Is finding funding for entrepreneurs different for women than men? Yes, say participants of a seminar held this week by the Toronto Venture Group, a networking organization for entrepreneurs, venture capitalists and angel investors.
Panelists at the seminar on financing women-owned businesses suggested that limited access to “old boy” networks and a male-dominated financial industry pose challenges for women seeking growth capital. Those conditions partially explain why women garner just 6% of the $69 billion of venture capital available in the U.S., said Ilse Treurnicht, president & CEO of Toronto-based Primaxis Technology Ventures Inc. Still, women don’t make it easy on themselves, either. A passive style, conservative attitude and inability to “talk the language” are just some of the factors participants said hold women back.
The good news: perceptions are slowly changing and there is money available for solid, high-growth firms that can adequately communicate their promise to investors. Whether you’re pursuing banks, angels or venture capitalists, said the panelists, the key is to stand out like a star.
- First determine what type of capital is appropriate for your business, suggests Suzanne Mar, senior account manager for Royal Bank Technology Banking Group. Debt financing and equity each pose different demands and challenges. Are you ready to give up a piece of your company to outside investors? Will sharing monthly reports with your banker be a burden? Also, remember the financing process will not happen overnight, so start looking for capital well before you need it.
- It’s the people, not the product investors are most interested in, says Treurnicht. And first impressions are important. Be active and interested without being arrogant. A banking or VC relationship typically lasts four to eight years, so investors look for people they like and believe they’ll get along with. Having experienced people on your staff or board of directors who’ve successfully gown businesses is also critical.
- Whether you are courting a banker, an angel or a VC, a personal referral will help you get your foot in the door faster. “I’m much more apt to take a call from someone who has been referred to me by a person I know and trust,” says Treurnicht.
- Write a solid business plan. After all, your plan is a critical document that defines your venture and can make or break your chance of getting funds, says Jen Macpherson, vice-president of Wise Mentor Capital in Toronto. Focus on the 4Ps: people, product, placement in the market and plan. Highlight your competitive advantage in each area. While there are firms that will prepare a business plan for you, Macpherson doesn’t recommend that approach. There’s nothing worse than a potential investor asking you a question about your plan that you can’t answer.
- Failure is good. Some 99 out of every 100 pitches to a VC fails, so learn from your mistakes and move on.