Only 10 percent of women hold decision-making positions in venture capital firms. Here are tips on how to pitch — from women who fund women entrepreneurs.

If you decide to raise capital to fund your startup — which is not the only way to scale a business, BTW — chances are you will cross paths with a small business lender, roll the dice with a crowdfunding platform, apply for a grant, or grovel (sorry, pitch) your nascent idea to friends and family.

You can also always grow and scale slowly, and treat your entrepreneurial venture as a side hustle until you have enough continuous stable monthly revenue to make it your full-time gig. On SheVentures, I’ve heard women who try one or more of these methods, but the bulk of them bootstrap their businesses. More on that later, but suffice it to say each approach has its pros and cons.

If you do decide you want to raise capital from angel investors, a venture capital (VC) firm, or a family office, you’ll need to prepare a more formal approach.

SheVentures asked female angels and venture capitalists what works, what doesn’t, and what flat out annoys them.

First up: Parul Madan, an angel investor in more than 40 companies, and CEO of DueDash, a global investor relations platform. 

 SheVentures: What is essential when you evaluate a company for investment?

Parul Madan: There are three key things I look for when I make an investment decision.  

1. First, I want to see a strong market demand. Most companies fail due to poor product-market fit, so make sure you have done your research and can prove that your market is compelling.

2. Next, your team needs to be strong. It will make or break your business, even if there’s demand for your product. Think about the qualities your team has that will help you succeed, and put your best foot forward.

3. If your product isn’t unique or doesn’t solve a clear problem–you’re in trouble.

SV: What tips do you have for female founders?

Female founders need to prove that they are fighters. But it doesn’t matter if you are male or female: If you are the founder, your startup depends on you for its existence. 

Create proof points to show that you are a hustler focused on getting your startup running. A fighting spirit instills confidence in investors that your startup can thrive — and that they are backing the right founder and team.

The statistics for female-led venture-backed businesses is still dismal. [Check out SheVentures Angel and Venture Capital Funding Resource Guide.] There is a long way to go to create a level playing field. [We agree, women raised a paltry 2.3 percent of all venture capital in 2020.]

Show that you know how to ace your game. In the end, success comes only to those who pursue and persevere. 

Female founders can push barriers by developing a confident mindset, and communicating that they are better than their male counterparts and/or competitors.  

SV: Do you have any special tips?

One of the best ways to pitch to investors is to have a real conversation, not just a presentation. It’s too easy for a VC or angel to tune out if you ramble on for 15 or 20 minutes.

Spend a couple of minutes describing what you do, and then ask for a reaction.

Sometimes when an investor gives feedback, she will start to convince herself that she’s interested — which is perfect for you! Create a persuasive leave-behind package that includes key points and added details. Remember, an investor pitch is an interactive conversation, not a pitch competition.

Build your network, find influential advisors, and hire solid team members. This will improve credibility and prospective investors will notice. These advisors or board members will help bring investors, and their presence can also increase your company valuation. 

It is easy to be overtaken by emotion regarding the lack of investors in female-led startups, but it would be prudent not to be sentimental about it. Instead, be rigorous about your numbers. 

7 investor questions all founders should expect

1. How investable is your business? 

2. Will you be caught off guard, or are you able to create a positive outlook that no investor can resist? 

3. Do you know your key performance indicators?

4. Are you able to speak about acquired users or customers?

5. How familiar are you with your churn and burn rates?

6. Can you show your proof of growth through metrics?

7. Are you able to measure and forecast your revenue? 

What is your biggest pet peeve when investors pitch?

One answer we received to this question was from Alice Neuhauser, CFO of Seismic Capital Company: Buzzwords are a big pet peeve of mine, specifically the phrase “serial entrepreneur.” Investors who are looking for founders who have a passion for their vision, and nothing tells me that you’re the type of founder to quit and move onto another project than the phrase “I’m a serial entrepreneur.”

SV: Fair enough.

But one investor’s pet peeve is another’s self description. Julia Lemberskiy, serial entrepreneur and angel investor formerly with Uber, Uber Eats, and Rocket Internet, now a principal with VC firm Frontier Ventures, and co-founder and managing director at JJ Studio–advises downplaying the gender angle:

When pitching investors for capital, don’t stress the point that you are a ‘female entrepreneur,’ or that it’s difficult to raise funding.

Investors are acutely aware of the industry and the situation. We don’t need to be reminded, and it can come off as you being less than confident about what you’re bringing to the table.

Instead, show your strength and confidence. Many female founders try to ‘hide’ behind a male co-founder or co-founders, or they will bring on board under qualified male co-founders because they feel they will be taken more seriously.

Investors can see right through that. If you– as the founder– lack confidence in your abilities, how will you be able to build a successful business on a shaky foundation? That’s a turnoff.

Last, but not least, don’t stereotype your pitch; sometimes other women founders will pitch me as a woman, and not as a VC, believing that because I’m a woman, I share the exact pain points of their target audience. It’s not always true, and I’m not evaluating your business as a woman, but instead, as an investor. Approach me that way, rather than my gender. I want to hear the financial data supporting your business model, not an emotion-based approach.

As an entrepreneur myself, as co-founder of CentSai, a B2B financial wellness company, and now SheVentures, I love seeing the sharp increase of women execs who exude talent. Such is the case for Oksana Malysheva Ph.D., a venture capitalist, entrepreneur, and business executive based in Austin. Malysheva, was raised in the Ukraine, earned a scholarship, and moved to the United States with her husband and only $100 to their name. She earned her Ph.D. in physics from the University of Pennsylvania.

Today she is the managing partner and CEO of Sputnik ATX, a VC fund and accelerator for early-stage startup founders. Her tips:

SV: What are your tips for founders looking to raise a funding round?

• Know how much to raise and at what valuation: As a general rule, try not to give away more than 20 to 25 percent of your company when you fundraise. As a startup founder, you should be reasonably okay with not knowing where the funds will come from in 12 to 18 months. If you over raise, it will give you more runway, but future investors may hesitate. Personally, I would not put my money in a startup if the founders own only 20 percent since the founders don't have much to lose; as a VC, I want to see a founder owning 80 percent of the company, so I know they’re committed to the company’s success.

• Know when to approach a VC versus an angel investor: The most important thing is to research who you’re talking to and what their typical check size is, so you don’t waste your time or theirs. Make sure you’re at the right stage for the investor. I know a lot of VCs in Austin who might take a meeting to keep tabs on you, but be clear that you’re not there to ask for a check, but to get acquainted. The last thing I’ll say on this: You don’t only want money; you want money from people who will help you build your business. The investor has to be the right fit for you.

• Put together a pitch deck: The job of the deck is to land you a meeting, not to tell the investor everything about your company. Keep it fairly short. The goal is to get a second meeting, not a check. A long deck will tell me you can’t prioritize or tell a good story.

• Make sure you tell VCs you’re pitching how BIG your company could be: At Sputnik ATX, we are intentional to ask all founders the same questions to avoid implicit bias. However, across the board, research shows that VCs tend to ask women what could go wrong versus asking men how big their companies could become. VCs are in the industry of making the right bets, so the biggest mistake is to miss a future unicorn. You sabotage yourself if you don’t speak to how big your company could become. If a VC asks you more risk versus opportunity questions, then you need to make sure you work in how big your idea could be — even if you aren’t directly asked.

The implicit bias of venture capitalists Malysheva cites is real, and kudos to her for streamlining her approach. The best research I’ve seen on the difference in how male and female venture capitalists approach female entrepreneurs has been quantified in research performed by Dana Kanze, Ph.D., at the London Business School. Listen to Kanze speak candidly about her research on SheVentures in this tell-all episode How to Beat Gender Bias When You Pitch. You can read further about her work in this Harvard Business Review article, and her most recent work in Science Advances on gender bias and product/market fit.

In her earlier work on implicit bias, Kanze analyzed a startup competition, how male and female VCs interacted with the men and women pitching. What Kanze found was that male and female VCs tended to ask female entrepreneurs prevention questions and ask male entrepreneurs promotional ones. The linguistic bias is subtle, often unconscious, but real. Here’s an example:

1. Prevention question: “How do you plan to retain customers?”

2. Promotion question: “What are your customer acquisition goals?”

Kanze’s advice: “Practice answering any question from an angel or a VC with a promotional answer. In this case it might be, ‘We plan to acquire customers at X percent a month, and will have Y customers in 180 days with an average lifetime value of $Z per customer.’ The response is direct, shows you know your business, and exudes confidence.”

Who can say no to that?

Pro Tip: Consider teaching others what you learn along the way. Products such as Teachable are a great way to share and monetize your knowledge.