Before talking about how to attract investors, it’s worth asking a question a lot of founders skip: should you?
Outside investment is the right fit for some businesses and a poor fit for many others. And it’s well documented that women founders receive a small share of venture capital, so it’s worth going in with clear eyes about both the opportunity and the hurdles.
First: is investment right for your business?
Equity investors, especially venture capital, are generally looking for businesses that can grow very large, very fast, and eventually return many times their money through a sale or IPO. That’s a specific kind of business.
Many excellent, profitable businesses aren’t built that way, and don’t need to be. A consulting firm, an agency, a local service business, or a steady product company may be better served by revenue, a bank loan, an SBA-backed loan, a line of credit, grants, or other non-dilutive funding. Funding Options for Women-Owned Businesses covers the alternatives.
Taking investment means giving up part of your company, and usually some control. Make sure that trade fits what you’re building.
If investment is right: what investors look for
- A real problem that a meaningful number of people or businesses will pay to solve
- Evidence of demand: customers, revenue, growth, waitlists, pilots
- A large enough market to support the returns they need
- A team that can execute
- A clear plan for what the money will do and what it will achieve
- Founders who know their numbers cold
How to improve your odds
Build traction first
Investors respond to evidence. The more you can show, revenue, customers, retention, the better your position. It also gives you more negotiating power.
Target the right investors
Research who invests in your industry, at your stage, and at your size. Many investors and funds focus specifically on women-led companies. Angel investors and angel networks are often more accessible for early-stage companies than venture funds.
Get warm introductions
Cold emails to investors rarely work. Introductions through people investors already trust work much better. That’s another reason your network matters.
Know your numbers
Revenue, margins, customer acquisition cost, lifetime value, burn rate, runway. Be ready to explain them clearly and honestly.
Get good advice
Before you sign anything, have an attorney experienced in startup financing review the terms. Valuation is only one part of a deal, and the fine print can matter more.
Talk to founders who’ve done it
The best preparation is talking to founders who’ve raised money, and founders who decided not to. They’ll tell you what the process is really like. WEN Round Tables are a good place to find those conversations.
This post is general information, not financial or legal advice.
