What Running an SEL Startup Taught Me About Raising Money as a Female Founder
Last year, when venture funding for female founders dipped 27 percent from 2019 and made up just 2.3 percent of all capital raised, we beat the odds. Amidst a global pandemic, my team successfully raised a seed round in December.
Timing certainly played a factor. Our company offers an online social-emotional learning program, which saw increased usage as schools looked for ways to support students struggling with anxiety and mental health stemming from COVID-19 and the challenges of remote learning. That traction helped us get attention and meetings with potential investment partners.
Once we got a foot in the door, though, we faced the typical challenges that too many women face in a male-dominated world. A 40-year-old investment banker held his hand up and told me “to be quiet and listen and then maybe I would learn something.” Ten minutes into the meeting, he still knew nothing about me.
That was just one of many challenging encounters we endured while fundraising. We were told our round was too small, and our round was too big. As a 60-year-old woman who has founded one successful startup and sold it to a Fortune 500 company while raising seven children, I have seen this too many times. It was easy to feel discouraged and discounted. And these are not uncommon experiences for female founders—in edtech or elsewhere.
But we learned three valuable lessons through the process.
1. Be thoughtful about how your values align with those of your investment partners.
Our core value at EmpowerU is to ensure that all students feel seen, heard, valued and respected by our virtual coaches every day. This extends to our employees, school partners and our peers in the industry.
It is also especially important for any investors that founders bring onboard.
Early on, my co-founder and I had an initial meeting with a venture capital firm where we felt anything but seen, heard, valued and respected. The investors at the table were condescending and rude, wondering if we understood cash flow and had ever heard of the term “value proposition.” But they were compelled enough by our business that they requested another meeting.
Too late. As we walked out, my partner and I decided that we wouldn’t take money from them even if they offered it.
I had learned early in my career that getting the money is only stage one; stage two is working with them on an ongoing basis—through good times and bad. And if the mutual respect was not present at the start, they were not going to be there later. It was important that we build an investment team that could not only support our team financially as we grow, but also work in alignment with our core mission and values and be willing to serve as strategic thought partners.
Fortunately, we had networked with other women business leaders in our community and were not afraid to ask for introductions. One of them, whose daughter had been a former therapy client, was able to connect us with Capita3, a local venture firm in Minneapolis focused on investing in women-led organizations. We clicked, and they became our lead investor. Our other partners were also mission-aligned: another three investors are nonprofits that focus on supporting mental health for young people.
By being selective and looking for venture partners that aligned with our values, we ended up with business partners who not only understand the problem we are trying to solve, but in some cases are pursuing solutions themselves. They are invested in both the potential business opportunity and social impact. And that feels good.
2. Hold firm to your beliefs and foundational product knowledge while learning from push-back.
By the time we started the fundraising process, we had already spent four years conducting research, pouring over best practices and beta-testing products with students. We had learned, time and time again, that the mental health programs that are most transformative are supported by a real person. Any working solution must be rooted in human relationships.
But this concept did not always resonate with some male-dominated investment firms.
We were in conversations with a large investment partner that was intrigued with mental health solutions. As they dug into our business model, they wanted us to change our fundamental product. They told us, “Get rid of the coaching – just focus on the app and the content because you will be way more profitable and can raise more dollars.” It was their precondition for writing a check.
That was anathema to our approach, to our beliefs. Without coaching, our program would not work. “Students don’t engage with just content,” I replied. “The coaches align the content with the goals and obstacles in the student’s life to help that young person make lasting personal change. It is foundational to our product and our program success. Isn’t it more important to have a solution that works?”
Apparently not, to this person. Needless to say, that investment opportunity did not work out. But because of that feedback, we become hyper-focused on how to effectively scale our solution with embedded coaching, but with an eye to operational efficiency. We had to balance profitability with product core functionality, and because of that, we were able to better articulate our value proposition and to raise the remaining dollars swiftly.
3. Process fear as a path to communicating your value proposition clearly and confidently.
We are wired for fear. It is one of the default settings related to our survival instinct. And it is a scary proposition to put yourself out there—especially for some women in a male-dominated world of venture capital. Raising money takes courage and vulnerability because you are not just asking others to invest in your business; you are asking them to invest in you, which can trigger all kinds of fear responses and insecurities.
One of the goals of our program is to help students develop their “inner coach” to replace the self-defeating thoughts that their “inner critic” (fear) often surfaces in their minds. These hurtful thoughts become paralyzing and often present a barrier to taking the courageous steps toward becoming the person they want to be.
The same is true for raising money. If you don’t process your fears around inviting people in to examine what you created and evaluate you as the leader, the thoughts can hijack your brain and rob you of your confidence. This can become a barrier to communicating your value proposition and, in turn, become an obstacle to raising money.
We all have these thoughts—especially for those of us who have been enculturated with “I am not enough” messages that make walking into a room of male investors trigger all kinds of doubts. If you try to push the fear aside, it only gives them more power as they quietly fester in your subconscious. Before a big presentation, I would often be up at night wrestling with imposter syndrome, wondering if my credentials were enough to ask others for their trusted dollars. I had to practice what I preached, and refine my internal obstacles into opportunities.
The goal of any pitch is to be clear, concise and compelling—and to be ready to answer any questions about your business model. By identifying, accepting and processing my fears, and focusing on what I could control by replacing my doubts with realistic and helpful thoughts, I felt empowered to communicate a compelling value proposition with clarity.