When you’re a woman launching a new company, “leaning in” gets harder. Things are especially tough in the world of tech start-ups. In the eyes of investors, the lack of a technical background is viewed as a greater disadvantage for women entrepreneurs than it is for men, according to new research out of Stanford University. Women have to reach out to people in their social networks to be seen as equally capable, say the researchers.
The results come from an online survey of 114 Stanford MBA students. All of the survey respondents were men, and all were members of a campus entrepreneur club. (The researchers’ rationale? The club’s makeup is similar to that of Silicon Valley, which is dominated by men from top colleges.) The students were randomly divided into four groups and given the same business plan to analyze. What they didn’t know: the business plan was based on a real, well-funded tech start-up. For each group, the researchers changed one or two details about the entrepreneur: his or her gender and his or her technical background. (The fictional entrepreneurs with a “tech” background were listed as being computer science majors, and those with a “non-tech” background were listed as being history majors.)
As part of their assessment, the investors were asked to rate their confidence in the entrepreneur’s ability to penetrate the market. On this question, women with non-tech backgrounds were rated an average of 18 percent lower than men with non-tech backgrounds. In other words, investors had significantly less confidence that women with the same credentials could achieve the same level of success in the marketplace. And although this didn’t ultimately impact the cash that investors were willing to cough up in the study, it may make it harder to get funds in real life, says Justine E. Tinkler, PhD, lead author of the study.
The good news: There are tons of successful ladies who have done just that. We rounded up their best tips for funding your great idea.
Source: Ashley Rankin, Founder of Shredly, a line of performance cycling gear for women
When you’re just starting out, turning to friends and family for support is a great way to go, says Rankin, who used Kickstarter to meet her fundraising goal of $ 25,000. Many venture capitalists want to see that you’re already turning a profit before they decide whether to invest, she says. Crowdsourcing can give you the seed money you need to start churning out a product. And using Kickstarter comes with all kinds of perks. Because the site is so hot right now, just being on it gives your own brand a publicity boost, she says. Plus, it’s a great way to build a core fan base. Not only do you come out with the money you need, but you have a dedicated group of people who are invested in your product and eager to spread the word. Translation: more free publicity for you.
Build part of your product and test it out
Source: Alexa Hirschfeld, Co-Founder of Paperless Post, an online correspondence site
Investors need to get a taste of your product by seeing a tangible prototype or sample, says Hirschfeld. It shows them what their money is going toward, and it gives you the chance to work out the kinks before you approach them. First, see how much of the prototype you can build yourself. (This is obviously a lot easier if your start-up is a website, where pre-built platforms like WordPress and Ning save you from building a site from scratch.) If you need to learn new skills, Hirschfeld recommends the tutorials on the website Skillshare. While they’re a good starting place, you’ll likely still have to enlist outside help. Learn a lot about what skills you need someone to have before you start seeking support, says Hirschfeld. If you’re looking for a programmer, learn which programs they’ll need to know to build your product, for example, so you can list it as a requirement on your job posting. You can also type the name of the program into LinkedIn and search for people who have it listed on their pages. Once you get the right person, there a lot of ways to pay them for their hard work. “Even if you can’t hire that person full time, you can hire them on a contract basis,” says Hirshfeld. Ideally, if they do a great job, you can bring them on as a partner.
Write a business plan
Source: Amanda Steinberg, Founder and CEO of DailyWorth, an online personal finance community for women
If you want any investors to take you seriously, you have to write a business plan, says Steinberg. It’s the document that lays out your whole business strategy, and it’s how investors weigh your odds of success. By far, the most important part of a good business plan is the revenue model—i.e., how your company will earn money. And you won’t know the answer to that question until you do some background research. You can start by looking at other companies like yours. Insiders call them “comparables,” and you can look to them to get a sense of the size of your market. Once you identify your comparables, you can look up publicly available info on their earnings and investments, which will help shape your own expectations. One other very useful resource is market research. While you probably don’t have the funds to pay for professional market research, Steinberg says you can DIY. Her advice? Conduct at least 20 one-on-one interviews with people you think are in your potential customer base. Show them your product and ask 1) would they buy it? and 2) what would they pay for it? Their responses will help shape the numbers in your business plan. “What’s most important is that you test whether or not people are going to actually pay for what you’re selling,” says Steinberg. For more tips on writing the best possible plan, Steinberg recommends Hit the Deck: Create a Business Plan in Half the Time, With Twice the Impact by David Ronick.
Find potential investors
Source: Maren Kate Donovan, Founder and CEO of Zirtual, a virtual personal assistant agency
Once you have some seed money and a working prototype, you’re on track to start rallying investors to your cause. The website AngelList is a great place to start, says Donovan, because it lets you search for all kinds of investors and sort them by industry (your best odds are with investors in your industry). To get the most out of the site, create a page for your company so investors can read about you, too. Reaching out to an investor through a mutual friend is the best strategy, says Donovan, so look investors up on LinkedIn or Facebook to see if you have a colleague in common. Either way, you want to send them a quick message that includes a one-paragraph bio describing your company. Keep in mind: They’re not going to want to meet with you right off the bat. Start small and request a quick phone call. “You want to give them a very low-commitment way of finding out what you’re doing,” says Donovan. If they’re genuinely interested, they’ll request more info (and that’s where your brilliant business plan comes in!).
Go ahead and brag
Source: Shradha Agarwal, Co-Founder and CSO of ContextMedia, a healthcare media company
It’s natural not to want to crow about your accomplishments. But when you’re trying to woo investors, you’re not just selling your business plan—you’re selling yourself. “Women tend to err on the side of being too humble,” says Agarwal. She should know: in addition to being an entrepreneur, she’s sat on the other side of the conference table as an investor. When you’re walking into the room, she says, it’s time to be your biggest, most vocal fan. Explain why they should put their faith in you and how you can apply your past experience to building a successful business. Personal experiences count, too, she says. In one investor meeting, she was impressed by a woman who described the complex process of planning her own wedding. Raising multiple kids and managing all of the moving parts involved also counts as legit leadership experience, she says—so flaunt it.
Repeat as necessary
Source: Jess Lee, Co-Founder and CEO of Polyvore, a social commerce company
As women, we’re not as used to being rejected as guys are. (How many pick-up lines have you used on a person, only to get a blank stare in return?) But if you’re out there pitching your heart out, get ready to hear “no” a lot, says Lee. Overnight successes like Instagram are the exception. Most businesses take years to develop, so hang in there. When you’re feeling like you want to give up, reach out to entrepreneurs who are more established than you. “They’ll have gotten ‘nos’ before, too,” says Lee. Not only can they give you some perspective, but they can help you strengthen your pitch and patch up any lingering holes.