Thursday, June 6th, Angela Lee, founder of 37 angels, spelled out the ABC’s of raising capital for the first time for female founders at LadyDrinks. She presented a slide deck with statistics and a treasure trove of resources women can leverage when seeking angel investment dollars for the first time.
Angela Lee’s background
- She is Chief Innovation Officer and Associate Dean at Columbia Business School where she has taught both leadership and entrepreneurship
- She has founded 4 startups
- She has spoken at the White House and advised high level decision makers
- She is the founder of 37 Angels, which has invested in 50 startups and activates new investors through an investment bootcamp
The traditional funding sources
- Founder, self funding
- Friends and Family
- Seed stage with professional investors
- Series A, B, C D private equity firms with co invest with VC’s
Other ways people are financing businesses
- Revenue based financing (Good for restaurants) You still get to retain 100% of the business. An investor takes 5% of the revenue for the first 5 years
- SBA Loans, which are built for small businesses
- Grants. Hire a grant writer if you go this route
Tips when starting to seek angel funding
- Go on Linkedin and search by function for the following key words, investor, angel, vc
- Start by connecting to people you already know
- If they aren’t the right person, ask them to make an introduction to 2 people who are a right fit.
- Always remember to be specific in your ask.
- 37angels.com, click on ‘resources’ to find accelerators you can enter into. For creatives, startup leadership program and tackle box are ideas
- Angel list https://angel.co/ Here you can see which angel investors invested in startups by industry. This is a great place to search for ‘food’ angel investors. It can help to inform your Linkedin networking
Where are women tripping themselves up when raising capital
- Women don’t ask for enough capital. Ideally one raises every 18-24 months. Angela recommends adding 25% to the ask amount
- Men when in front of investors get asked promotion based questions. Women, when in front of investors get asked ‘prevention-based’ questions. While women should answer it, they should also be prepared to present projections and forward looking data about their business
- Anecdotally, women are conservative in their asks. Men present the ‘pie in the sky’ scenario
60% of founders pay themselves
Where are the investment dollars going?
75% of what we are looking for is tech based, because investors are looking for hyper growth.
When a founder is presenting, everything is being evaluated. Both the pitch deck and the style of presentation.
- If you can’t convince a potential investor, the concern is that you won’t be able to ‘sell’ to other critical relationships such as vendors.
- The common mistake is seeing founders who focus presentations on product. A better presentation focuses on the problem you are solving.
- Recommendation: role play your pitch with a friend. Ask for feedback.
- Mindset is key when pitching
- Know that you will hear a bunch of ‘no’s.
Common mistakes women founders make when starting a business
- Ask yourself what is the difficult part of my job and hire around that
- Outsource everything else
- How to prioritize a never ending to do list: Put a dollar sign next to each to do list item and list how much revenue you will glean from making good on it.
If you are in the retail space VC’s to look at
- Forerunner Ventures https://forerunnerventures.com/ is an early-stage VC firm dedicated to partnering with ambitious entrepreneurs.
- Lerer Hippeau https://www.lererhippeau.com/ is a seed stage venture capital fund based in New York City. The firm invests heavily in early-stage companies and has historically focused largely on startups in the New York metro region. In 2018, two-thirds of the portfolio were New York-based companies, followed by San Francisco and Los Angeles
Legal Resources for entrepreneurs just starting out
Three newsletters you should subscribe to for startup events
- Charlie O Donnell’s newsletter https://www.thisisgoingtobebig.com/the-newsletter
- Gary’s Guide https://www.garysguide.com/events
Other great resources
- https://getpocket.com/ This is an online destination where you can save content you want to read later. It’s ideal when you are on a plane.
- 16 start up metrics https://a16z.com/2015/08/21/16-metrics/
Books to read
- Traction, Get a Grip on Your Business https://www.amazon.com/Traction-Get-Grip-Your-Business/dp/1936661837
- Lean Startup