5 Funding Lessons from the Most Successful Women’s Healthcare Venture Ever
Investors who aren’t able to relate. That’s the barrier women founders face when raising capital
PHOTO CREDIT: Getty Images
When it comes to raising capital, the news for women founders and entrepreneurs is not promising.
You've probably already heard about the female co-founders who invented a male co-founder in order to skirt sexism.
According to a study led by Alison Wood Brooks of Harvard Business School, women and men can use the exact same words in a business pitch, but both genders are more likely to be influenced by the pitch if it's delivered by a man.
According to a Pitch Book analysis, just five percent of companies with women CEOs manage to raise capital.
For many women-led businesses, a major hurdle is investors' ability -- or non-ability, as it were -- to relate to their product or service, or even to them as people. That gap of communication and understanding is evident when you consider the gender dynamic within U.S. venture capital firms, where only seven percent of decision-makers are women.
That was the case for Katherine Ryder, founder and CEO of Maven, a healthcare network designed exclusively for women. Studies show that women make 80% of all health decisions for themselves and their families yet, Ryder said, "healthcare doesn't treat women like they are the primary consumer. [Maven is] changing the way women relate to healthcare, by raising our expectations."
At this point, Ryder and Maven have raised more than $15 million, significantly more than any other women's healthcare company. Yet it was extremely difficult, she said, especially early on, when she kept walking into rooms of all men who had little or no understanding of the health issues that women face. Looking for some point of commonality, she would ask them if they had kids and they would reply, "Yeah. My wife did that."
Here are five insights into how Ryder shifted the dynamic to successfully navigate the waters of venture capital.
Seek Female VCs
Ryder intentionally set out to meet every venture capitalist she could find who's a woman. Some female VCs actively seek female entrepreneurs because they know it's an underserved market; Ryder pointed out that others in the group are harder on women because they're trying to prove themselves. Eventually Ryder met "a great woman VC who ended up leading the deal, and she was pregnant at the time."
When the Glass Ceiling Hasn't Shattered
Ryder has developed a network of "incredible female investors" who have all put in smaller checks at certain points in the process. She recalls a conversation with one former media executive in particular, who told her, "My generation was supposed to be the generation that broke the glass ceiling and we didn't." Now she's investing in a way that can actually help to break the barrier.
Subject Matter Counts
Ryder attended meetings where achieving investment was a non-starter because of the subject matter. "If you're an investor who's only doing one or two deals a year, do you really want to spend the next five to ten years of your life going to board meetings and really knowing the [women's healthcare] industry?" Ryder asks. "It's not necessarily their fault that they want to invest in self-driving cars or the drone industry. But that's the problem in having no diversity in VC -- all the deals that get passed over."
Cut Meetings Short
If there's no chemistry within the first ten minutes of a meeting, Ryder is much more likely now than when she started to cut the meeting short instead of spending 45 minutes trying to interest potential funders. "When I started out I would assume that everyone would see the need for Maven, and I would spend a lot of time with people who would never invest," she said. "But they have to fall in love with you and your business right away. Now I'm much pickier. I have a bigger company and a business to run."
Hire Senior People Earlier
Looking back on her own experience and what she would have done differently, Ryder said that she would have hired more senior people earlier in the process. "Now that we have some senior people here they've made my life so much easier," she said. "They do a lot, and they come in with a lot of experience already, so that's been wonderful."