Finance for Female Founders

Finance for Female Founders

It’s no secret that female founders face more challenges than our male counterparts when it comes to financing businesses. 2% of VC funding goes to female run businesses, despite the fact they make up 39% of industry. That is a pretty depressing fact. But, in my conversations over the last 2 seasons of the podcast, I’ve heard from co-founders feeling positive when going out for VC funding with a strong strategy to overcome the structural limitations they, and we, face. They’ve shared advice, war stories and practical tips.

What has been really encouraging is just how many options there are for female founders looking for funding, from crowdsourcing to EIS, or good old fashioned bootstrapping. Here’s what I’ve learnt from the last 6 months of conversations, from finance options to how to spend it.

When you’re setting up your business – where to find funding and where to spend it

I was lucky when I set up my business, as a service provider, my overheads were pretty low, a few registration fees, and I was ready to go. But if you’re a product based business?

Ruth Marsden of the Better Company had a small start-up loan of £5k from her family, which she spent on branding, product, her domain name and imagery for her website. To keep costs down, she created her own website. Which is totally doable! If you’re not me.

Kat Fellows, founder of Lesh, had a payout on leaving her last job and got a council grant to put towards her website. With her background in luxury skincare marketing, Kat had firm ideas about the look and feel of her brand and how she wanted it to look and feel, “the way my brand comes across is really, really important. So something I wasn’t prepared to compromise on was the way that it comes across…the way the website looks, how it functions, how it’s being communicated, what the claims are, everything about the product, product that is really, really important.” Her top tip? When it comes to photoshoots, it’s the model that sells the product, so that’s where you should invest.

My conversation with Lucy Legal was great in terms of financing, because she was really transparent about how she made her business work, and the pressure and targets she put on herself. Having made between £10-20k of savings that gave her the courage to take the leap. But she was clear she needed to match the salary she had been getting at her law firm pretty quickly, while her husband was on statutory paternity leave. And within a year she had matched her corporate salary and was adding more to her pension than before.

Venture Capital funding

The world of VC funding can seem pretty inaccessible for female founders. For Danielle Wallington, founder of FLOCKHERE reading the stats meant that it wasn’t even a consideration for her.

In the US, 39% of start ups are run by women, and they only get 2% of the funding available. The 2022 Gender Index report found that, while women lead around 17% of active UK companies, these companies attract just 12% of the investment in UK businesses. These stats are absolutely shocking but it’s important to for us to know them, and recognise that there are structural limitations for us. So we can work together to get around them.

Advice for when you’re going into VC fundraising rounds

If you’re going into funding rounds, I’d really recommend going back and listening to the season 1 episode with Rebekah Clark and Joanne Glen from Happy Marlo. They have a lot of experience and insight to share.

There’s a lot of conflicting information and advice when you’re going to fundraising networking events, it can be overwhelming. But what I’ve learnt from Rebekah is to focus on your purpose for these events. Is it to meet investors and speak to other founders that can introduce you? Then focus on that. Don’t pay too much attention to panel talks, or other information being shared, it will just create more noise and confusion that you don’t need. If your priority is raising the money, focus on that and ignore the rest.

Joanne from Happy Marlo mentioned a TED talk by Dana Kanze, talking in detail about the structural limitations female founders face, from the language used to the questions asked when we are interviewed in funding rounds.

We need to answer the questions that we want to be asked, give positive and promotional answers to preventative focused questions. Create strategies to get around the limitations that we face.

VC funding isn’t the right path for everyone

VC is kind of held up as the holy grail in a lot of conversations about funding. But it’s not right for everyone. It can be great in terms of access to contacts, network, advice and experience. But it can also mean a lot of compromise: you’re no longer in total control of your business. And in my experience from the conversations of the last 2 seasons, a lot of founders are starting their businesses because they want that ownership, that autonomy.

What about Crowdfunding?

If you’re in the business of creating community, then maybe Crowdfunding is the finance option for you. It’s a great way of testing the market and making sure that the demand for your offer is there, creating buy-in and a ready-made community for launch.

It’s not easy though, Danielle Wallington crowd funded for her third business, called it “one of the hardest things [she]’d ever done”. When you’re a one woman band trying to create the hype, raise the money, run a business and raise children, it’s a lot. But, it’s only for a short time: the majority of crowdfunding campaigns are 30-40 days. You can do it.

Or an EIS share equity raise?

Laura Crawford, founder of Mama Bamboo took her company out onto the market and did an EIS share equity raise and gave away 20% of the business in exchange for investment, which they planned to spend on brand work, sales and marketing.

Unfortunately, Covid and skyrocketing freight costs meant that all the initial investment went on keeping the business afloat, and they had to go out for a second successful round. Listen to Laura’s episode for more information on her funding journey.

I think the main takeaway from the last 6 months for me, is that the finance is out there. You will find the right route for your business, you will find the right people.

If you took a different route to finance than we’ve seen on the podcast so far, I’d be so interested to hear from you, so please get in touch. I think it’s so important to share finance stories with other female business owners so we can support each other and access the financial resources that we deserve.

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