Julia Pimsleur, founder of Little Pim, a multimedia language teaching software for children, and the Double Digit Academy, a how-to-pitch bootcamp for women, brought up an interesting statistic while sharing her tips on ways to get investors interested: “Of all the companies that make over $1 million in revenue, only 1.8% are owned by women,” she said.
The idea of helping women launch their companies and increasing the number of women entrepreneurs was the theme of the evening at the Women Innovate Mobile and Women In Music panel to discuss everything related to private equity and raising capital. Hosted by Women Innovate Mobile’s Holly Lynch, the panelists were Jeanne Sullivan, founding principal of StarVest Partners, Cecilia Pagkalinawan, an entrepreneur with over 15 years of experience and current CMO of Hone, and Julia Pimsleur.
Lynch started the discussion by asking what milestones should be achieved before talking to investors. “There is no right or wrong time to raise money,” Pimsleur said. Talking to investors even when all you have is an idea allows you to value the company at a higher price, since there are, at that point, no restraints. She has three items that add value to a company: Proof of concept, a strong team and how far you can get without outside help. The last item is a big draw for investors, since it allows them to see that the entrepreneur can get the job done.
When deciding between angels or venture capitalists, Pimsleur said that angels are easier to approach, since they are usually open to ideas from other industries and don’t need formally structured business and financial plans. VCs, on the other hand, probably won’t consider a company if it doesn’t fit their portfolio. They also need formatted presentations that talk about the problem, the solutions, the competitors, financial plans and other information.
Pagkalinawan said she first approached investors by asking them for advice. After talking to them and explaining her business plans, she convinced them to invest in her company. But raising capital is extremely challenging and which model you choose depends on your current life situation. Pagkalinawan shared stories of not being able to give her 100% at pitches because she was dealing with personal issues at the time. Pimsleur made a decision to go with angels over VCs when starting out, because her children were still young and took up most of her time.
Sullivan, a veteran VC, suggested putting together a personal board of advisors and looking for angels in your private circle, “…people who have domain knowledge and can bring something to the table.” She also had advice on what can make or break a pitch. Things like mentioning the VC by name in the initial correspondence, explaining the business model and expansion plans before jumping to a demo of the product and the capital needed, rather than being vague can change an investor’s mood in an instant. “We’re giving you a lot of money and so we want to see if you can execute and scale,” Sullivan said.
When asked about hurdles that are commonly faced while seeking funding, Pimsleur said that the biggest struggle women had is knowing how much they’re worth. She said women worry about having big financial dreams and the only way to overcome that is by being comfortable with the idea of making money. Apart from not knowing the right valuation, women also stress about not being familiar with the financial side of the business. But with the Internet and business schools like Wharton making online courses available for nominal fees, there is now no excuse for not being at least slightly conversant with financial terms, Pagkalinawan added.
Sullivan expanded on the Internet as a resource by recommending videos by David Rose and Claudia Chan that cover entrepreneurial issues. She also said that there are several incubators and accelerators dedicated to helping women, like Women 2.0 and Springboard Enterprises. Another resource mentioned by Pagkalinawan was to start putting yourself into the system by attending meet-ups, networking events and talks. Pimsleur said talking to CEOs in your chosen field will give you an idea about who invested and maybe even get you an introduction to a VC who might be interested in your idea. She has also created a list of investors to approach, on her Double Digit Academy site.
While the capital raising process does seem daunting, Sullivan had a few words of encouragement to get the audience motivated – “You can learn this stuff.”
She had herself and her fellow panelists as proof of that.