No one can speak to the challenges of female entrepreneurs raising capital better than the female entrepreneurs themselves. Crain’s talked with a few female business owners to hear their experiences when trying to raise funding. A companion story to this one, found here, tackles the same issues from the viewpoint of female venture capitalists.
Sheri Atwood, founder and CEO of Santa Clara, Calif.-based SupportPay
Sheri Atwood was the daughter of divorced parents, and ultimately went through a divorce herself. In both instances, Atwood saw firsthand how the topic of money was a huge area of contention, no matter how amicable the divorce process was.
So she quit her high-powered job at a major tech company and taught herself to code. Atwood came up with a system where parents could register, set up recurring payments, attach receipts and mark items as paid or received. She named the company SupportPay.
Atwood’s biggest challenge by far has been getting capital. She had liquidated all her assets and found herself one week shy of needing to apply for food stamps before she separately raised money from two major Silicon Valley venture capitalists, Tim Draper and Marc Benioff, for her seed round.
When it came time to raise money for her series A round, the process was no less difficult.
In general, Atwood notes that the venture world suddenly switched gears in early 2016 and she was advised to focus less on user growth and more on revenue.
“As a woman, the bar is that much higher,” she said. “There are so many stereotypes and barriers that you have to overcome. There’s very little room – if any – for error.”
Karla Friede, CEO and co-founder of Portland, Ore.-based Nvoicepay
Nvoicepay started in 2009, right after the downturn. The market for B2B payments was huge because at that time, no one had made money in it.
“It was a tough time to start a company and raise money in general,” she recalls.
Since then, Nvoicepay has grown its revenue and raised more than $25 million in venture capital. “We’re in a position that we can choose companies we accept capital from,” Friede says. “But that wasn’t always the case.”
Friede points out that one of Nvoicepay’s three co-founders is male. She believes that did make a difference in raising capital.
“I think it would have been harder if three people had shown up (to pitches) and they were all women,” she says. “But about 67 percent of the people that work for us are women.”
In Friede’s view, there is not necessarily blatant sexism toward women raising money – but she does believe there is a subtle systemic bias.
“It’s easy to work with and talk to people that are like you,” she says. “When someone shows up that is different, it’s tougher to gain their trust and bond with them, whether it’s women listening to men pitch or men listening to women pitch.”
In an effort to overcome such hurdles, Nvoicepay targeted potential investors with a deep knowledge of B2B payments.
“It’s important to target those who understand your market,” she says.
The company also looked for venture capital firms with female team members. And it came to realize the importance of achieving results as quickly as possible.
“In the end, numbers speak loudly and overcome any gender bias. Things like big growth results and customer retention will overcome any bias,” Friede says. “People want to invest in success, so if you can demonstrate it and have proof points, you will overcome any bias. Because of our success, we have firms who were not interested in us early that are very interested in us now.”
Holly Tachovsky, CEO and co-founder of Austin-based BuildFax
Since 2009, BuildFax has raised more than $20 million in equity and debt.
The company has gathered a wealth of building permit data in the U.S. and used it to create a property condition and history database. It sells that data to insurance companies, lenders, real estate agents, home inspectors and the country’s largest online real estate portals.
To Tachovsky, being a woman-run company didn’t make fundraising more difficult.
“I didn’t have an issue at all,” she said. “What we had was a new data set that was hard to come by. I feel like the idea was compelling enough that I got the meetings I wanted.”
That said, Tachovsky admits the capital-raising process was grueling. “But I don’t think it had anything to do with my gender,” she says.
Like Friede, her company’s investment ultimately came from a strategic investor, DMGT.
“They have a portfolio of real estate data companies,” she says. “They weren’t traditional VCs, which can be more of a boys’ club.”
Also like Friede and Nvoicepay, one of BuildFax’s co-founders is male.
“But I feel like it’s all about the idea and the management team,” she says. “I felt like I did get grilled by the VCs and potential investors, but I didn’t take it personally. In the end, we took strategic money because we felt it came with more advantages.”
Tina Aldatz, CEO and co-founder of Los Angeles-based travel wellness company Savvy Travelers
Tina Aldatz has been trying to raise money for her company since April 2014. While she has been able to raise some funds, she and her partner have had to personally invest $2.5 million in the company to keep it going.
This is despite the fact that Aldatz previously had a successful exit in selling her company, Foot Petals, to accessory footwear and slipper marketer R.G. Barry Corp. for $14 million in cash in 2011.
“We’ve presented time and time again to a plethora of angel investors, groups, venture capital firms and private investors,” she says. “It’s astonishing to me because we’re in revenue and have a reputation for a successful ROI and exit strategy.”
Aldatz believes the challenge is largely due to Savvy Travelers being a female-led company. It is a maker of custom designer wipes aimed at travelers seeking to manage personal hygiene.
“I think there’s a good ‘ol' boys club and a certain level of comfort that still exists among men,” she says. “I think we’re up against not a glass ceiling, but a glass wall. We can speak and show stats and proof of legitimate experience and a track record, but it’s almost like it falls upon deaf ears.”
Ultimately, Savvy Travelers turned to previous Foot Petal investors and to OSEA Angel Investors, a private angel investment group focused on and driven by women executives with diverse backgrounds.
“We’re seeing more angel groups comprised of women,” Aldatz says. “It’s very new and taking longer for women to write the checks, but I think in the long run it will happen.”