Co-founded by Kate Dwyer and Penelope Gazin, Witchsy is an online marketplace startup for artwork. Whilst trying to secure venture capital funding in Silicon Valley in 2016, they struggled to get meetings with Venture Capitalists (VCs) and their enquiries often went unanswered. When they did secure meetings, many of the male investors they met with wouldn’t take them seriously.
In a bid to overcome this, the two women created a third fictional male co-founder called Keith Mann. When they began using Keith’s signature on emails to developers and potential investors, Keith got faster responses and more meetings than his women co-founders ever did. Our research suggests that this story is just as relevant today as when this sequence of events unfolded.
The fact remains that the challenges around securing funding for women founders are both ongoing and well documented.
Today, Witchsy is a thriving and profitable online business selling “art, pins, shirts, patches and weird wares made by special artists.” The founders’ success means their experience of sexism may serve as both a warning and inspiration for women entrepreneurs. On the one hand, as women, they faced a unique set of barriers not faced by men. On the other, they overcame these challenges to fund, launch and run a successful business.
Put simply, it can be done. But the fact remains that the challenges around securing funding for women founders are both ongoing and well documented. The British Venture Capital Association research showed that for every £1 of VC investment in startups in the UK, all-men founder teams get 89 pence, mixed-gender teams 10 pence, and all-women teams less than 1 pence. Furthermore, the Rose Review of Female Entrepreneurship in the UK found that around one-third of women cite access to funding as the biggest barrier to starting a business, compared to 20 percent of men.
The UK isn’t alone in exhibiting such a gender imbalance. According to the last count of The State of European Tech 2021 study, women founders secured just 1 percent of all VC investment in Europe. Researchers of the report write: “The great gender funding divide remains a harsh reality for the European tech ecosystem.” There are signs this divide has been getting even wider at a global level with only 3 percent of total worldwide VC funding going to women-led startups in 2019 and falling further to just 2 percent in 2020. It becomes even harder for women of ethnic minorities, with only 1 Black woman founder receiving early-stage VC investment in 2020.
About our research and its goals
In light of this evidence, we took a closer look at the issues facing women entrepreneurs. We conducted interviews with 40 successful women founders from 25 different countries. We explored their first-hand experiences and perceptions of fundraising, from seed rounds through to Series D and beyond, and asked what advice they would give to other women entrepreneurs following a similar path. To make sure our interviewees could speak freely, all interviews were conducted off the record. Throughout the report, we have included verbatim quotes that are anonymized as the interviews were conducted on a non-attributable basis.
We analyzed their responses and, whilst we covered much ground in the interviews, broadly we found five recurring themes. We put these forward here as our key recommendations for overcoming the barriers facing women founders seeking capital. This report aims to shine a light on the difficulties women routinely face when raising funding, whilst also giving inspiration and constructive advice to women that it is achievable despite the odds
The top five recommendations from our women founders:
- Be strategic and intuitive in selecting your investors
- Blend the best of traits typically associated with men and women
- Master the art of passionate and authentic storytelling
- Support other women, including through networks
- Retain your integrity and stay true to yourself
The most significant takeaway that emerged from the research: be prepared. According to Inc.’s Women Entrepreneurship Report, 62 percent of women entrepreneurs say they’ve experienced some form of gender bias during the funding process. Many of the women founders we spoke to had encountered sexism in one form or another during the fundraising process. Furthermore, those that hadn’t experienced it directly had heard of other women who had. Their advice was that it is important to have a firm idea of what you will do when it arises.
1. Be strategic and intuitive in selecting your investors
While choosing investors wisely is vital for any startup, our women founder interviewees believe that it is especially crucial for women-led businesses. In their view, the selection process should involve both “head” and “heart.” The founders we spoke to recommended researching thoroughly the diversity and type of investor that you approach so that they reflect the values that are important to you. They also recommended applying gut feel and intuition to tell you whether an investor relationship is right for you and your business. Acting on your instincts also means being prepared to walk away if you feel they aren’t. In this context, one founder described female intuition as a “superpower” that gives women an edge in making the right choice.
All agreed that the relationship with investors is a two-way street: you need to feel a genuine connection with them – as they will be an integral part of your business, potentially for many years to come. They also recommended that you need to be clear on what you want from the investor relationship aside from just money. For some founders, access to their network was very important. For others, it was the advice and mentoring support that was of great value.
“In my experience female investors are more likely to invest in companies or long-term projects that aim to have a positive social impact, rather than looking for a quick transactional relationship.”
Conversations with the women founders revealed that part of being strategic was choosing when to go for fundraising and evaluating if you really need to. Sharing insights into investors’ points of view, one founder commented that investors want to know that you want their money to expand your business, and not to survive. Many interviewees commented that founders are always fundraising and part of this should include networking. They believed that building relationships early on with investors is crucial. This is something that women may struggle with, preferring to only present their business to potential investors when they believe it is fully ready rather than engaging investors earlier on with a less well-developed product. They commented on the sweet spot of timing the fundraise so it’s not too early and not too late to ensure securing the investors that are right for the business.
Speaking about their experiences in pitch meetings, several had experienced situations where male investors had made personal comments about their age or appearance. Interviewees who had male co-founders commented that their male colleagues were typically asked different types of questions. Investors asked quantitative, data-centric and visionary queries to the male co-founder. However, women co-founders were asked more speculative, qualitative, and risk questions to the woman. This echoes the findings in this Harvard Business Review article.
On the rare occasions where the potential investors were women, they tended to be more interested in ESG-type businesses and more supportive of women founders. But one interviewee, while agreeing this was the case, said some women investors were wary of being seen to focus too much on investing in women entrepreneurs. All the founders interviewed commented on how few women investors there were especially in male-dominated industries. This is something we’ll be focusing on in our next piece of research.
2. Blend the best of traits typically associated with men and women
Interviews with some of the women founders shed light on what they observed to be some personality differences between men and women. The overall view was that entrepreneurs of both genders have their own respective complementary strengths, and that both can benefit by adopting some of these from the other.
Many of our interviewees felt that their key strengths as women are feminine intuition, passion, and empathy. They viewed their ability to communicate with emotion as an advantage – but added that it was vital to own this aspect of their femininity and be authentic in expressing it. Interestingly, some of the respondents who have male co-founders noted how they instinctively took on a more compassionate role in investor meetings, while their male business partners focused on the more technical details. It is important to note that this was not the case for women co-founders with a technical or financial background or those who were responsible for this area. In situations where a woman founder was the CFO, she would be asked financial questions by investors, recognizing that this was her area of expertise.
Some of what the interviewees cited as traditionally male traits were exhibiting confidence in their own ability and not taking criticism personally. Our interviewees said greater confidence does come with experience, but that they believed being thick-skinned is a harder behaviour to learn, particularly for women. Some described how they’ve deliberately adapted their behaviour or style to get their message across more effectively. However, others stressed that it shouldn’t be down to women to adapt in order to confront outdated stereotypes, as this compromises who they really are.
3. Master the art of passionate and authentic storytelling
A key aspect of raising capital is telling a compelling story that investors will buy into. This is especially important in the early rounds where success at pre-seed and seed rounds rely, in part, on potential. That’s why successful women founders say that, as a woman entrepreneur, it’s vital to become a great storyteller, and incorporate your passion and your “why” into your story. It’s vital to prepare painstakingly, practise the presentation in advance, get it honed to perfection – and be very clear on what you’ll say about who you are, why you set up your business, what the metrics are, and where you want to take it.
Our interviewees also cautioned against underselling yourself or your idea. Some felt that women tend to be more humble and modest than men. This is an area where appropriating some traditionally “male” traits can be especially useful, as discussed earlier. They urged women entrepreneurs to show that they own their story and their business – and to be proud and passionate about both. And when telling the story, they stressed the importance of staying true to yourself. The story should bring you back to why you initially started your business and help you to distinguish between which ideas to take on board and which to discard.
A number of our women founders described techniques they use to keep themselves centred on their story. A recurrent theme was the added strength and resilience that come from seeing yourself as an embodiment of your company – effectively personifying yourself as the business, and thereby distancing your own individual feelings and emotions from anything that’s said about it.
4. Support other women, including through networks
Many interviewees commented on how lonely the entrepreneurial journey is and a recurring theme of our conversations with women founders was the importance of mutual support and, in many cases, the subsequent friendships that form between women in the startup ecosystem. Many interviewees said they were members of networks of women entrepreneurs, both formal and informal, who had come together to share experiences and provide mutual support.
“Don’t give up as you giving up means less representation for other female founders. One of us getting to the top means one more role model to look up to.”
The common view was that these networks can be a valuable source of guidance and advice, and a help to women as they grow their businesses. For example, our interviewees gave examples of sharing pitch decks, mentoring connections, and references. In this way, it’s hoped that the networks will help to increase the numbers of successful women entrepreneurs and investors over time.
A further positive force for change – one highlighted by several interviewees – is experienced women entrepreneurs mentoring the up-and-coming generation. Furthermore, many of the interviewees spoke about the importance of both having and being role models for other women.
However, a number of interviewees sounded a note of caution about diversity sometimes being used as a public relations exercise rather than a genuine attempt to drive change. They counselled that the women founders should seek out the best mentor, investor or adviser irrespective of their gender. This comes back to the point about using your intuition when choosing where you go for support.
5. Retain your integrity and stay true to yourself
Virtually all of the women founders we spoke to were fully aware of the statistics about how few women-founded businesses manage to secure VC funding and knew about the challenges they would encounter as a woman entrepreneur. However, they stressed that – as their own success showed – these challenges can be overcome and that as an aspiring woman entrepreneur, you shouldn’t let the statistics discourage you. As they highlighted, it’s important to remember that the media often focuses on the negative news stories, such as the gender divide, and is less likely to report on stories that show progress is being made.
Coining a memorable phrase, one respondent summed up the hurdles facing women startup entrepreneurs as a “female tax” – reflecting the need for women to work harder and be more resilient than their male counterparts. But in common with many other interviewees, she also stressed the importance of retaining your integrity and staying true to yourself throughout the journey, whatever might happen along the way. This means having clear red lines for what you will and won’t tolerate, knowing what your values are, and being ready to deal with unacceptable behaviour when it arises.
The big takeaway: be prepared
In our view, two distinct messages come across from our series of conversations with successful women founders. The first is that any woman seeking funding for a startup business will almost certainly encounter barriers related to their gender along the way. The other is that being prepared for these challenges and addressing them in the right way is key.
But while change may be relatively gradual, it can and will happen. As a recent Financial Times article showed, in 2022, women entrepreneurs launched a record number of businesses in the UK.
The pioneering women entrepreneurs we’ve interviewed are blazing a trail for others to follow. As one founder commented: “The entire startup ecosystem needs to decide to make a change in terms of facilitating more female-led businesses.” That’s the journey we’re on and every successful woman founder moves us forward another step.
A huge thank you to the inspiring women founders who took part in this project. We wish you every success with your businesses and the part you are playing in changing the world.
Jenni Chance is the Senior Manager, Entrepreneurial & Private Business, PwC United Kingdom. Get in touch with her here. Sabrina Fitzgerald is the National Leader for Private Clients, PwC Canada. Get in touch with her here.