“Entrepreneurship is a battlefield - it's not for the faint of heart. It is tough but it is a calling for entrepreneurs because they are born that way.”, Jackie Carmel, Managing Director of Endeavor Catalyst said at the second EndeavHER webinar series. Together with Sarah Chen, Co-founder & Managing Partner of Beyond the Billion and Rosaline Chow Koo, Founder & CEO of CXA, these three dynamic and inspiring leaders shared their thoughts on fundraising.
Moderated by Ryoko Manabe, Managing Director of Endeavor Japan, these exceptional women attracted a generous crowd as they explored the cardinal aspects of fundraising. From the do’s and don'ts, what investors look for in entrepreneurs to the challenges from the perspectives of both investors and entrepreneurs, these women redefined the meaning of insightful in this webinar.
What do investors usually look for?
Jackie: “In the most simplistic way, they are looking for a great team, solving a real problem, in a big market. If you can deliver that, you will have capital knocking on your door and you will have your pick.”
How do you find or evaluate the right investor?
Do your due diligence
Rosaline presses on the importance of communicating with other startups about the reputation of investors. Jackie indicates that it is still a relationship, despite the imbalance of power. “As desperate as you are for money, know that this is a long term relationship for you and your business.” Mirroring Rosaline, Jackie also lays emphasis on speaking to other founders in order to make the right decision for yourself.
Join Endeavor or a similar organization
Jackie focuses on how such organizations can allow entrepreneurs to openly speak to other founders and their experiences across different topics, including taking venture capital from a specific investor. “There is definitely a role for these types of organizations and networks, because at the end of the day only an entrepreneur is going to truly understand what you're going through and be able to share your achievements and failures.”
Look for signs to ensure that you are both in the partnership together
Sarah reveals that there are certain signs which outline the nature of the investor. Sarah recommends testing around before deciding, as should be done in dating! Especially In countries where there isn’t a lot of information and networks. She reveals that there are certain signs which outline the nature of the investor. These can be analysed by asking questions such as, “What are they insisting on? What sort of questions are they asking? Do they really know your business or is this a fishing expedition? How long does it take for someone to respond to a priority of yours? If this person doesn't respond in a timely manner, what does this say?” According to Sarah, team management is a bigger hurdle than getting funding & is critical to a partnership.
Adding on to signs to scout for, Rosaline highlights how the manner in which the term sheet is negotiated tells you a lot about the investors. “Those dealings will tell you a lot - the response, the flexibility, the understanding of the low points as well as the highs. It's all part of the dating game. If they are rigid, non-negotiable and unresponsive, don't expect any changes when you get married. You only have negotiating power before you get married. Dating is really important and so is dating many people. Negotiating is important because you want to find out as much as possible during the dating process.”
Is it true that it is harder to raise funds as a female entrepreneur? If yes, what do you think is the solution?
Ever since then, I pitch like men
Drawing on her personal experience, Rosaline illustrates why it is in fact harder for female founders. “When I first started pitching, someone told me I needed to pitch better. He said when men pitch, we divide by 10 and when women pitch, we multiply by 10.” Sarah demonstrates that only about 3% of VC goes to female founders. “We see the numbers that we see because it is an unconscious bias. ‘You don't pitch good enough’ really means that the investors are so used to presentations that are loud, gregarious and aggressive BUT in a good way that the person seems brilliant and a visionary. It is a difficult rope to navigate because when women change the way they pitch, they come off as too aggressive.”
It starts with being aware, and addressing and designing for diversity
Sarah defines how one of the solutions is to address and change the way we socialise young girls. Using the sandbox example - telling the boy in the family to play in the sandbox while telling the girl to not dirty her dress - Sarah touches on the importance of how the effect of this can worsen if they don’t have role models growing up. “We aspire to be what we can see. I believe in diversity so much because we need to see different examples of ourselves - different versions of leaders that can succeed in different ways. It starts with being careful with investors about your own biases. Female founders are definitely judged on higher standards.”
How do you identify the moment when you find the right investor?
“It’s all about doing your research and asking questions, because when you first start you really don't know anything. You are ignorant of your own ignorance,” Rosaline accepts that the best way to learn is through trial and error. However, she points out how “you usually know when something resonates with you, when someone is on the same wavelength as you. You know when someone is being helpful and not just taking advantage of you.”
Sarah instructs on how the right investor will be by your side through the ups and downs of entrepreneurship. “When you're dating and it's rosy, things are good, but you wanna think about how the person will react when things get tough.”
Is being a sole founder a barrier to fundraising?
Sarah trusts that it is better to be a sole founder than have a bad co-founder. “I have seen both sides of the coin. Unless you have a really strong co-founding team, being sole founder has proven to be successful”, she justifies by naming successful sole founders such as Whitney Wolfe, Pierre Omidyar and Sara Blakely. “It’s not a barrier - it just depends on what you bring to the table.” Rosaline does not view this a barrier either. Nonetheless, she emphasizes the vitality of a CTO for a founder who specializes purely in business.
Jackie believes that having a good strong partnership can go both ways. It will either propel your team forward, or it can be incredibly destructive. “But if you find someone who is aligned to your mission, with complementary skill sets - it's a dream come true. Another interesting aspect of having a co-founder is that it mitigates the loneliness that comes with entrepreneurship.”
The content of this article is summarised from the EndeavHER session organised by the APAC Endeavor offices: Endeavor Malaysia, Indonesia, Philippines, Vietnam & Japan. Endeavor is the world’s leading community of high-impact entrepreneurs. We dream big, scale up, and pay it forward. Follow us on our social media pages to get the latest news on upcoming events and key learnings.