Starting and scaling-up a business needs capital. Right capital, be it equity or debt or grant, can often be the critical difference between a successful business and the one that didn't make it. And yet, it looks like too few women are getting this capital.
Reports show that globally, and in India, the percentage of women founders raising venture capital ranges between two and seven per cent. At either end, the number is abysmally low. You might think that for more stable businesses that go for debt funding, things will be better. But even there, the percentage of women getting funded appears to be less than 10 per cent.
Much is being said about the gender biases and the social structures that need to change to ensure more women get funded. All of which helps move the needle. But do you know what really leads to more women getting funded? It is more women getting funded. Success stories are also important because they are the true motivation to the next round of women sitting on the cusp of "should I do this"?
If you are one of those women founders who have decided to take the plunge and are looking to raise funding, Simmi Sareen, CEO and Founder, Loans4SME has some top tips to help you on the journey:
Be optimistic: Study after study has shown that women are too cautious when talking about their future. There are risks to every business but when pitching to investors, focus instead the best-case scenario for your business. Yes, things can and will go wrong but when looking for funding, start with your most optimistic goal. Dream big in your pitch, in your business plan and in your financial model, then figure out the resources to achieve your dreams.
Be prepared: Look beyond the media hype and you will find that most of fundraising is boring stuff like business plans and documents. But this boring stuff is what successful fundings are made of. So even before you head out for that first investor meeting, there is much you can do to set yourself up for success.
The business plan: Create a detailed business plan with a clear understanding of financial data and the revenue/cost/customer numbers you are targeting month on month. I am often surprised by how little understanding entrepreneurs have of their cash flows and how much funding their business actually needs. This is not your accountant's job; understanding the financial data is core to a founder's role.
Research your investors: Just like you are on the lookout for funding, funds need to deploy money they have raised. You just need to find the right ones. After all, there is no point going to a bank for seed funding when they only finance three-year-old companies. Talk to peers, mentors, advisors; get as much information as you can about investors.
Get your documents in order: Because after the investor says yes to the idea, there will be legal and financial diligence. Your financials, tax returns, patents, trademarks, board meeting minutes and a truckload of other documents stand between that termsheet and money in the bank -- so start getting them sorted today.
Be stubborn: Yes, it is hard to hear investors say no or tell you that your idea isn't as great as you think it is. Use all these rejections as an opportunity to get feedback, tweak the idea and get back in there. Eventually, if you can clearly show the investor that your business has the potential for multifold returns, or if you can show a lender that your business has enough cash flows to repay the loan, they will invest in you.
Remember that Lijjat Papad, now a multi-billion enterprise, started with an 80 rupee loan and a lot of guts. Capital helps, but having a great idea and staying the course on execution is what really makes for a successful business.