of “the cluster”, Krishna secured multiple offers from VCs and was in a position to choose where her money would come from.  

In Indian mainstream commercial businesses however, such networks are yet to catch on.   

There are a few issues that women entrepreneurs need to keep in mind when conceptualising their business model or when approaching a VC:

Dream Big:

Small business ideas are not difficult to execute and require limited resources. These ideas normally do not find favour with investors. The point to remember here is to think big. Many entrepreneurs make the mistake of taking the simple route. The tougher the challenge, the bigger are the rewards…this will interest investors.

Ideas that find favour:

It is accepted that successful entrepreneurs have been able to deliver a product quicker and faster than the competition. In the current era, speed of delivery is taken for granted. Ideas that find interest are those that have been labelled as “disruptive”. Such ideas normally satisfy a ‘niche market’ that exists but has not been tapped. 

Referrals:

Any salesman will tell you that clinching a sale is easier if you have a referral. This principle has to be applied to VCs. The chances of an application getting serious attention increase if the entrepreneur has been referred to the investor.  

Pitching to the VC:

Women by nature do not show an aggressive or competitive attitude. VCs like to see this in entrepreneurs. Re-organising a presentation to shows the aggressive streak gets the attention of investors.  

Focus on Marketing:

Women have been good marketers but very often undersell their experience and strengths when negotiating with investors. They need to stress that they have the skills to market the product in a competitive environment. This does need to be backed by an explicit marketing plan.

It is combinations of the above that will see an entrepreneur get the attention that she deserves.

If the statistics that we are seeing in some parts of the world come true in India, a level playing field will be assured. As more women reach the top of the ladder, women’s networks will soon be competing with old-boys networks.

Related reading:

1.“Network of their Own”; Osborne, D M; Inc; Sep 2000
2.“Helping Women Get a Good Start”; Pofeldt; Elaine; Fortune Small Business; Oct 2000.