It’s still an uphill battle, but more female-founded companies are starting to emerge. One of the biggest challenges for new entrepreneurs is getting loans and landing critical investment during the earliest years of their businesses.
Companies launched by women brought in only 2.3% of U.S. venture capital dollars last year, according to Pitchbook, but that number doesn’t paint the full picture. The same report touts that the deal count for female-founded businesses has more than quadrupled in the past decade. It also indicates that more capital was invested in these companies during the fourth quarter of 2018 than in any other period in the past decade.
FN asked five leaders, ranging from fashion entrepreneurs like Rebecca Minkoff, Sarah Flint and Kendall Miles to women working in finance, what advice they have for founders looking to take their business to the next level.
1. Learn the Different Types of Capital That Are Available
“The first critical step is to identify how much funding you need, how long you need it, how quickly you can repay and how you will use that money when you get it,” said Marisa Harney, EVP and chief credit officer at CIT Bank.
Before reaching out to people to ask for money, make sure you have a general understanding of what kind of capital your company will actually need.
Sutian Dong, a partner of the Female Founders Fund, a VC that represents women-led companies like beauty brand Winky Lux and online wedding registry platform Zola, said narrowing down a list of potential investors is also key. “The first thing for entrepreneurs to think about is not, ‘How do I reach out to people?’ but, ‘Who should I be raising money from?’”
2. Find Solid Partners to Help You Achieve Your Goals
If understanding finance isn’t your strong suit, team up with someone who has mastered it. “For me, the first challenge was financial,” said designer Rebecca Minkoff, who had a tough time figuring out the right business model when her Morning After Bag took off in the early 2000s. She decided to team up with her brother, Uri, who had an entrepreneurial flair. “Working with my brother was definitely an advantage. He had a really great sense of technology and is probably the best mathematician I’ve ever met,” said Minkoff. (The two continue to be business partners today.)
For designer Kendall Reynolds — who developed her luxury shoe label, Kendall Miles, while she was in college — getting her investment banker parents on board was essential before she launched her business.
“I had to gain their trust in the beginning by presenting them with this business plan so they could follow along on that,” Reynolds said. “And as soon as I had the business plan, things got a lot more real because I had my support behind me. I had a solid founding team.”
Meghan Markle-approved designer Sarah Flint said her focus on building a solid team early on helped get her business on the right track. “Having a strong team that you can trust is essential in building your business, and my team fully understands the brand and our mission,” she said.
3. Network With Other Women
Female founders are learning that competitors can also be great advisers. “The growing [group] of female entrepreneurs has created a very powerful movement where the support that women feel in their industry is hopefully enabling them to be bolder in their choices and their investments,” said Dong.
She got her start being the only woman at FirstMark Capital and now helps run a VC group that’s dedicated to female founders. “There’s a community of women across the firms that help support each other,” Dong said.
Networking with women in different fields can also help provide valuable expertise.
“Surround yourself with people who you can learn from — not only mentors but sponsors, sounding boards and advisers who want to see you succeed,” Harney said.
4. Remember It’s a Marathon
Even though it might be difficult for first-time business owners to think beyond each day, the future should always be top of mind.
“You have to remember that it’s a marathon, not a race,” said Reynolds, whose shoes have been worn by Rihanna. “You have to be willing to work through all the challenges and all the struggles because every time before a big break, I’ve found that there’s a struggle right before,” said Reynolds.
Insiders said that having a long-term view is also critical when it comes time to fundraise. Dong and her partner Anu Duggal, who started the Female Founders Fund in 2014, are always looking for women who will be a good fit for their growing portfolio — not just now but in years to come.
“We take a long-term view on entrepreneurs, and we ask ourselves, ‘Is this somebody who we would be excited to work with?’ And not only someone we could help within the next year but during the next seven years.”