Ksenia Yudina describes going through four rounds of funding over a year as “a rollercoaster journey” as she developed her company, UNest. The seed round was “very challenging,” taking about half of that time.
Among the reasons? Gender bias.
Speaking as part of the leadoff panel at VentureCapital.Org’s WeROC (Women Entrepreneurs Realizing Opportunities For Capital) event, Yudina joined others in saying that women face extra hurdles in getting the money needed to grow their ventures.
“The seed round was definitely the most difficult round ever, and I think it’s true for any female-founded company because we are perceived as a high risk,” Yudina said at the conference, which featured a blend of in-person and virtual attendance.
Panel moderator Kimmy Paluch, managing partner at seed-stage venture capital fund Beta Boom, framed a few questions by asking about “the bias we know exists in the system.” She noted that only 2.8 percent of venture dollars in 2019 went to companies with female founders. Angel investing saw a higher number — over 15 years, growing from 5 percent to 21 percent — “but it also has a lot of room to grow,” she said.
Linda Klug’s approach to the situation was to focus on her credibility and the brand of her company, Airin, highlighting tech experience, patents and software launches. “We decided from the very start that we were not going to be a ‘female-founder startup,’” she said. Instead, she tried “to make sure that the focus was on the problem that we solve and how we solve it.”
“There is an inherent bias, and don’t pretend that there isn’t,” conceded Jeramy Lund, an angel investor and managing director of impact investing and the managing director for University Venture Funds at the University of Utah’s Sorenson Impact Center.
“Acknowledge it and figure out a way to work around it,” he said, whether it’s pitching to female-led funds, surrounding yourself with experienced advisors or spending lots of time with investors to help them understand what problem the company is attempting to solve.
“But understand it’s going to be a little harder to get venture capital if you’re a woman and not pretend like you’re just going to be able to waltz in and do it,” Lund said.
Yudina learned a lesson about gender bias when she split duties with a male entrepreneur when two pitching events were happening at the same time. The man was a little older than her, with gray hair.
“So here we are,” she said, “same day, pitching to two angel groups, telling the same story about the same problem, same solution, same team and same founder, and I get a ‘no,’ and his group was like, ‘Peter, this is the most amazing company we’ve ever heard about! Oh, my gosh! Thank you so much for coming! We’ll be moving you to the next round!’
“And that got me thinking, there must be something going on. Obviously, they could relate a little more — he looks like those other angel investors — and I’m like, I need to figure out a way to overcome this bias. I understand it exists. I have to embrace it and move on.”
Since then, he has been in all the pitch meetings, and Yudina encouraged other women to “have a qualified male colleague with you who can prove and validate your idea, who maybe has a successful track record and he believes in you and he can tell everyone else that ‘this is a real deal, this is a real founder and this is why I’m backing her,’” she said.
She has also brought in advisors with proven track records, had their own networks and could open doors to those networks. She also suggested that woman rely on funds that support female entrepreneurs. “We all have to help each other. … If you cannot find the money from male investors, try to lean on your female network,” she said.
Richard Haskell, director at the Westminster Center for Financial Wellness, took a different tack, saying investors “don’t care if you’re male or female. They care if you’re going to be profitable for them, and that’s not a gender issue.”
Funders are “terribly objective” and “numerically biased,” he said.
“They want numbers” from those seeking money, he said. “They know that all business owners and all entrepreneurs can be separated into two categories: those who understand their finances and those that are controlled by other people who understand their finances. And as a funder, I don’t want to do business with someone who isn’t in control of their business. … Have the numbers dead-on.”
Haskell was asked by an audience member if female founders “need to learn to speak ‘male,’ which is ‘numbers’?”
“I’m going to argue that speaking numbers isn’t gender, either,” he replied. “I think that women and men should be able to speak numbers and can speak numbers equally as credibly. So if you’ve put yourself into that camp, step out of that camp, because that’s kind of pigeonholing yourself and others in the room.”
Those numbers should be spun into “a story you tell well,” he said. “If you only come with a story, then they’re going to beat you up and throw questions at you that are hard to deal with.” But using numbers in an objective story that reveals the founder’s passion? “That’s the package they’re after. That’s the package that sells,” he said.
Lund stressed an approach that spells out the “pain” a startup company is trying to address.
“One of the things we really like to see as a funder is, is there real pain here or is this just a solution in need of a problem?” he said. “If you can clearly articulate that, it goes a long way to establishing your credibility, even if we don’t understand how you’re going to solve the problem.”