Allison Byers is the Founder & CEO of Scroobious, which is increasing diversity in the startup ecosystem by teaching diverse founders how to create investable pitch material through a scalable online platform and making it easy for investors to discover them through data-driven curation.
Prior to founding Scroobious she launched and co-ran a medical device company spun out of MIT where she raised nearly $10M before it was acquired and experienced first-hand the challenges that come with fundraising as a female founder. Her earlier career includes over a decade of startup and tech operator roles.
Allison is also an angel investor, startup mentor and advisor, speaker, on the All Raise Boston leadership team, and works with dozens of diversity-focused accelerators, non-profit organizations, and university programs. She is frequently quoted in the press including Bloomberg, Business Insider, TechCrunch, BBC, and others.
She received her MBA from Boston University, is a mom of two young children, and is a vocal proponent of parent entrepreneurs.
How do you banish the fear and dread you feel when you’re pitching investors? What’s the one mental switch you can make to instantly gain power and confidence when pitching? How can you use your knowledge of the human brain and the investor mindset to make your pitch much more compelling?
In this episode, entrepreneur and founder Allison Byers talks about the key mindset shifts you need to increase your odds of getting funding, how to equalize the power balance when you’re seeking capital, how to avoid the hidden pitfalls that lurk unseen in every investor conversation, and much more.
- How gender impacts you when you’re pitching
- How and why Allison founded Scroobious
- How to approach investors from a place of power when fundraising
- Why it’s difficult to get honest feedback on your pitch, and how to address it
- The three things that matter most for early stage founder pitches, and why
- How to use human psychology to make your pitch more compelling and memorable
- Why it’s not smart to present financials too early in the process
- What to watch for when presenting financials, and why
- The hidden question in every section of your pitch deck, and how to answer it powerfully
- Why investors are challenged to invest in diverse founders
- The invisible hurdles women entrepreneurs face when pitching, and how to overcome them
- How to choose the right investors to pursue when fundraising, and why that’s critical not only to your funding, but also to the success of your startup
Links and Resources
Scroobious: The pitch deck development platform that Allison founded
NASDAQ webinar: Allison’s webinar on how to pitch effectively
Dana Kanze’s TEDTalk: The real reason women entrepreneurs get less funding – talk by Dana Kanze
Shubha Chakravarthy: Hey Allison! Welcome to the Invisible Ink show.
Allison Byers: Thank you for having me! I’m excited to chat today.
Shubha Chakravarthy: We are really excited to have you on here as well. Let’s jump right in!
You had a pretty interesting journey. You were a founder yourself. You raised a meaningful amount of money and now you are a founder who helps other founders. What has that journey been like?
Allison Byers: Yes, it has been quite a journey for quite a while. I was a tech operator for about 15 years before my foray into entrepreneurship with my last company.
I helped launch and co-ran a medical device start-up that we spun out of MIT in a hospital system here in the Boston area where I am. I was the business one on the team and I did our fundraising. We raised almost $10 million over the course of five years and then that company was acquired.
For me, what really stood out and defined the experience was the gender bias that I encountered while fundraising. In that process, I’m very used to gender bias.
Having been a female tech operator, I’m very used to being the only one in the room, but this was different. It was a very different feeling and a very different experience. So, when that company was acquired, I spent a lot of time researching the space of pitching and the space of fundraising to understand if what I went through was typical or not. I didn’t even know if that was a normal experience.
You very quickly find out statistics, that about 2% of VC dollars go to women and 1.6% go to Black founders. I think it’s 0.6% go to Black women founders. All these are indicators of a true systemic issue in a way that you almost don’t see anywhere else in any other industry to that extreme.
So, that served as a catalyst for wanting to do something right. I wanted to do something meaningful in this space because it needed innovation from outside. When you are at that extreme, the innovation isn’t going to come from inside of a system that perpetuates that type of bias.
So that’s what led me to found my current company, Scroobious, which I did right when the pandemic started, one month before Covid showed up, which is a whole other thing to talk about.
Now our focus really is on helping founders and primarily those who have been historically blocked from accessing investor networks or those who identify as underrepresented in some way in the space of fundraising and entrepreneurship.
The focus is for founders to learn how investors think and to create pitch material that is investable and compelling. We do this through a scalable platform so that it is widely accessible and affordable as that type of education and guidance today is really not affordable for most entrepreneurs.
Shubha Chakravarthy: That’s pretty inspiring. I want to touch on one thing to the extent you’re comfortable talking about it, that you mentioned in terms of the overt discrimination, the gender issues that you saw during the pitching process. Would you care to give us some examples of what that felt like?
Allison Byers: I mean this manifests in so many different ways and I can share some of what I went through. We’ve worked with over 350 founders now at Scroobious, and we’ve heard unbelievable stories.
Most of our founders have gone through just a huge range of how this type of bias exists in different ways based on their category of underrepresentation. For me there were some instances that were pretty overt. There were some that were not as obvious but were still very clearly impacting my ability to raise.
One example that most women who are fundraising have experienced is going into a pitch meeting with male colleagues and having the fund manager really only address the male colleagues and not you.
I experience that a lot, a lot of the questions are directed at the CFO when I should be the one fielding those questions. It just diminishes your authority and you’re clearly not perceived as the person running the company, which really damages your ability to raise.
Another one that I did not know at the time when I was raising for my last company, but now having done all of the research in this field that I’ve done for Scroobious, I realized that I was asked a lot of prevention-oriented question.
So this is research by Dana Kanze, who gave a fantastic TED Talk and her research is outstanding in recognizing that women tend to get asked prevention oriented questions.
So, things like, “How are you going to mitigate this risk and how are you going to defend yourself?”. It is always putting you in that negative position versus the promotion questions that they ask men.
Like, “Oh, tell me about all the upside. How do you grow the positive aspects?” I was repeatedly put on the defense and I answered as such for that last company. It creates a negative tone to the meeting versus one of excitement about opportunity.
Now I know to recognize those and turn them around and answer them in a promotion way, but I didn’t at the time. That one’s a subtler gender bias, but one that equally harms your ability to raise.
Shubha Chakravarthy: That resonates so much across, yourself and other women we’ve talked to at Invisible Ink as well.
So, you talked about having done the research on the pitch process and all the challenges that women face. What gave you the exact idea? What does Scroobious do?
Let’s start with that and then maybe go into how you came up with the product.
Allison Byers: I started doing a lot of secondary research into what a typical pitch deck looks like or what are the investors saying that they are looking for? For me, a part of our ability to raise is that I am good at pitching and I am good at presenting.
I have a consulting background and the operator background. This is a skill for me. So, that served us well. But for many, it’s not right. This is a not natural skill and it’s very uncomfortable to put together this kind of presentation.
One of the things I noticed was that there are a ton of pitch frameworks out there and there’s no one accepted framework. Every investor is shooting out tons of different advice.
Particularly if you are Googling or using Twitter, for these founders that are trying to educate themselves, there’s so much noise and it’s really hard to find the good signal in that noise.
So I instantly thought, “Well, if there was a framework that was validated with investor input, that if this content was in there, it would satisfy most people. That they are looking for this content, first of all. Then what is the narrative so that you can order those sections or that content?
So, it tends to work well. It tends to be in a compelling order. That’s just where we started. I also did a hundred investor interviews with a mix of angels and funds spread over all geographies to get at that and constantly testing, “Hey, if it was this content in this order, how would you feel about that? What about this? What about that?”
We were constantly refining our idea so that we could get it to a product type place, and we could be giving advice that’s validated. So, the content in the platform that we offer is everything from what even is a pitch deck to all the way through the sections you need to include and how you organize information on a slide so that it’s easy to understand and all those principles such as, “How do you present it in the form of little micro lessons?”
That’s also what I discovered is a very effective way for most people to learn. It is through those micro lessons. It is about enabling founders to learn how to do this right through asynchronous online access to accessible and validated material.
Then we also pair it with some specific points of personalized feedback from reviewers that we train because that was the other thing I heard from founders very clearly, “I still want someone to look at my things. I still want someone to tell me if I’m on the right path as much as I can enable myself.”
So, we do that and a whole ton of community building and workshops and curation with meetings with investors and all those kind of things and meetings, founder to founder and practices and the stuff that will build something that’s very supportive.
Shubha Chakravarthy: So, how long did this whole process take you from the time you started doing the secondary research to the day you rolled out something that a founder could sign up for online?
Allison Byers: Yeah, that was an interesting process too because I incorporated a month before COVID and I have two kids, and all of a sudden there was a year and a half where they had no school to go to. That was a very different experience for working parents than what other people had and particularly for those with school-going children.
So, I made a very conscious decision when that happened to take a slow measured approach to building out this product so that it could survive through that period of uncertainty rather than having to shut the company down by trying to still grow really fast. What it did was afford me the time to very thoroughly and methodically test the content.
Our first product was a Google Doc that followed this curriculum I had made, and I tested that if I gave someone this content and then I gave them the feedback that I think they should have, will that work? — Just the concept of it.
You don’t need to build a tech platform. I talk about this with a lot with tech founders. You can do a whole lot of validation without really spending any money, with the tools that we have today.
We got someone into the Mass Challenge Accelerator just on a Google doc and I thought, “Okay, there’s something here and I really believe that a lot of it is that work we did into the content and understanding how you teach somebody the why behind the advice.
That’s what is missing from a lot of education out there, it is the question of why does this matter?” When you teach someone that then they are more able to create compelling material because they get why it is important versus someone just telling them to do something that they don’t think is important.
So, we had that Google Doc for a few months and we kept getting people using it successfully along with kind of that paired feedback from me and then we took another step and I said, “Okay, I, this isn’t really tenable anymore and I turned it into a bunch of landing pages using a website maker that I could make as a non-technical founder.”
We had that for a few months and then that was starting to break because more people were using it. So, we created a low code version on Bubble of our software to test that out.
That lasted a few months and then we hit the limits there. Now we have a custom software that we launched less than a year ago — our custom software platform. So, it’s been kind of a journey over a few years.
Shubha Chakravarthy: I just love how you develop essentially from a matchstick and rubber band model all the way to something that can stand alone on its own legs.
What does the price point look like if I’m a founder that’s trying to come in and make this an affordable answer? What am I looking at in terms of an investment?
Allison Byers: So, we have iterated that a little bit too based on our community because we have now worked with over 350 founders in basically a couple years. We learned that people come to us with different stages of needs.
We have a few different levels of an annual membership. So, we have a “Just join our community without the whole pitch education” piece. If you want access to our workshops and our resources and our perks and all of our community network then that is only $120 for a year.
We wanted to make it super accessible to be a part of a supportive network. Then we have our middle range, which has access to all the education and what we call our pitch plan or our pip and that is $240 for the year. So again, super affordable for the value that you’re getting.
Then, our highest level includes three points of that personalized feedback, so founders can upload a draft of their deck two times and get a round of very actionable comments each time.
So, written feedback asynchronous, which is how we keep it scalable and affordable and then a one hour zoom session. That is $480 again for a whole year and all three points of that, including that hour session, which is not something you can find elsewhere and it was very deliberate because I’ve been a pitch coach.
It is $5,000 on average because it is time based. It is somebody’s time and by making that scalable as we can and by enabling people to get as far as they can, we can keep it at a price that really is affordable.
Shubha Chakravarthy: I’m excited about it. Looking at the process holistically and having coached all these 350 founders as well as your work as a pitch coach prior, what are some of the high level observations you can make about women founders and underrepresented women founders in particular that would be good for us to take to heart?
Allison Byers: The biggest thing that we see all the time and that I experienced and it took me going through that for five years, to come to a different place of being is founders who identify as underrepresented, in particular women and founders of color, tend to think that we are lesser than the investor that we’re pitching.
So, we go into meetings with the attitude of, “I need your money. You know better than me.” We acquiesce to whatever it is the investor is saying, but that puts you already at a disadvantage in a system where, we are already experiencing every disadvantage. We are doing it to ourselves.
Investors don’t make money without investing. So, it’s a shift in your mental framework, in your approach to these meetings of, “Hey, I’m building something that’s going to make a lot of money”, and if you don’t believe that in your heart, you should take a step back and evaluate what you’re doing.
You have to believe that you are going into a pitch offering an investor an opportunity to profit off of what you’re building. You are inviting them into your opportunity, right? That is a chance for them to profit off of you and you are equals in this conversation.
You’re not going in looking for a donation. You’re not charity. It really can take a while and you need to have that network of other people supporting you for that construct in your head to be like, “Hey, when I get a no, it is fine” or “If somebody doesn’t see what I’m doing and it turns into an argument, then it is fine. We’re not a good match. That’s okay. I’m going to go talk to some other people.”
Shubha Chakravarthy: Is there like a mental switch that you see that’s helpful in flipping that mentality because I’ve had this conversation with quite a few people and I can totally relate to it.
What has been most effective in getting that?
Allison Byers: A lot of it is bringing some transparency into how investors evaluate opportunities and understanding the feedback that you’re getting from investors and how to interpret it.
The other thing that makes this such a hard industry, and I call it an industry — fundraising itself, is an industry. It just hasn’t really been looked at that way, but it is and in that ecosystem, investors are not incentivized to give honest feedback to founders.
It’s not in their best interest from the investor standpoint, even if you would normally just say no, there’s always that thing that says, “Well, what if one day you do make it big or you surprise me and I was wrong? I want the chance to get back in. So I have to keep a friendly relationship with you.”
If you give honest feedback, which is what the founder needs, there is the fear that you are going to hit someone the wrong way with that feedback and they are not going to invite you later, or they’re not going to be receptive to future communication from you.
So, instead founders get things like, “Oh, it’s a little too early”, or, “Let’s talk again when you have some more traction” and it’s not true. It’s not the honest feedback.
However, if you are a founder who is going through this for the first time and you don’t have a big network of other founders or investors, then you don’t know that. Then you question yourself, right? You start questioning, “Well, what am I doing? Am I doing the wrong thing? What do I need to change? This might not be right.”
And instead, if you do get that education and you enter a network where people teach you how to interpret this, you can start changing that construct because then you know in your head, “Oh, they should have just said no. We’re just not the right match. It’s not that I’m doing something wrong, they just don’t get it. So, I should go approach a different avenue.”
Shubha Chakravarthy: That makes a lot of sense. But what if, let’s say my business model is simply not up to snuff. So it’s not as if I came to you and there’s an industry mismatch or a stage mismatch but the intrinsics aren’t good enough.
How do I get to that as a founder to make sure that’s not the core issue that’s making me uninvestable?
Allison Byers: That’s why you have to have people and you have to either work with someone like us — work with a party that will give you that feedback and help you understand that, or have advisors or connect with other founders. You have to be able to share what you’re doing in a safe space and get that direct feedback.
So, if we get a deck where the business model slide isn’t clear, or they don’t clearly communicate how they’re going to generate revenue or it doesn’t make sense, we give that feedback.
We say that directly in our comments. “This is not a clear business model. It doesn’t seem investible because I don’t understand how you are generating revenue.”
We would point out that an investor might push here. “Is this a realistic source of your primary revenue?” All of those kinds of things.
You can’t do it in a vacuum. You can’t do it if you don’t know what you don’t know or you don’t know better, and you can’t do it if you’re only pitching investors who are not giving you direct feedback. You have to have that other source and you can modify it. It’s not like you can’t change your business model.
So if, you get the feedback that it’s not an investable business model, you do something about it. You can either say, “Okay, let’s think of new ones, or maybe equity funding is not the right way to capitalize your business if that’s what you want your business model to be, then let’s think about other ways to get this going.”
Shubha Chakravarthy: But the economics has to still work regardless of how you fund it. It still has to make money and you still have to be able to operate with a profit.
Allison Byers: Or it’s not long for business.
Shubha Chakravarthy: You started to hit on it a bit already, about how within Scroobious you help with the pitch support? I started looking at some of the great videos you have on YouTube. You talk through the NASDAQ Entrepreneurial Center.
I love the video, so I’ll plug them right here. They are a very good use of time. For those of us who haven’t seen them, you have a 10-step model.
I don’t know if you can do a quick walkthrough of the 10 sections of your deck.
Allison Byers: Thank you for watching those! We’ve put a ton of content out there in the videos. I talk about this all the time.
I run pitch workshops all the time and we do have that model of our core 10 sections that should be in the core of your pitch deck. We cover those in depth. Each one comes with the content and the storytelling element that it provides, and then also the risk that investors are assessing with that section.
Those are the two sides of pitching, is you have to tell a story and you have to remove risk with that story.
So, I look at it in a couple sections but the top three sections and the way we recommend everybody start their pitch, and you’ll get different advice, again, it’s not one size fits all system and there’s no one authority on how you pitch, but what works really well is to start with your origin story at the early stage.
So, if we’re talking Series A or earlier, you as the founder are critical to the investment decision because you as founder and CEO, are the steward of the capital you’re seeking. You make the decisions about what to do with that money.
So, the investor has to not only believe in your business and your idea, they have to believe in you as the person managing their money.
So, you have to communicate why you started this company? Why are you doing it? I think as founders, particularly women, we tend to think we shouldn’t put ourselves in it and we should keep it factual and get ourselves out of it.
But you have to put yourself in it. You have to talk about why you decided to do this because the investor has to understand and believe that when it gets really hard, harder than you think it will, you’re not going to walk or you’re not going to just check out and make poor decisions because it got too hard.
That means that you’re in it for more than just the potential of financial gain. You’re tied to what you’re doing in a deeper way and that is communicated through telling your origin story of why you started this business.
So that’s the first section.
The other reason why it works really well, I incorporate a lot of human psychology into our pitch, so you can use our brains to your advantage. We all have the same human brain no matter who we are.
So, if you can get somebody to feel an emotion when you’re delivering information, it’s been shown that they pay more attention to you for a whole 30 minutes after they feel that emotion and when you tell your origin story, it typically elicits some type of emotion from the person you’re talking to.
So not only is it important information and a good way to start a story, you are priming the person to pay more attention to you for the whole rest of your pitch. So we can use it, use our brains.
Then after you tell your origin story, you want to get right into the problem. A very common origin story is that you experience a problem, there was no good solution, and then you go solve it. That was my origin story.
So it’s very natural to go into it and show that this is a big problem and then you have to convince the investor that there is a big problem for a lot of potential customers where they’re experiencing acute pain. So, it needs data behind it. It’s independent even of how you solve it.
Just convince someone that the problem that exists. Then you talk about how you are solving it. Those top three — the why you’re doing it, the problem, and the solution are tickets to the game. That’s why you put them at the top of all the other sections that are about business mechanics and execution.
But if the investor doesn’t understand why you’re doing it, if they don’t believe there is a real big acute problem out there that people would pay money to solve, and if they don’t believe you solve it, nothing else really matters.
So, that’s why we spend the most time there on those top three.
Shubha Chakravarthy: Do you want to talk a little bit about what to focus on if you’re a founder on the business mechanics section? Just some top dos and don’ts that we can keep in mind.
Allison Byers: We have the Core 10 right up on our website. You can see that model. It’s been published. We go into detail and there’s a Business Insider article about each of these sections. Our top tips and that NASDAQ workshop goes into them too.
Essentially from there you need to clearly communicate how you’re going to execute on this solution. What is that business model that we talked about? How are you going to make money with that solution?
Then your market size, how much money is there the potential to make? That one’s really important. In particular doing a bottom up market size is important. Again, we have a lot of information out there.
One of the things in our platform is that we built a workbook to make it really approachable for founders to build that bottom up market size that they download and work in with a whole big lesson. I do a whole workshop just on this.
I know it’s a challenge area but that’s how investors do their market sizing. There’s math behind it, which determines if something is investible or not. So. that’s why it’s important. It’s not just throwing some big number up there. It has to make sense.
Then your competitive landscape and how you’re going to go to market, which really is your customer acquisition.
Why is now the time for your company to exist and why is now the time for you to be fundraising, which is usually all about your traction and the chronology of the progress that you’ve made.
So it, it’s the classic elements of what you would have in a business plan. It’s just people don’t really make business plans anymore. They make pitch decks and you have to communicate it in that way.
Shubha Chakravarthy: That’s a great overview of a really complex topic, I appreciate your giving us the quick download on it.
Couple questions on that. First is, I wonder if you can drill down on the financial projections, particularly when we’re talking about women entrepreneurs. There’s a perception, maybe there’s some of the reality there that women don’t feel as comfortable handling the numbers.
What has been your experience and what have you seen work well when it comes to the financial projections part of the pitch deck?
Allison Byers: Yeah, that is a great question. So, we have our Core 10 and then when I do the workshops or in our platform, we talk about optional material. This is stuff that you have to make, but I don’t recommend keeping in the core because you don’t need it for your first meeting or for a first pitch, which is all about convincing someone that you are worth another meeting or you are worth more time. A lot of it is because of the data and the research.
I found that, especially for women, if you put your financial projections in your pitch investors will hang on that slide and they will try to pick it apart and they will really focus on it and you don’t need that to determine whether you are worth another meeting because everyone knows these are made up numbers, no one expects at the early stage that your projections are exactly what’s going to happen.
This is where founders can get more comfortable. It’s not just the numbers.
So even if you’re not a numbers person or you get uncomfortable or afraid that you are going to mess up on a number. What the investor cares about is what is behind the numbers.
How do you talk in regular language about what creates these projections? What are the assumptions under them? So, if you show a big jump in sales from one year to the next, well, how did that happen? Did you hire a bunch of people and you had to spend a lot of money behind it, or did you bring on a new channel partner? Or did network effects start happening?
So when you think about projections, I like to push on those questions because it makes it more real, right?
Then there’s stuff behind the numbers that you do know how to talk about because it’s the decisions you are making about how to run your business and when you put it on a slide, save it for the second or the third meeting.
Then you talk through it that way and you pick for yourself and put this on the slide. “This is what you know.” This is in our program and it is what we coach people.
What is it that you want people to know about your model? How you came to these numbers, what stands out?
For a lot of tech companies, they want to call attention to the gross margin and over time how big that gross margin gets. So, call it out or maybe for you, you have really low customer acquisition costs and you want that to be noticed.
Whatever it is for your model that you want people to know, that’s a core driver of it, pull it out. Put it on the slide and talk about it in real language so it becomes more tangible.
It changes when you get beyond Series A and hopefully you have some sales and some data where you should be talking more about the actual cells in your spreadsheet.
But in the early stage, you built a model. It’s a model. It is historical and you are not building off of data that has already happened where you can start predicting. It’s all based on assumptions. So, yes, it’s looking at your model.
I do think every founder should be hands on in there even if you contract someone to help you. You should be part of the building of it so that you are not just handed a spreadsheet and your eyes glaze over and you say, “Oh, I have to have you with me to talk about it because then that’s not instilling confidence in the investor that you know how to operate the business.”
You should get in it. You should get comfortable and you should build in things where you can play around with changing numbers and see what that does to your bottom line so that you do get that deeper understanding of, “Okay, I know the levers.
This is a big lever. A small change in this row on this factor makes a big change right below. So, I know this is important.”
You also want to calculate deltas between things so you can talk not just about the numbers that are going to happen, but what the change rate is so that you know when there’s a big jump and you can tie it to something else that’s happening in there.
Shubha Chakravarthy: One little question on financials, and I want to come back to another point you made.
I heard from a couple angel investors that there is a “two-sy” rule or “three-sy” rule. I guess depending on how realistic your top line predictions are and then how realistic your cost projections are, do you have high level comments in terms of what founders should keep in mind while they’re building out? Or things you’ve seen women entrepreneurs do that we should be cautious about?
Allison Byers: Yeah, in general, I try to stay away from giving the two-sy or three-sy or saying in general that this budget should be this percent of this because it is different, right? We are industry agnostic on our platform because we focus on communication, not evaluation of a business per se. We have CPG companies, we have deep-tech, we have biotech, we have food, we are all over the place.
Shubha Chakravarthy: Sorry, let me clarify. The two-sy was the rule-of-thumb investors use that everything is going to take twice as long and cost twice as much as you say it is, as a founder.
Allison Byers: Yeah. So a few areas that founders can fall into and a lot of this is in trying to please the investor, right? This is the trap of, “I think investors won’t take me seriously if I don’t have a hockey stick projection where it just goes very steeply up in your revenue projections.”
But if that’s not realistic or if you can’t talk about why that would hockey stick, or if your assumption behind it is just, “Well, every month we’re going to 5X.”
That’s not realistic and so you’re not doing yourself any favors because you are going to have to talk through your model when you get into due diligence if someone’s really serious about it.
So, don’t waste everyone’s time, including your own by having fanciful projections. That obviously don’t make sense when you talk about it and that’s kind of the guiding principle, is you always want that gut check.
You don’t want to have something where a lot of times women will do this. We’ll be much more conservative in our estimates and our projections, much more realistic that are grounded in what do we actually think will happen.
These are stereotypes, obviously it’s not across the board. Men do tend to have, more inflated projections or much more on the upside versus the realism.
There’s a happy medium where everyone should be, where if things went well, these are some projections that pass the gut test. You can have multiple scenarios if you want.
You can have a good medium and poor if you want to, but really getting that Goldilocks level of, “Hey, we’re going to expect some upside, something positive. So, we think this passes the gut check.” That’s really what you want to go with.
Shubha Chakravarthy: Are you seeing investors adjust for this known tendency of women to undersell both themselves and the potential of their startups and is that covered in your process?
Allison Byers: Yeah, it’s hard. It really depends on the investor. For the most part, sadly, no. They will look at your projections and make their own assumptions about what you have in there.
For women, if you do trend toward a more conservative estimate, investors are not going to automatically add to your numbers because they think that you’re doing that.
They might think that you are not aggressive enough as a founder, that could be a conclusion that they make. They could believe that you are not going to hit sales hard enough. So, the onus is on the founder to find that projection range that communicates the upside opportunity but isn’t so fanciful.
So, we do a lot of pitch practice breakfasts where we have great partnerships and we bring together founders from our community and then emerging fund managers where it is a safe and supportive space to practice your pitch and get that real feedback that you need.
We were in one where there was a projection that had just a crazy, like by year five hundreds of millions of revenue, and a fund manager said, “I don’t even take it seriously. That’s just not going to happen, right?”
You don’t see that. You don’t see those numbers in all the pitches that cross your desk. So, having some awareness of what your projections look like compared to others that are pitching and what investors are seeing.
Shubha Chakravarthy: One last question on the pitching side and then I want to move to the investor side.
One critical thing you mentioned was de-risking and I’ve heard that from several investors now, that what they’re looking for is not only that you intelligently understand the risks but you also intelligently de-risk those risks.
Clearly, it depends on which one of those 10 dimensions you’re talking about to de-risk. Are there general principles or things that you would outline in terms of what a founder should think about as she is thinking about de-risking her pitch and her overall plan, that would be good for someone to keep in mind?
Allison Byers: Each of those sections carries risks with it. So, if you watch that NASDAQ talk, for example, I go through what are the risks in each of those sections. In our platform, there is a whole lot of more information about that.
But it is an important lens and that is the “why” behind a lot of stuff and that is what founders usually don’t get — that type of knowledge or insight without someone teaching them that investors do come at things from the negative.
You are not only up against others in your space, your competition that they might see. You are up against every opportunity, even ones that have nothing to do with your industry on your risk level because every investor has their own appetite for how de-risked they need something to be, where they feel like it is a good bet.
It’s always a risk to early-stage invest and you try to remove as much of that risk as you can. So, you justify and I feel good if I put my money in and I think there is a decent chance I’m getting more of it out later.
We already talked about your origin story, the risk that you are going to walk because you only want to do this to make money and you are not tied to it deeper. Then you are not going to care if it gets hard and you are going to detach.
The risk with your problem section is that there is not a real problem — that you don’t present data or cited sources that back up the incident rate of whatever’s happening and that it’s not acute. Maybe it’s a dull problem or a dull pain and people aren’t really going to go spend money to solve it. That this is what the investor is trying to evaluate.
With your solution, the risk is that you don’t actually solve that problem that you told me about. You solve a slightly different problem and there’s disconnect and maybe you don’t understand your audience in the way that you think that you do or your solution just isn’t really needed and you are just making something that I don’t think is needed out there.
Maybe, it doesn’t seem realistic that you could build the solution that you are talking about. Maybe, it seems untenable.
Each of those 10 sections carries different risks and if you know the risk that the investor is trying to mitigate, then you can make your content speak to that risk, right then.
Your story is not only telling the narrative of your opportunity, but it is removing the risk. It’s de-risking it along the way.
Shubha Chakravarthy: It’s like you don’t explicitly call it out, but you answer the unasked question that the investor is playing out in their head that says, “Well, what is the worst case scenario in each of these and how is she addressing that so that I feel comfortable enough that I’m not going to be left in the middle of the Atlantic Ocean without a life raft?”
Allison Byers: Yes, exactly. That’s the whole concept behind it.
Like with Scroobious, that’s what I wanted to do. I wanted to teach someone, not just go, “Here’s a template for a deck. Fill it in.”
I wanted to answer the, “But why? Why do you have to do these things?” For a founder it is pretty intuitive to make a sales pitch and to sell to a customer.You can put yourself in the mindset of your customer and understand their needs.
If you can’t put yourself in the mindset of an investor because you haven’t been one and don’t know a lot of people who are then how can you make a compelling pitch?
How can you put the stuff in there that answers the questions in their head? You have to teach someone how they are thinking so that they know what they are doing.
Shubha Chakravarthy: So, that’s a fantastic segue into the investor side. I know that you also offer investors a platform via Scroobious. So, I am curious in terms of your observations as you worked with these investors.
What is their appetite for investing and what are you seeing in terms of both — the upsides as people are becoming more aware of investing in women founders as well as potential blocks or things that are not as encouraging on the investment side?
Allison Byers: So, we haven’t launched yet but we are building an investor facing side of this so that all the founders we are helping create their compelling pitch material, and we work primarily with founders who identify as underrepresented and don’t come through normal sourcing methods, so that we can put them in front of relevant investors.
For the investors, we are data driving the curation so that we are showing them relevant things in a really cool manner. But that is a whole other conversation.
But in the meantime, we do everything we can to curate these introductions. We do these practice sessions, both virtual and in person and we really build that ecosystem.
So, we have developed relationships with lots and lots of investors, accelerators, and incubator programs.
For me, I like to be very realistic with my founders and value their own time. I send them to places where they are more likely to achieve their goals. VC is not the realistic avenue for a lot of founders and we know this from the statistics.
You are just unlikely to get a check. It’s not that people shouldn’t or it’s not that it’s not right for everyone but knowing your odds of different capital sources is really important.
I don’t see a lot of changes happening on the venture side. We do have a lot of emerging fund managers who have a different view of things and a lot of them do realize the alpha potential of underestimated founders because it has been shown that we deliver more per dollar invested than other groups do.
So it actually is a profitable endeavor to invest in us. We are an undervalued asset class in the true term. But those emerging fund managers suffer from some of the same things that founders do where it is difficult for them to get LPs, and when they do, they get smaller checks.
So they’re raising smaller funds and they can allocate smaller check sizes and it is going to take generations to see a real and demonstrable change or increase in parity on the venture side of things.
There are reasons why — venture capital is structured differently than other sources, like angel investing. Where an angel investor does not have limited partners, they are not managing someone else’s money, which impacts a lot of decisions made on the venture side, just their own money.
I’m an angel investor. I just decide what I want to invest in. It’s my own money. I’m really excited about angel investors as a capital class. There are over 4 million actively investing accredited investors in the US alone. It is a huge number and a huge amount of capital.
We are more likely to write checks to these overlooked founders. We are more likely to write checks to those that we identify with, who somehow relate to us. I’m very excited about that.
The issue, of course, is fragmentation in a market that is that enormous and they are everywhere. So, that is a part of what we are working on as our platform solution.
We are working on ways to consolidate and ways to group angels or help them find each other to pool capital in a way that is more curated than just joining a group or joining a syndicate.
Shubha Chakravarthy: I wish you all success in your angel endeavor. I think it is long overdue. Related to that, clearly there’s been a lot of visibility in terms of DEI and greater equity and obviously that spills over into the entrepreneurial space.
One of the complaints I have heard is that it takes women founders more time and more meetings to get fewer dollars for a greater share of equity.
Now, if I’m a founder, how do I go in and vet investors so that it doesn’t look like they’re generating a lot of activity by taking a lot of meetings and they feel good and I feel good, but there’s no check at the end of it?
Allison Byers: That one is such a thorny area and there is no silver bullet answer. It can be a very stressful and sometimes traumatic experience to go through fundraising as an underrepresented founder and have that experience that you are just talking about.
I can share with you even with Scroobious, I ended up turning down a venture check because I just kept going to meeting after meeting, taking so long and then for me, I decided I don’t want fund on my tap table.
I don’t think that’s a good working relationship. There was a check at the end of it, but often there’s not.
Like you said, sometimes it is a lot of stringing along and women and founders of color are getting more meetings than we ever have before because it has entered the popular sphere and these statistics and people are focused on DEI but it’s not translating to the dollars, which is just a waste of time.
So, there are questions that you can ask investors if you find yourself in that position to help validate and this is a part of that mindset of, “I’m not a charity case. I’m not going to waste my own time because I’m offering you something.”
So, you can ask questions right off the bat, just like they ask you.
You can say, “Would you mind sharing with me what were the dates of the last three investments that you made?” So you can know if they are recent or was it two years ago and you are not actually actively investing and then, “Can you share with me what was the last opportunity you invested in that had a woman CEO?”, and see if they have recently a founder of color or a Latinx founder, or a veteran founder or however you identify.
You can then get some facts about what are they actually investing in so it is not just words. and that helps qualify your time if you know those things.
Shubha Chakravarthy: I was at an event recently where there was a talk by a venture capitalist and he said, “We’re a gender blind and we’re colorblind. If you come to us with a great business idea, we’re going to fund it.”
I think we know that that’s not true because of the numbers. Do you just run or do you try to do something to validate that you still have a chance because you have the world’s greatest business idea?
Allison Byers: Yes, that one. Again, it’s auditory so people can’t see me rolling my eyes.
Shubha Chakravarthy: Big eye roll.
Allison Byers: You know how you get emojis that are most often used by you? It is just a hundred percent eye roll. That is my most often used emoji.
But you hear people say that all the time and when we talk about ways to remove bias from investing decisions, there are two ends of a spectrum.
Some people believe the real way to do that is you remove everything about the person and you only have the business metrics and then they argue that then you can’t be biased because you don’t even know who the person is. You’re just basing it on the business.
The other end of it is, “Put a lot about the person in there because people make decisions with a human relationship element” and you have to make that forefront and really get it out there. That’s how you de-bias it, by creating these human relationships.
I’m obviously on the human end of things and there are a number of reasons for it, but one of the really scary parts about the end of the spectrum that says, “Hey, a good business is going to get funded, just show me the metrics and we don’t care.”
That has bias baked into it. Founders who are not able to access networks or resources or have life responsibilities that other founders don’t will not have the same growth metrics or the same growth or momentum signals a lot of the time that others do.
I’ll use myself as an example.
I talk to fund managers about this a lot. I say, “Hey, we’re past the height of the pandemic now. You are comparing opportunities across your desk. I’m a mom and I had two school-aged kids and I had to deliberately not do the fundraise I was planning on doing and deliberately slow down the building of this company to make it work and make it viable. You are now comparing my year-three metrics with single white guys that did nothing but focus on their business for the whole pandemic.
That’s not an indicator of potential return later on, but that’s how it’s being used. So, if you’re going to just take me out of it and put my opportunity straight up against someone else like that then no, it’s full of bias and it’s almost worse.
At the other end of it there are a lot of investing decisions, even from funds who say that it is not a rational decision. A human is making that decision and there is so much that investors rely on in terms of whether they think you are confident, whether they like being in a room with you, whether they think you can command the room well, or who your network is.
None of those are just quantified metrics of your business, but that’s how those decisions are.
That is a part of what we are doing at Scroobious. We are measuring and quantifying some of those intangibles and things about how people relate to other people because that is the reality and anyone who tells you that it doesn’t influence how they make investment decisions is either lying or not aware of their own behavior.
Shubha Chakravarthy: So, what I’m taking away is for the time being, just given that you have limited time and limited opportunities, you are probably better served going after the people who are committed to making that investment in some way and staying clear of those who either appear to not be aware of these biases or not committed to addressing them in any way and are just looking at it from a pure financial perspective because that’s how the industry’s been run for the longest time.
Allison Byers: Yes, that’s my best advice. I really speak to those who identify as underrepresented and more than others. We work with everyone. True diversity is equal representation of everyone.
So, we don’t exclude people. But if that’s the primary audience — for people who historically have been challenged to raise, what’s your best advice there at that time then I would say that the portfolio speaks for itself.
So, if it is a fund, they often have their portfolio companies up on their websites. Do some research before you contact them or take a call from them.
Who is in their portfolio? Is it all men and you are a woman? Then probably don’t go to them.
Be smart about it and have your eyes open to what realistically you’re going to achieve. You are probably going to need a mix of VC and angels or maybe crowdfunding is the right thing for you — that comes with its own issues.
Maybe debt financing is the right thing for you. There are a lot of ways to get capital now that didn’t exist before. So, everything should be considered.
But if you really are looking at VC funds and if they say big on their website, “We care about DEI, we don’t look at this stuff, we make decisions” and then you look at their portfolio and it’s not diverse, then that tells you something.
You can do that research and make those decisions for yourself before you reach out to them. Don’t just take the homepage for the words that they have on the homepage. Look at what they actually do.
Then when it is angel investors, my best advice is to do some research. This is how I coach founders. I say, “Create an investor persona, just like you would create a user persona who would just get it. Who would just get what you’re doing.”
What type of experience do they have? Maybe it is something to do with demographics or geography. Usually they have reached a certain level in their career in an industry or you’ve seen them quoted somewhere, who when you talk about what you do, their eyes would light up and they would just know what you were doing.
That is who you want to go find and it is a very good use of your time to go pitch to those people.
Shubha Chakravarthy: The hour has flown by, so I’m going to try to leave this with asking you, what is one thing that you wish women founders would know or do differently so they can significantly increase their chances of raising the capital they need?
Allison Byers: It is kind of a summary of what we talked about, a lot of it is.
Knowing the signals that investors look for. There are some simple things you can do, and then there are the mental frameworks that need to change. So, even a simple thing, like if you release any of this video, you’ll see I’ve trained myself to stare directly in my webcam when I’m talking.
It’s different. If I’m looking at you, I know this is an auditory medium, but when I look at you and when I look at my webcam, there is a big difference. Eye contact is important because our human brains interpret direct eye contact as confidence and confidence is a signal that investors rely upon heavily for a founder.
As women, we tend to avert our eyes when we feel uncomfortable or if we think someone knows better than us, which is the position we often find ourselves when we’re pitching for money. It’s uncomfortable a lot of the time.
But when you avert your eyes, you are submissive and you are not perceived as confident as much as that other guy that walks in who isn’t nearly as competent as you, but directs eye contact and uses a loud voice and makes direct statements.
That person is seen as more confident. It sounds silly, but honestly a lot of raising in my last company was, “I can do that in a room.” It signals things.
So, teaching yourself the signals that you can put out to portray that confidence and then being really realistic with your time is important.
We don’t have a lot of time, if you are a parent, you have negative time and making smart decisions to not just go pitch everyone that will take a meeting with you, that’s not the right use of your time.
Just like we were talking about, do your research and understand where your odds are better than others or what the right source of capital is for you based on your goals and direct it there.
Shubha Chakravarthy: Anything else that I should have asked but didn’t?
Allison Byers: No, this was a great conversation. I love the platform that you’ve built.
I appreciate you inviting me on and it’s so important just to hear these different voices and hear from people who have been in the space and have these experiences.
It is important so that all of your listeners and particularly all the founders listening to this know that there is a whole community out there of people that can relate to them and that they’re not alone and things are achievable.
You just have to educate yourself so that you’re going into it with your eyes open.
Shubha Chakravarthy: Fantastic. Thank you so much, Allison. This has been very eye-opening for me and I’m sure it will be for others as well.
For those of you listening, if you are a minority or any kind of underrepresented founder, I have heard personal testimonials from people who, just by themselves came and told me how great Allison was and how great Scroobious was in helping them improve their pitch.
So, thank you so much, Allison. It’s been a pleasure.
Allison Byers: Oh, thank you so much! I really appreciate it.