Marie Meslin has led non-profits and worked in the innovation industry for 15+ years. As the Executive Director for The Capital Network, she pioneered programming to build avenues for female founders to raise capital and create more equity and access in a notoriously inequitable space.
This program – The Fellowship for Female Founders created in 2016 has supported 90+ female founders, (50% POC) 43% who have then raised over $65 Million+.
In 2020 Marie also created the Investment & Inclusion Series in collaboration with the VC Inclusion Lab out of Brown University to provide an open forum for investors and entrepreneurs looking to change the status quo, and build a capital ecosystem that works for the New Majority.
What’s even more important than an MBA when you’re a founder on the lookout for funding?
What’s one obvious mistake many founders don’t even realize they’re making when fundraising?
What simple exercise will help you find the best sources of capital for where YOUR startup is right now?
In this episode, Marie Meslin, former president and Executive Director of The Capital Network, talks about the one critical factor founders must focus on, easy-to-avoid mistakes founders make, tips to sharpen your fundraising strategy, and much more.
Links and Resources
The Capital Network: Boston-based nonprofit whose mission is to build a more inclusive and accessible funding ecosystem for the founders who need it most and now expanding from New England to become a nationwide resource and community hub
Marie Meslin: It is a pleasure. Thanks so much for having me.
Marie Meslin: Quite frankly, it was accidental that I ended up in this field. I’m sure for a lot of people that’s how they discover entrepreneurship, right? A little bit accidentally.
My background was actually in non-profits, women’s rights, and International human rights. Then I also worked for an innovation consultancy in New York and in London. My background was about how can we have creative new ideas and help change the way people think, but also about making things better for people who have been underserved.
I ended up moving to the US and when I moved here, I just met somebody who said, “Oh, you know what? I have this job with The Capital Network, but I’m leaving. I think you’d be perfect for it.” They described the organization.
I was like – investors, financials, fundraising – no, thanks! That was not what I thought I would be doing, but when I started looking into it and thinking about it, I was like, “It is really just about supporting people who have these great and innovative ideas and want to make a difference in the world.” But you need money for that. So, how do you help people succeed in this very difficult field?
When I started, it was mostly about fundraising education. But because of my background and my interest, I moved the organization towards more of a slant on the new majority and specifically on helping women fundraise because that is one of the biggest issues in this sector.
Women are not raising in the same way that men are. In fact, this is a statistic that has been thrown around quite a lot, but only less than 3% of VC funding goes to women. Moreover, this has gone down in the last few years. So, this is really a topical subject and it’s not getting better.
Marie Meslin: We are a non-profit. We are based out in Massachusetts and what we do is that we provide entrepreneurs fundraising education.
We run three programs. This organization has been around for a while. It was actually started in the eighties by a professor who actually coined the term “angel investor.” The idea was to help entrepreneurs find investors. But since the mid-2000s, it has been a non-profit with the mission to educate entrepreneurs about fundraising.
The idea had investors speaking to early-stage entrepreneurs and they very quickly realized that the entrepreneurs just didn’t really understand what it meant to receive outside capital, not just for the medium term, but for the long term of their business.
They really wanted entrepreneurs to be as best equipped as they possibly can so that the investors can make investments in start-ups that were led by people who really understood what it meant to have that investment-investor and entrepreneur relationship.
So, we run three programs.
We have one which is for fundraising education. Any kind of topic that has to do with raising funds – outside capital for your company is tackled. Obviously, we talk about angel and VC investment. We also teach people about SBIR grants, about equity crowdfunding, and about revenue-based financing.
We talk about all of the different ways that you can get your first round of capital for your start-up. This is open to anyone who comes to any of those programs. We also teach entrepreneurs about pitching. We teach them about cap tables. We teach them about 409a valuations – the kind of technical aspect of raising that nobody really teaches you.
But our flagship program is actually a six-month program called the “Fellowship for Female Founders.” We call it Raise, and it is a structured program that is six months long, where we take between 10-15 women first time founders raising for the first time.
We help them get everything they need to be ready to fundraise or at least get everything ready to make that decision as to whether or not they want to. We never say this is the right path.
What we want is for these women to have the right access to education and access to network. All of the things – the tools, the support, and the mentorship, all of the things that they need so they can make the right decisions for their business.
We have been doing that program since 2016. We have had 90+ women take part in the program. In total, 50% of those have always been women of color and at this point they have raised about $65 million, collectively. Even our last year’s cohort created over a hundred jobs. These are all women based out in New England. So, right now the program is a New England based program.
Then the final program that we run is the “Investment and Inclusion” series. That is our partnership with Brown University. It has a group called the VC Inclusion Lab, and they do research on investments and equity and DEI and they do a lot of research around that.
So, we partnered with them to create a series of conversations around creating a more equitable capital ecosystem. That goes for anything from sourcing to the question of who makes the deals and how do you structure pitching, how do you collect data, how do you structure an investment firm in a different way, so you allow for more equity and for the whole capital stack to be more equitable.
That is open to anyone too. It is really addressed to both investors and entrepreneurs. We basically took a series of conversations we had in the summer of 2020 with investors, and we realized that a lot of those topics just kept feeling like they were the same and were being told in the same way.
We really wanted to open those to the public so that we could really try and find solutions together rather than pretend we have the solutions. That is the last program that we run at the Capital Network.
Marie Meslin: There are all sorts of different issues and reasons. I think one of the things, regardless of whether it is a woman or others actually, but when it comes to the technical education, there just isn’t a lot of in-depth content out there.
There are some programs around financials, but you actually don’t find as many really explaining and going deep into, “What is a cap table? How does it work? How do you think about it? What are your options?” There is all of this technical assistance that feels like it comes out from a black box, and it does, right? These are not the conversations.
You don’t get focused on your MBA if you are lucky enough to have done one. I don’t come from that background. I don’t have a financial background. I don’t have an MBA. So, for me, even as I was starting to learn about all these things, it just felt really confusing and out of reach. The language that is used is also very technical, so it takes a while to really understand what people mean when they say certain terms and what their assumptions are and what they expect.
So, I think it is confusing for everyone but especially if you don’t have a financial background. But I think that the way we have structured our program moving forward for women is such that there’s this there’s a portion where community is really important and the way that you have to present yourself in every room.
So, one of the issues that we’ve seen is you can have access to the best education, you can have the best network, you can really have access to fantastic mentorship and people who support you and all of that stuff, but if you don’t see yourself as a leader and if you don’t see yourself as a person who is going to be driving this forward, when most of the time you are likely to be the only woman in the room or the only person of color in the room, then none of it matters.
If you can’t really present yourself and really own that portion of raising money, leading an organization, and having difficult conversations then having all of the education and all of the support doesn’t really matter.
So that’s a really strong piece that we added in our program. We already had the education. We already had the mentorship. We already had the network of investors, but what we were missing is that extra component so that women could really understand what kinds of conversations they needed to be ready for – that is anything from bias and being in the room where uncomfortable conversations are happening to really representing a whole organization and talking about money, which for some of us is a difficult subject.
Marie Meslin: It is funny. All of this is going to be based out of what the women have told us and one of the conversations I recently had is from this fellow past from last year who raised a lot of money and she started to raise when she was in our program, and it is so simple. I can’t tell you how simple this is, but it is that she realized, and this is why we were really digging deep into this, into the coaching portion where she realized she wasn’t asking for money.
She was fundraising, but she wasn’t asking for money.
She would go and pitch and talk about her company and talk about the idea and talk about the business and talk about all these things. Then she realized she wasn’t clear about what she was asking and what it was for and why – which is so simple.
But often all of the focus in start-up world is on the pitch. It is not focused on the business and how you make money. Making sure that the way you talk about that – the way you pitch and the way you talk about your company is taking that step back from being excited about your product or your project or your idea or all of that stuff.
Being as excited, communicative, and as explicit about how you make money is necessary because that is actually something that we have to talk to our entrepreneurs about all the time.
They are so excited about the technology they have built but they can’t tell you how they are actually going to get the funds or how they are going to get their customers to pay for their product which in turn is what investors need to understand and need to know.
If you can’t articulate how you are actually making money and growing the business then you don’t really have a business. You have an idea and that is great, but that is not what businesses are built on and that is not how you get outside capital.
So, it is that flip around the part where you are not teaching your idea, but you are really pitching a business and being clear about what that means.
Marie Meslin: I don’t think that it is because they don’t think about it as a business. I think it is just that, when you are solving a pain point, you are so excited about your solution. You are so excited about what you built and you should be, especially if you are solving something that is really an issue. I’m not taking any away from that. I think that is really important as well.
But I think if you are talking about your business to an investor, you just have to remember who you are talking to and why. As great as your solution might be, if you can’t make money, then you can’t solve that problem for anyone. It’s really that simple.
So, it is great to be excited about what you are solving, but if at the end of the day your company is not making money, then you can’t do the thing you want to do. So being clear about what that gets you and how to talk to people about it is just so important.
A part of it is maybe a little bit of that quite frankly, talking about money is uncomfortable for a lot of us. We haven’t been taught to talk about money. It feels weird.
I run a non-profit for a living. Fundraising is really hard for me. I have to ask people for money all the time and it is still really hard because we have never been told to have those financial conversations. So, a part of that is little bit ingrained in some of us that it is impolite to talk about money.
It is something you do behind closed doors and you have to be able to ask for what you need, but a lot of times we are trained to just ask for just what we think can be okay for the other person. You know what I mean? I do this all the time where I’m looking for corporate sponsors and I’m like, “Oh, okay, well maybe we’ll just ask this because I think they can probably do this.”
Instead of me saying, “Well actually what I need is this.”
I just need to go out and ask for it because if I don’t ask for it then people can’t give it to me. It sounds so simple, but we are so ingrained to just holding back a little bit because it is uncomfortable, and we really have to break through some of that.
Marie Meslin: There are a couple of things. Honestly, one of it is this component of leadership coaching I was mentioning, because again, it is about, seeing yourself in that different light as a leader versus as someone who is running a business. If you are able to really look at your role and if you are really able to take some of that mysticism out of the whole process because we know that asking for money and fundraising is a bit of a black box. You have conversations to the side, and it is not really open and you are negotiating things that things are very secretive and all of that.
So, being able to practice those conversations is really helpful. So, this is something that we talk a lot to our entrepreneurs about. One of them is replacing yourself in the narrative. There is a power imbalance, or at least a perceived power imbalance between entrepreneurs and investors.
I need money. You have money, so you have the power. I’m asking for you to give me something, which feels very uncomfortable. But actually, if you start thinking about what you are doing and reframing how you talk about it, then you realize that the investors can’t do their job without you. It is really that simple.
Investors can’t invest if you don’t create great businesses to invest in. That is one reframing.
Another reframing is around you, in the sense that what you are doing has value and worth. You are really helping make a difference and people want in on that. They are excited about that and instead of being apologetic about what you need or how much you want to ask for and all of that, it is remembering that you are creating something that has value and people should be so lucky as to be able to be participate in that.
So, sometimes it is the little words that matter. Instead of saying “the ask” in your pitch, say “the opportunity.” Sometimes it is little things like that that reframe the way you think about something because although yes, you are asking for money, it is important to remember why you are asking for money.
You are asking because this is a great opportunity for people to be excited and involved and to give you money and be a part of this journey that you are creating this momentum for versus asking, “Could you please, maybe, consider possibly giving me something?” You know what I mean?
That puts you in a different kind of mental state and a lot of this is about reframing and reshaping the way we mentally prepare ourselves for these conversations.
The other portion is if you are really sure about what you are building and what you are doing, and if you have a great understanding of the kinds of people you want to work with, then it is okay to say no because I think a lot of times, again, when you are fundraising, you think “I need this money and if I don’t get this money, things are going to go down the drain” which is why, you shouldn’t raise if you are desperate.
But a lot of times at some point that happens to all of us. But I think that a part of it is also being able to say, “This is a good opportunity.”
It is okay to say no if you don’t feel like that fit with the investor is going to be the right one. This is a long-term partnership that you are creating.
So, feeling good about saying no, as scary as it is, can really be a great tool in building that confidence around what you need and a part of that is getting that clarity about what the vision is that you have for your business.
Where do you want this to go? What kind of people do you want to surround yourself with? How much money do you actually need? Where should you be getting it from? All of those things come from really understanding your business well.
So, it is about really getting the women to see their business from a little bit on an overview versus when you are so into it that you are just trying to get to the next thing. It is really hard to take that time to see the overview and really plan for what it is that you want and that is really big.
Marie Meslin: So, first of all, there are some recorded workshops that are open to everyone and actually you can just check our YouTube page for some of those. Then there are others that will become available in 2023. So, there are recorded materials that people can have access to.
We are working on that because we know that there is definitely a need for that kind of thing out there. Then the other thing is that since we live in New England where there are a lot of investors, there are a lot of resources, and there are a lot of community organizations, and that is great but there are two things to note.
Let me speak to areas where there are not as many and then areas like ours where there are arguably too much because one of the things we talk about with our entrepreneurs, just in general, is that wherever you are, be selective about where you go and what you do.
One of the most precious things you have is time and in an area like New England or New York or any of the big cities, you could go to a different event, pitch night, and investor every single night. Is that really what you need? No. Be really focused about what kind of people you want to meet and why and what you want to get out of those conversations so that you don’t lose track.
It is great when serendipity takes over and you go to an event and you meet someone that is fantastic, but you are also running a business and creating the right balance between what are the right events to be involved in are.
We had a founder who was great about that. She would always, at any event that she was asked to be in or attending, get very clear about who would be at the event so she could really make that decision whether or not this was the right thing, and she would always ask the organizers, “What is it that you want entrepreneurs to get out of this event? What is it that you are trying to create here?” She could then get a sense if their mission was aligned with hers.
Then for areas where there is not as much, so much has moved online. It is kind of obvious, but there are now communities of entrepreneurs where you can meet up every week or so. I think more than anything, what we found really helps support those women in gaining that confidence is being able to find a small group of entrepreneurs in the same boat as them and being able to share the wins and share the frustrations and brainstorm around solutions because one of the things you don’t do when you are an entrepreneur is celebrate.
You are so focused on the problems. You don’t have time to really celebrate the wins and creating your own community where you have people you can celebrate that win is important.
Wherever you are, there are entrepreneurs around you and finding small groups of people you can meet with once a month, even if that is all you can do is important. But really structure your conversations around, “Okay, let’s go around the table and all celebrate what the best thing you have achieved in the last week is. What is something that you are having an issue with that we can help you figure out and what are some of the things that are going on in terms of not just your business, but like your family or your home life?”
For women it is especially so important as these are not separate things, it is all connected.
I think that is where a lot of coaching comes into play. It is about being able to look at all those different aspects and understanding that it is not like you are going to go through a hurdle – through a difficult time, and then you’ll be over it and then everything will be great.
It is hurdle after a hurdle after a hurdle. You have to be okay with that, with knowing that things are going to continue being uncertain for a while and there may no quick way to the destination, but it is how you put those things into perspective.
Having a group of entrepreneurs that can share that burden is really key.
Marie Meslin: So, in terms of finding entrepreneurs, there are just so many communities online that you can look at and join in. Also, I’ve seen people find other entrepreneurs by creating their own opportunities.
You never know what’s going to happen if you say, talk to your Chamber of Commerce? Just ask them about what the other businesses are that are registered with you. Ask them if you can do a networking event where you can meet each other. There are also the universities and sometimes it can be a really great attribute to find younger entrepreneurs, usually, but starting somewhere could be really helpful.
Similarly, I’ve also seen people start various groups where they are like, “I want a group because I’m a mother and also an entrepreneur and I want people who are experiencing the same things as I am – the frustration of being a parent and an entrepreneur at the same time.” There is a great organization called Black Parentpreneurs that has created this whole platform around Black parents who are also entrepreneurs and that particular kind of demographic and creating a community around that.
So, you can build your own community for anything. If you are shy and if you are not sure if it is the best idea, then maybe look around at LinkedIn and see what other people are doing, what events people are going to, and then just try to see if there is something that either you would want to create yourself or you want to go to, or if there is a way to access remotely.
Sometimes that can be helpful too. There are a lot of pitch events that are open to anyone too. So, there are a lot of things like Founders Live which is open to anyone. So keep looking for things you can just go and watch. You don’t even have to participate, but just go and see who shows up and if anyone speaks, if anyone resonates with you.
Honestly, I’d say that 99.9% of the time people are really open to helping out and giving you half an hour for chatting about your business or theirs. People are really generous with their time, so don’t be afraid to ask. The worst that they could say is no.
Marie Meslin: We do a little bit of work on that, but because we focus a lot on the fundraising aspect of journey, a lot of times the women that we see have something already built and it will change. It will change as obviously as you grow, as you speak to customers, as you test it out, and you get feedback. All those things tend to change.
I think what we’ve learned is that the simpler the better. So, there is a tendency to want to create something from scratch or reinvent the wheel.
You don’t need to try and see how you can build something in the absolute simplest way possible. Without thinking too much and putting money into creating prototypes and all, just try start off with something really simple that you can just practice talking to people about and seeing if it makes sense. As you build something, you can start researching about other companies and what their business models look like.
Again, you don’t have to reinvent the wheel. So, sometimes stealing something that works somewhere there and like implementing in your own business is a great way to touch something for yourself. But there is nothing static here. I think that is part of the myth around entrepreneurship. It is like you will build something, you’ll get there, it’ll be done, then you’ll raise, and then you’ll grow your business.
It’s always changing, and it is always evolving. Actually, my advice would be if to be careful about advice. What you want to see from yourself is that you are going to get a thousand different types of opinions about your business model or about anything to do with your business.
You are going to get a thousand different pieces of advice with a thousand different people. So really what’s going to be more helpful in terms of figuring out what works for you is trusting your gut and really listening to what people are saying. If you have got to say, “No, that’s not how I want to do something” then listen to that.
No one is going to fault you for saying no to someone if you’ve got a good reason why not. Especially investors, they want to see you have opinions and perspective on what you are building and not just blindly take advice.
Just because some hotshot VC told you to do things one way does not mean that is the right advice. Nobody knows your business like you do and it is okay to say, “That is interesting. Let me think about it, I’ll get back to you,” or “That is interesting. I’ve thought about it. However, we’re going to go this way because of this, and this is why we’ve decided to go in that direction.”
That is what people want to know.
People want to know that you are thoughtful, and you are not just taking on everybody’s advice. If you do that then you are just going to end up in the asylum. It is just too much.
So, I think trusting your gut and trusting what you think is the right thing is always good and not paying too much attention to what everyone’s trying to tell you is important.
Marie Meslin: This is something that maybe you can ask the Chamber of Commerce or Economic Development Groups in your cities, because some of them actually have programming to help their businesses and if they don’t have the right programming that you want, you can definitely ask them to think about putting it on.
One of the things that we do with a lot of companies that we work with is putting them through a lean canvas. You can look this up. There are a lot of things online about it.
It is essentially like a piece of paper that is divided into different segments and you fill this in to get an overview of your business and that is a really great way to start that journey around how do you understand what questions you need to ask and who you need to ask them of and where you are going is by doing a simple lean canvas exercise. There are a lot of videos out there to help you work through it, but it is always good to have someone help run through that as well.
Marie Meslin: So, a part of that is by going through the lean canvas, you get to realize what kind of company you have and what kind of company you want to build because that really dictates where you are going to get money from. So, if you’ve built a business where you are like, “I love this business. I want to run it forever. I want it to be mine and I want it to be something that I can do, and I want it to grow a little bit, but I just want it to be manageable,” then angel and VC is not going to be the right one for you.
By virtue of, if you don’t want to sell your business and if it is not going to be big enough to provide at least a 10x return to your investors, then that is just going to be a non-starter.
So, a lot of that is around what kind of business you have and what kind of future you want for that business. If you are in a sector that needs a lot of capital, like a lot of the life science sectors or maybe some of the tech sectors where things take longer and you need more money to build.
Then sometimes, investment is trickier. But sometimes it is better to go to grants, non-dilutive grants because the government is actually interested in funding some of those projects that will be able to be put back into the NIH or the DOD or whatever it might be.
So, they actually have portions of money allocated to support innovation and support growth in those fields because the government might have invested interest in actually accessing those and the great thing about SBIR grants is that you don’t owe anybody anywhere, anything.
It is a grant, you don’t have to pay it back and some of them are worth millions of dollars. So, part of that is really just being aware of the options that are out there, and we have so much information on our website around the different types of funding, the different sources, and what that looks like. So, feel free to go to the capitalnetwork.org.
But it is really about matching what is out there and the options as well as where you are at and what you want to build. Sometimes you know that the only person that can do that work is you because you are the only one who knows what your business is and what you want it to look like.
But asking yourself very serious questions like, “What is right for me? There is what is right for my business and how I want it to grow and then there is also me as the founder, how much do I want to put into this? Where do I see this going? How long do I want to run this for?”
Ask yourself, “Do I have support from family and friends to take this on?” These are all questions that are really worth asking so you don’t go down the road into something that ultimately won’t be the right fit for you.
Marie Meslin: I think, that’s very apropos. It is analyzing the cost of anything and the most precious thing you have as an entrepreneur is your time, especially if it is something like an SBIR grant, which is bigger, you will need help to go through it, you’ll probably need to speak to an expert. It needs to be reviewed.
There is a specific language that they like to see and whilst there are plenty of resources to help you maneuver that, and by the way, the SBA and other groups really want more women to get those and there are more and more incentives out there to help more women take part into that. So, there are a lot of resources out there but it is very time consuming.
It may or may not be the right kind of balance for you. One of the things I think that any entrepreneur needs to ask themselves is, “How can I get someone to do this for me?” So, part of it is resources and people you can call upon and creating a structure around you with advisors, mentors, other entrepreneurs, all of that stuff.
Lots of people have applied to grants and so really making sure you are talking to people who have either applied to things, have received them, and really understand what that took, how much time it took, and how much have reporting was there.
Reporting is one of those things that is such a drag. You have been given the money; you’ve used it. Now you have to explain all over again how you used it and why, and why did you spend 30 cents here? Why do you spend 50 cents there? So, the first thing you need to do is really talk to people who have received those grants in the past and really understand what their takeaway is, understand how much support they got from the granters.
Some foundations give a lot of support to their founders. They want to see you succeed. So, they don’t just give money, they also give time and resources and networks.
Similar to investors, you want the foundations and those kinds of sources of money that are not just going to give you money, but that are actually going to give you time, access to their networks, and ones that they are going to be champions for you because they really believe in what you do.
So, no matter where you get money, it’s always the same questions you have to ask yourself. It’s like, “What am I getting besides money? How much time is this going to take? Who do I know that I can talk to, in order to really get the kind of the behind the scenes scoop?”
That is why it’s so great to create a small network of entrepreneurs. The chances are that they’ve spoken to that investor, they’ve applied for that grant, whatever it might be. So, it’s really about creating that dialogue and not being afraid to ask, because again, people are very forthcoming about their experiences, and you don’t want to go into something blindly.
The other thing that I would say is that when it comes to investors, do not waste your time and to feel like you are ready. One of the things we have on our website is this big database of all sorts of investment groups in the US.
One of the things we want to make sure our entrepreneurs do is take that list or any list that you start creating. So, you can just download it, look at all the sectors, how much money they give, what sectors they are, where they place, do they fund women, what check sizes they have, who is on their board, who you might know in common and all of that stuff.
Create this big Excel spreadsheet for yourself and then segment that into three buckets, “Most likely to fund you”, “Somewhat likely to fund you”, and “Least likely to fund you” and then flip that model.
Start with the people least likely to fund you so you can really test out the questions you want to ask and what you need to be ready with and what kind of questions that you want to ask them and they’re going to ask you so that you are not going after the people who are most likely to fund you first.
That way you are not wasting your time or you’re not burning bridges when you are just not ready yet. So, being able to create that funnel for how you’re going to approach getting outside funding in a very strategic way is so important.
So, you are not just going at it blindly and having a list of questions on your end is great. I think entrepreneurs are used to investors asking them questions. It is just as important for you to ask them questions.
Again, these are long-term relationships. You want to know what you are getting into and there is absolutely nothing wrong with that. In fact, it is really important to ask them “What other founders you have invested in that I can talk to?” because what you want to know is not just the investors with the entrepreneurs where things went well with the investors.
You want to talk to entrepreneurs where things went badly to them. How did the investors react? Did they come through? Did they provide support? You really want to test that out. That is on you. That is on you to really make sure you are getting into a situation that is comfortable. You have confidence when you are really building something with someone.
Marie Meslin: That is a technical question. So, there are things like, “Who is the lead investor?” or “Do you syndicate with other groups? Do you partner with other groups to put funding in? Do you follow on funding?”
If it is a VC firm, when does the cycle end? When do they have to extend capital and when do they just start a funding cycle? That is really important for you. Maybe you want to ask about the LP, like who funds this funding group?
You want to try and have some of those questions ready and then you want to also have questions like, “Tell me a time when a start-up wasn’t doing so well and how did you manage that? How did you manage that with your founder – When they were running out of money or when they had to do a down round?”
Find scenarios that you want to know about and then ask them, “How did either the individual investor or their group react to that and help support the entrepreneur?”
That is really important. Also, things like, “What is it that you are looking for? What is it that you want to see? What kind of returns are you expecting? What are some of the terms that you are used to seeing?”
A lot of the times when there are the first initial conversations where you are just feeling over somebody, and then there are the following conversations where you are starting to get into kind of more negotiations.
All negotiations can sound scary. All they are, are conversations. You just want to know what people expect, and you want to know what to expect so that there are no surprises. It is great to also ask the investors, “What are some of the questions entrepreneurs usually ask you that they want to know about?”
It is okay to ask that. Then you get ideas from other people. This is also, if you have the groups that you can talk to, is getting that list of questions so that you are ready and you don’t walk away feeling like things are still in a black box.
Marie Meslin: So, we have a mentor in residence, and we were just talking about this very recently. It is very difficult to know who is just talking to you because they have got some kind of box to tick.
So, my advice for that is to look for, and this is where your research comes in of creating that whole document about, is looking at that portfolio. If they’ve never invested in a woman or a person of color, don’t expect to be the first. Don’t, you are wasting your time.
So, really a lot of that is that background research around looking at their portfolio, looking at who the entrepreneurs they have invested in are. Look at what kind of sectors they are in. All of that will tell you, if they’ve done it before, the likelihood that they’ll do it again.
So, that’s part of it of how you get ready with people who are serious. It is like, “Okay, what have they done in the past? Does that match someone like me?” Now, there is the first time for everything, but to not waste your time is a really good piece of advice.
One of the things I would recommend, and we do this in the fellowship is that we talk about the difference between what questions women are being asked versus what questions men are being asked, right? People who are in this kind of industry have talked long about this, but it is still happening.
The difference is between preventative and promotion questions. It is what we talked about, right? So, there is a lot of research by professors from Harvard and Dana Kanze is usually the name that comes up. Actually, she was one of the people we talked to in our investment and inclusion series.
The difference between those two things are men tend to be asked promotion question and a promotion question is something like, “How big can this be? What are some of the things that are going to make you successful? Where do you see this going?” It is like having a conversation around all the possibilities and the expansion of the business.
Women tend to be asked preventative questions, which are more around like, “What are you going to do if things don’t work out? What if you lose all your customers? What if Google starts creating a product? If Google starts being your competitor, what are you going to do?”
Then it is all the questions that back you into a corner to talk about all the things that could go wrong and what some of these questions might seem totally normal for an investor to ask.
They are really pointed at women specifically. So, we actually do some work around flipping those conversations. How do you try and create an opportunity for you to answer the questions being asked but also to say, “Well, here is what we have put in place so that we make sure that we retain our customers because we know that this is how big this can be and we can really build this company to X, Y, and Z.”
So, making sure that you are answering questions, but also putting it back onto creating a picture of the organization that you want to build is important. It is tiring and frustrating because on one hand it is like, do you play the game or do you say, “You know what? This is bullshit. Let’s be done with this.”
I think the answer is a little bit of both. I think, one of the things you have a choice out of is that you can choose to confront things and just say, “This is what I’m noticing and I don’t feel like this is appropriate.” Sometimes it is not right either because it is not on you to keep educating people quite frankly.
So, that is one of the extra work that women entrepreneurs have to do – to balance when you are going to challenge something and when you are not. When you start noticing those patterns or when you start noticing why investors are always asking you what your husband does for a living or how many kids you have, or “What does your husband do for a living and is he supportive?”
Classic question, right? You couldn’t possibly do this on your own so there must be a man somewhere to help you out. If there is good for you, you have got someone helping you.
But that is not the point and sometimes as you know, those questions only become apparent two days later when you are like, “Why was I so uncomfortable?” Two days later you are like, “Oh, it is because this was weird. It was weird, right? That they asked us that?”
Sometimes you don’t know in the moment and that is okay, but there is that balance between that women and people of color have to face, which is, “What do I address? What do I not address? How much do I play the game? How much do I try and circumvent this whole thing?”
It is that it is a constant question you have to be asking yourself. There is no easy answer for that.
Marie Meslin: To be honest, I think a lot of this is gut instinct. If something feels off, it is probably off and you can sit with it for a while and think about it like I’ve interacted with people where I’ve just been like, “Something is not right, something is off. The way they talk to me, the questions I’m being asked, something is just not quite right.”
Sometimes I’m like, “Okay, this is not somebody I really want to be involved in and I will not be involved with them anymore and I will avoid them, and I will just stay away.” Sometimes it is so egregious and obvious that I have to be like, “Do you know what? I don’t think this is appropriate. I don’t feel like this is a question that I need to answer” but that puts you in a vulnerable position.
So, you have to be really in touch with what you are willing to give and willing to do and it is totally fine if you feel at that moment, you know what, this is not the energy I need to expand right now. That is totally fine because if that is all you did all day, you would not have time to run a business.
Marie Meslin: So, a couple of things. One is practice because it is something that, again, you don’t really know. So, some of that is like practicing with other entrepreneurs that have gone through it and understanding what deals look like and feel like. Understanding what kind of things people are particular about is important.
A lot of times the entrepreneurs are like, “Oh, well, valuation is the most important thing” and it is not, it really isn’t. Especially if your valuation is too high and you don’t raise enough money in the next round, that could really cost you in the end. So, valuation is actually not the most important thing.
The terms are what is important. Having really good legal advice is critical. You don’t want this to be your cousin’s best friend, you want it to be someone who really knows about the start-up world, and you really want to know what you want to get out of it.
Are there things that are non-negotiables for you? Are there things you are open to? One of the things that entrepreneurs in general make is that there are really a lot of standard terms and a lot of those are what people are used to and it’s okay to go with that. It is also okay to not go with that.
My point is that you don’t want to try and make things too complicated. The more complicated the terms end up being, the more it’s probably going to cost you in the end.
So, really understanding what basic terms look like – what people call vanilla terms? Like your basic kind of most agreements look like. There are key principles and really understanding those and why investors are keen on one and why entrepreneurs are keen on another and what the benefits are for an entrepreneur and what it benefits an investor.
Ultimately, if you have good investors that you are dealing with, then their priority is to keep you with a big enough share to keep you excited and involved in the company. It’s not to phase you out because they want you to be excited about building this company and making this bigger.
That’s not to say that at some point you may not be the right person to lead the company anymore. That happens a lot. You build it and then you know, you find somebody else who has got that growth expertise. That is okay. But know that is okay for you.
If you are not okay with that, then maybe you might want to reconsider getting investors. Is this something you want to run the rest of your life, or maybe this isn’t the right thing?
So, that’s why, I keep going back to being clear about what you want and how you see this company growing and making sure you are within investors that really have a vested interest in keeping you excited with the right number of shares and the right support system and all of those things because at the end of the day, as most investors will tell you, the idea is important but the team is everything.
You can have the best idea in the world but if the team isn’t excited or able to execute it then it just doesn’t matter.
So, part of that is, all the things we have talked about lead you to that moment. Doing the homework within yourself, doing the homework of your investors, understanding the terms, understanding what could go wrong, understanding what people are really fussy about and sometimes on the entrepreneur side, that is the valuation there.
Doing your homework and really understanding kind of what else is out there is really critical.
Marie Meslin: So, I would say first and foremost to back it up slightly. One of the reasons why we created the investment and inclusion series is because a lot of the conversations I was having with investors behind closed doors was around the pipeline issue.
I’m going to use quotation mark here, “Pipeline issue.”
A lot of investors were telling us that, “We want to invest in women. We want to invest in the new majority. We just don’t know how to get to them. We just don’t know where they are. We just don’t know how to find them. We just don’t know, blah, blah, blah, blah, blah.”
As someone who works with a bunch of women, I’m just like, “You are not looking hard enough. They are everywhere.” I think that is the part of it on the investment side. People are looking for an easy solution, but they are not doing the work to actually do it.
So, when you are an investment and you are committed to investing in people of color and women, you have to change your networks. Chances are you are white and male. If you are an investor, that is like statistically probable. So, chances are people around you are probably similar, right?
A part of the work that needs to be done is around changing your networks and around accessing different groups and putting yourself out into situations that may feel uncomfortable because maybe you are not used to being surrounded by women or you are not used to being surrounded by founders of color or whatever that might be.
So, there is some work from the investment side. Part of it is also creating more spaces for women and people of color to invest and trainings to make sure that the next generation of VCs emerging investment groups, all that are led by the people who are looking to put money back and create, build that generational wealth for women and founders of color. So, there is, work to be done.
Then, in terms of what is coming out, you are right in that there is a lot of conversation around, “Well I want to do this. I want to invest in women. I just either don’t know where to find them”, which is what we just talked about, or it is performative.
It is like if I say this out loud, it will make me sound good, but I’m just not going to go follow through because it is so much more comfortable to pattern match to people, to invest in people who look like you, sound like you and speak the same language as you. So, there is some work to be done to break that down.
Some of that again goes back to the fact that if you are going to have these conversations, understand whether or not they have invested in women before, or if they have invested in your majority founders before, so that you are not wasting your time and you are not having this dance around of “Well, they won’t, or they will. Am I good enough?”
All of those little things that go into your mind when you are having these conversations with people, it is really tiring and draining. Fundraising is a full-time job and you’ve already got a full-time job, and chances are, if you are a parent, you’ve got that third full-time job.
So, don’t go into it lightly and make sure that you have the conversation with the people who you can at least somewhat attest to being fully committed into this field. Also, by the way, not every company is going to get funded. That is just normal.
Sometimes, it is really about, “Okay, if this isn’t going to work out, how do I think about my company? How are there other avenues for getting funding if this isn’t the right avenue?”
The other thing I’ll say too is unfortunately with, the Theranos debacle, one woman entrepreneur failing ends up being an example for everyone else. So, part of that is also just being prepared and having those conversations around your idea, your business, where you see this going, how the financials are going to work, and really being able to understand what investors are looking for and being able to talk to that.
But my advice is obviously if you have a company that you in any way, shape or form can grow without getting outside investment, do that.
Marie Meslin: So, we had a founder who is in the life sciences. She is about the same age who told us she was, and she has raised millions and millions. This is her second with her company. She said she sat in a room full of investors and they brought that up to her and she said she could feel that they were wary of investing in someone like her.
So, it has been brought up, this is in like later stages, but it has been brought up.
We were shocked. She said, “Yeah, they had these conversations right in front of me and I was looking for funding and I’m similar age, similar field, looking for a series A and and it was quite open.”
Marie Meslin: No, I think women build different businesses and they build better businesses because they are more used to overseeing a bunch of different aspects of their own lives, especially mothers. So, they are used to having that overview of what needs to happen and when it needs to happen.
We can talk about stereotypes all day. I don’t think they are really helpful. But what we know statistically to be true is more diverse the company the better it performs. It’s that simple. Having a woman on your team makes your company stronger. It’s that simple. Having different groups, different sectors, different ages, is important.
The more diverse your company is, the more you can really future-proof your business because ultimately, and this is something that, we were talking about in one of the sessions for the investment inclusion series, at the end of the day, the US is a minority-majority country.
If you are going to future proof your business, if you are going to want to speak to the right customers, you need to start speaking to those customers right now.
Those customers are the new majority, that are Black and Brown women. That is who your customer is. So, there’s no reason why you should build a company that is full of White men. It just doesn’t make sense anymore. So that is a big thing that people need to keep in mind too.
Marie Meslin: I can’t think of any. You’ve been great!
Thank you for letting us talk about the work that we do and the way that we want to see women be supportive as themselves, not as a proxy for white male entrepreneurs who are doing excellent.
Marie Meslin: Thank you so much. I really appreciate it!