Mind the gap: Helping women cross the funding chasm

Are women better at networking than men? Quite possibly, judging by the atmosphere at FinnCap’s recent Female Leaders Series event.

There certainly seemed to be more smiles and fewer wallflowers at the pre-event reception than at the average get-together. Active listening – that rarest of business skills – was prominent.

Some fifty female entrepreneurs were welcomed with a deliciously provocative speech by Sandi Toksvig, OBE, fresh from revelations over the pay gap between her and Stephen Fry at the BBC. She began by clarifying there has been progress…of sorts. Pointing to the Tower of London out the window she reminded us that “plenty of uppity women lost their heads over there!”

finnCap CEO Sam Smith introduced the agenda with a bold statement. Women are intimidated by finance, she argued. The jargon is impenetrable and it’s dominated by men. The event was designed to bridge the knowledge gap, she said, to help female entrepreneurs find the funding they need.

Finding the ‘smart money’

BBC Business journalist Samantha Simmonds quizzed four female leaders on their experiences. First up, the question on everyone’s lips: how do I find the right investor?

There are two parts to this question, of course. Entrepreneurs should first consider the right type of investment – and various panellists were on hand to extol the virtues of debt finance, private equity and venture capital.

It was left then to Memery Crystal Chairman Lesley Gregory to speak up for two other, equally valid, types of investment. She referred to the popularity of crowdfunding, but urged female-led growth businesses to also consider an alternative source of public money.

“Crowdfunding definitely has its place, but people should be wise to its drawbacks, too. It’s a shame, I think, that too few entrepreneurs consider listing on a market such as AIM. It provides access to huge amounts of capital to fund growth – it’s not just an exit strategy.”

Alongside the type of investment, businesses should also think hard about the people behind it.

For Erica Young, Director at Anthemis, female leaders should get ready to ask the tough questions. “You’ll be intimately involved with these guys for a long time. You need to know that they understand your challenges, your market, your business. Ask yourself: is this ‘smart money’?”

Lesley Gregory reinforced the importance of chemistry. “You do need a ‘fit’ – I recommend going with your gut feel. Mostly you know within the first five minutes if they are right for your business.”

Finally, entrepreneurs need to understand how investors think. For Sonia Powar, Co-CEO at Boost & Co, it’s all about considering the risk profile of the business. She encouraged founders to think about why they need the money.

“There are two types of funding. Either you’re doing the same thing but bigger – for example, expanding into new markets. Or you’re trying something brand new.” “The latter carries more risk and will attract a different kind of investor. It’ll save time if you know in advance what risk profile you represent.”

Key ingredients to business success

These insights are all well and good, but what if a startup can’t even get a foot in the door? Luckily, the panel swiftly moved on to what investors look for in entrepreneurs. The advice boiled down to four main factors.

1) Mindset. Are you ‘coachable’?

“Founders need to embrace the fact they’ll have another partner onboard,” said Flor Kassai, a Partner at Inflexion Private Equity. “We look for signs they’ll collaborate and minimise friction.”

2) Governance. Is your house in order?

Memery Crystal’s Lesley Gregory urged founders to ensure their intellectual property is properly protected and that the team have a shareholders’ agreement. No investor will be interested in a company whose ownership isn’t clearly laid out.

3) Planning. What’s your story?

Founders should set out their vision for two to three years from now, says Sonia Powar. Be clear about the opportunity but also be honest about the risks. “We want to know what they will do when bad things happen and see that they’re realistic and prepared,” she said.

4) Team. Who’s advising you?

Investors want to see that founders aren’t alone. Lesley Gregory highlighted the importance of mentors, advisory boards and early stage supporters in giving other investors confidence in the business.

 “You have to kiss a lot of frogs”

This was the slightly left-field nugget from Polly McMaster, CEO of fashion brand The Fold. Polly was extolling the virtues of networking – an essential activity for all entrepreneurs.

And the need to press the flesh doesn’t stop once the funding is in. If anything, it becomes even more important.

“It never stops because you never know what’s coming around the corner. You always need to think ahead by building the right network and ensuring you have enough support when things get tough.”

Because things will get tough. And that’s when the networking pays off.

“A conversation pops into your mind. A meeting you had months ago that you worried had been a waste of time contains the perfect solution.”

Beside making and maintaining relationships, Polly urges entrepreneurs to listen harder. “Understand the needs of the consumer and put it at the heart of your business. Make sure suppliers and your team are heard. Actively listening to what they want will help in the long run.”

Create an emotional connection

Bronwyn Corbett, CEO of Grit, knows what it takes to succeed in a male dominated business environment. She has thrived in the intensively competitive real estate market, driving the growth of Grit’s portfolio from $140m to $600m across seven African countries.

And the key to her success? Simple. “We found out exactly what people needed and wanted and gave it to them.”

Property owners in underdeveloped markets across Africa didn’t want to be told how to be more corporate or sophisticated. “They wanted us at their weddings and christenings – we needed to be seen to take an interest in their lives. A lot of male-oriented businesses aren’t prepared to do this. That’s why it didn’t work for them.”

Maybe it’s not just networking where women hold the advantage…

You can watch the entire event here (registration required).

(Image Credit: EY UK, co-supporters of the event)