Last year, women-founded startups in the U.S. secured just 1.9% of venture capital (around $4.5 billion) of the total $238.3 billion allocated, according to the latest data from PitchBook.
“The statistics show that the amount of venture capital going to women is very small,” says serial entrepreneur Pam Marrone. “That’s a major challenge. Women entrepreneurs don’t get their share of venture capital.”
However, despite the disparity and the challenges many women founders face, Pam has been fortunate to secure funding throughout her startup journey. The multi-time founder has raised nearly $300 million from investors. Her second startup, AgraQuest, was acquired by Bayer Crop Science for nearly $500 million. And her third startup, ag-tech company Marrone Bio went public in 2013 and was acquired for $260 million last year.
Now Pam devotes her time to helping other startup founders as an advisor.
In a global keynote for Founders Network on August 17, she shared her tips for attracting startup investors when you don’t fit the mold. Whether you’re a founder from a minority group or a technical founder struggling to establish credibility, Pam shared insights on what investors are looking for.
Her webinar covered:
- How to establish credibility as a technical founder
- Tips for honing your pitch
- How to identify emerging markets
- Utilizing an advisory board to fill your gaps
Challenges for Women
It’s difficult to account for why women fail to receive startup funding. According to statistics, women-founded companies have higher returns than male-founded ones. Additionally, women are more likely to start a business than men.
But women in tech continue to face discrimination and women founders are not exempt.
“Women’s accomplishments are often diminished, relative to men,” Pam says. “So they have to do so much more to get the same credibility.
“When I’m at a startup pitch event, I’ll watch the difference between how investors react to the woman entrepreneurs and the male entrepreneurs,” Pam says. “It’s pattern recognition. Investors have this idea of who they want based on what they’re familiar with. Women could give a better pitch and have a better business, but because the guy fits their pattern, the investors flock to him.”
Challenges for Technical Founders
Securing funding can often be challenging for technical founders who might feel less comfortable with the business side of their startup. For that reason, many founders seek a non technical co-founder. Research shows a balanced team with a technical founder and a business founder will raise 30% more than a one-person startup.
“Being a technical founder can be a challenge because investors think you’re going to be the chief science officer. Investors will very quickly swap out a technical founder for someone with business experience if the founder talks too much technical. So it is a barrier. You do have to really practice and learn your business chops. It’s about being able to talk about the whole business.”
Pam recommends founders invest time and energy into learning as much as they can so they are able to confidently answer investor questions and establish credibility.
“I’m a technical founder, so I always had to put energy into really focusing on the business side. I did the financial model for Marrone Bio myself because I wanted to learn,” Pam says. “Learning as much as you can, to sound credible is really important, for sure.”
Filling the gaps
Teaming up with a co-founder isn’t the only way for a startup founder to fill their skill gaps. In order to attract investors, Pam recommends founders form an advisory board that ensures your startup has all of the experience necessary to succeed and satisfy investors. Research shows as many as 74% of businesses globally have appointed an advisory board to assist with growth strategies.
“A lot of the startups that I have advised put together a really top notch advisory board so they can get that experience that investors are looking for,” Pam says. “I think founders underestimate how long it’s going to take to raise money.”