With the number of women founders rising, women investors are an important success factor for them.
5 min read
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Women are founding companies at a phenomenal rate with women-owned firms growing by 1.5 times the rate of other small enterprises. About 43 percent of women leave the workforce after starting families and struggling for the elusive work-life balance and return to the workforce as entrepreneurs.
While a lot has been said and written about the growing body of female founders, there’s an important tribe that’s rising — the women investors. The Diana Project study by Babson College reported that a female entrepreneur is more than twice as likely to get funded if a woman is part of the investor decision-making team; but beyond that, women bring an entirely different perspective to the pitch evaluation of the founder — male or female.
Here are seven women investors, speaking in their own words, on how their approach and evaluation of a pitch is likely to differ from that of a male counterpart.
Women focus on the details.
Maxine Koven, co-managing director at LDR Ventures, finds women are less focused on the opportunity and more focused on the plan for taking advantage of the opportunity.
“My male colleagues seem to focus a great deal on how big the company and the opportunity can be, which is not a bad thing at all,” she said. “I find that women investors focus on how realistic the road map is to success, asking more often ‘What is the actual plan?’ We like to focus on the details.”
Male investors can’t relate.
Terri Mead, managing partner at Class Bravo Ventures, believes men simply don’t pay enough attention when a woman is pitching.
“I often see male investors tuning out as soon as they see it is a woman pitching, so from the start, the female founders may not even get a chance to be heard,” she said. “I often coach them on ‘dazzling with dollars’ from the start to make sure to catch the male investors’ attention. Male investors often struggle with relating to what a lot of female founders are pitching and may not make the effort to really understand the problem and the solution to see the opportunity. They also have plenty of investment opportunities with founders who pattern match to what they are comfortable with.”
Women build partnerships.
Jill Royster, strategic adviser/investor at JCR Consulting, says the potential for partnership guides her decision-making.
“I invest based on my ability to be additive to the growth of a company. I’m interested in building a strategic partnership with the founder, and I know right off the bat if it’s going to be a good fit. Certainly, diligence will prove that true, but there is a certain amount of shared value that comes with my investment strategy. With men, I tend to see the ‘partnership’ happen down the road once a deal is signed, sealed and delivered, it’s not something that is realized during the pitch process.”
Men see women as less ambitious.
Stacey Feinberg, founder of 33 Capital, believes women are more conservative about asking for funding and, as result, are perceived as less ambitious by male investors.
“If you are in a room with men, the atmosphere gets competitive, with women its collaborative. Male investors are focused on the financials. Women tend to look at non-verbal communication,” she said. “I also find a difference in the way men and women ask for money. Women are often afraid to ask for too much money. Men are more likely to say, ‘I want a million dollars by Friday,’ which is perceived as ambition and confidence. I tell my women founders to ask for money confidently because investors don’t want to see their founders spend time fundraising.”
Women see the value in a balanced outlook.
Jennifer Sills, co-Founder at Parkbenchcap, said women founders are likelier to speak about the headwinds facing the business and male investors don’t view that favorably.
“In general, we have found a female founder will give a balanced view of her business, delving into both the pros and cons,” she said. “As women investors, we feel that it is practical and reasonable to present and consider both sides. In a pitch meeting, while we, as female investors, interpret the discussion of the pros and cons as a practical market reality, a male investor interprets the balanced view as a lack of the founder’s belief in their business.”
Men pass on ideas they don’t ‘get.’
Penelope Linge, vice president at Montgomery & Co, said men tend to pass on ideas they don’t immediately grasp instead of probing further.
“Men often pass use cases that they personally wouldn’t understand, as in the case of the digital media content company for women, HelloGiggles, where male investors passed it because they couldn’t ‘get’ the content, even though they loved the growth!” she said. “With 85 percent of consumer household spend being controlled by women, I think women investors evaluating potential opportunities becomes paramount.”
Women have a different perspective.
Shelly Kapoor Collins, founding partner at Shatterfund, said the lived experience of women investors gives them a different perspective.
“Having a woman on the investment side lends a diverse perspective which leads to a better, well-rounded solution for all customers, instead of just a select few,” she said. “While a male colleague may not see all uses of a particular technology or product, women investors have the ability to provide a different set of use cases based on our own needs and experiences.”