A Female Founder’s Investment Outlook
Over the last few months, I’ve noticed a groundswell of new programmes and initiatives to get more funding to female-founded businesses, including the latest, Pink Salt VC and Morgan Stanley’s Multicultural Innovation Lab for women and ethnic minority entrepreneurs.
Will they result in more female founders leading businesses of scale?
Unlikely, without significant change.
The investment outlook is changing for female founders. Image credit: Raimond Klavins on Unsplash.
Recent Conversational Themes
The themes of my recent conversations with clients and colleagues have been burnout, founder mental health, capital raising, sustainability and ‘the great resignation’.
How they interlink is important for a female founder to consider when growing her business.
Fundraising expectations
Founders I'm working with are expressing two main concerns around raising capital for their businesses.
The fear of having to compromise their values to raise funding and ‘losing themselves’ for their businesses to be successful.
Burning out by working themselves into the ground to deliver on their promises once funding is secured.
Neither of which bode well for them scaling their business - why would they commit fully to the fundraising process if those were the conditions?
Chris Smith, the Managing Partner of VC firm Playfair Capital, talks about this problem directly in his recent article: 4 reasons the venture capital boom is damaging entrepreneur’s mental health.
He suggests on LinkedIn that founders choose their investment partners carefully (a topic close to my heart) and find ways to support themselves to manage stress - something that business coaching can support.
Investment in lockstep with growth
Another consistent theme is that women want to build scalable, sustainability businesses. By this, I mean businesses that do good for society and/ or the environment.
I’ve spoken with three start-up programmes, Impact Central, the Sustainable Network (who featured me recently in their female founders’ article), and the School for Social Entrepreneurs. None of which specifically set out to attract women to their programmes, but found that they made up the majority of their cohorts.
Whilst impact in lockstep with growth hasn’t interested mainstream investors in the past, the risks of climate change and social inequality have now become mainstream concerns.
Investors are waking up to the fact that doing good is actually good for business, resulting in more purpose-led investments like Backstage Capital’s recent backing of LVNDR.
The message here for female founders is to stay firm on what’s important to you. An increasing number of investors are waking up to the value of investing for both purpose and profit.
A lack of investment diversity
Spice Start-ups recently conducted research around why female founders aren’t getting investment. Their research put it down to:
the types of businesses women start - usually B2C ‘problem-solving’ businesses created around issues they’ve experienced, and
the ability of predominantly male VCs to understand the problems and market opportunities.
I’d add that the types of questions investors ask are problematic for female founders - a position spelt out by Dana Kanze in 2017.
All this brings me back to advising female founders to seek out investment partners who get you and your business.
A hostile environment
Problems of sustainability, capital raising, burnout, founder mental health, lack of investment diversity, and even ‘the great resignation’ are all symptomatic of a wider problem.
Women are raising capital in an environment that asks them to be someone they are not.
The way we’ve been working, running businesses and investing is no longer fit for purpose. The natural environment can’t take it, founders won’t take it, and women as the default carers in most homes find it particularly difficult.
Getting more women into venture capital is the first step because women are more likely to back women and products that solve problems they’ve experienced.
As Tessa Clarke, Co-founder and CEO of OLIO bravely said to Sifted recently, it’s ‘time to fix the system, not women’ because ‘diversity amongst the gatekeepers of capital’ is what will drive change and solve humanity’s biggest problems.
Change is afoot
Female founders, don’t be disheartened. Now is a great time to be leading and scaling an impact business.
The Investing in Women Code is one example and Diversity VC’s paid internship programme, Future VC, is another, actively diversifying the next generation of investors.
Systemic change is underway.
There’s increased understanding about the social value of female leadership, and more support available to you than ever before.
What does this mean for female founders?
You have options if you know where to look.
As a founder, knowing you have choices means you can feel good about investment. With self-awareness and vigilance, you can succeed in raising capital and scaling your business without compromising your values or succumbing to the inevitability of burnout.
Observe your environment and the pressure it puts on you, and choose how to respond.
You can take feedback at face value and feel that you need to change to fit in or take it with a pinch of salt given the context.
Know your mind, know what you want, and seek out others who share your values.
Staying anchored in that knowledge will help you weather the storm of investor feedback, advice, and pressure to match your peers.
Your reward? Building a business you believe in - and enjoy working in.
Build a solid foundation and you’ll reap rewards
Building your self-awareness and navigating those high growth challenges is something a founder CEO coach can help you with. Your coach will give you space to speak freely and confidentially, a forum to process feedback and an opportunity to practice new ways of presenting yourself.
A simple place to start is to get clear on your role as founder CEO.
When working with my clients, the act of writing a position description is simple but pivotal in retaking control of their time and energy.
For founders leading teams, it offers direction on where to focus to keep their business growing, greater clarity into their relationships, the support they need, and how to communicate clearly.
For founders raising capital, this clarity reduces post-investment burnout risk and makes the idea of raising investment less daunting and more exciting.
‘CEO by design’ workshop
With this in mind, I’m trialling a standalone ‘CEO by Design’ Workshop. An antidote to the feeling that you’ve become CEO by default or a ‘give-it-a-go’ CEO.
For more information, available dates, and booking details, please visit events.
FEMALE FOUNDER NEWS: This post was inspired by Aata’s monthly email.
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