Funding a business is never easy, and for women entrepreneurs, there are many reports stating the gender bias they face while raising funds for their ventures. However, this International Women’s day we get you insights and lessons on fund raising from women entrepreneurs who carved their own paths and built successful businesses purely based on confidence that they had in their business idea, abilities and talent which ensured that no bias became an obstacle in their journey.
Investors look for growth potential, so know your numbers
CashKaro.com, one of the largest cashback and coupons sites in the country, has raised $4 million in Series A funding led by Kalaari Capital. CashKaro is also one of the few ventures in India to have raised investment from Ratan Tata, the former Chairman of Tata Sons.
Swati Bhargava, the co-founder of CashKaro.com, agrees that the gender bias exists in fundraising, but there is also no denying the fact that venture capitalists (VCs) are an important source of funding. “Remember to not let the bias get to you and continue to do your own thing. Once you let this bias not become an obstacle, there’s nothing that can stop you. As exciting as running your own business is, it’s definitely no walk in the park. It is of extreme importance to be backed by a reliable and reputable investor. Apart from financial backing, the right VC can also add to the value of your brand,” she says.
The most important thing an investor cares about is numbers. “More than anything, they are looking to see how much growth potential your business has. Prepare your business blueprint in a way to let the investors know when exactly are you planning to break even and become profitable,” she stresses.
An investor not only invests their money into your business, but they invest their brand too. You want to go to an investor who will have synergy with your business idea, someone who will relate to it and understand it. “Look for investors who have invested in ventures in the industry you’re aiming to enter. Have a clear target demographic for your product in mind. They would want a concept that will produce numbers where you’re planning to set the base of your business,” Bhargava adds.
Bhargava describes her personal journey as that of an individual, not a woman, who has built a successful business purely based on relentless hard work. “In the many paths I took in my life, whether it was topping the subject of mathematics at my school in Haryana, or presiding over the biggest society at The London School of Economics, I was the only woman in the room. But I held my ground, and made the most out of these experiences,” she adds.
Swati Bhargava, co-founder, CashKaro.com
Look beyond VCs, not an NGO
When Aditi Gupta, co-founder of Menstrupedia, a platform that uses storytelling and sequential art for educating young girls about periods in an informative and fun way, was pitching the idea of Menstrupedia comic to seed funders, no one believed that a for-profit model like Menstrupedia or a product like Menstrupedia comic should exist or even thrive.
Menstrupedia has not actively looked to raise funds, but the company did raise a small amount in seed funding before the launch of the website and the Menstrupedia comic book.
“No one believed in our idea, and this was unanimous. Many believed that an NGO named Menstrupedia should exist, but every business expert would say that a book on Menstrupedia will not sell in India and we wouldn’t make enough profits. In fact, they were rather worried about how we will pay our bills,” say Gupta recalling her initial journey.
“When we were denied the seed funding, my husband Tuhin Paul, and I went ahead with crowdfunding. Crowdfunding in 2013 was very new in India, just like talking about Menstruation was. We wanted to raise Rs 4 lakh, and we ended up raising Rs 5.5 lakh through crowdfunding. That is the only funds we raised. After that we started selling the books and got into sponsorship deals with sanitary pad brands and pharma companies, which has helped us generate enough revenues and have been quite sustainable and profitable so far,” says Gupta.
Aditi Gupta, co-founder, Menstrupedia.
Crowdfunding is basically raising small amounts of money from groups of people, usually from friends, family and sometimes complete strangers who believe in the business idea. Raising funds through crowdfunding campaigns has become increasingly popular over the past few years and is considered as a good initial strategy.
“I would say if you are starting up your entrepreneurial journey, raising money shouldn’t be a problem as today VCs funding is not the only source of funding. There are different ways, like debt funding or crowd funding for raising funds for your venture. We tried crowdfunding and if it wasn’t for that, an idea like Menstrupedia would have never been a reality. The army of people who are pursuing their careers in menstruation education would not have been possible,” she adds.
Today, Gupta’s venture has not only established the business but has changed the entire landscape and enabled every big brand to talk about menstruation positively, inspire the entire generation and prove that it is cool and okay to talk about menstruation. Over 10,000 schools in India use these comic books as a part of their curriculum. The Menstrupedia Comic is available in 20 languages and used in 23 countries around the world. Her teaching techniques are culturally sensitive and widely accepted by over 1.5 lakh Indian parents and 1.7 million girls so far.
One bias among people, whenever there is a woman who wants to raise funds, is that the company operates in the social sector or it is an NGO.
On the flip side, Gupta says a woman entrepreneur should not feel that just because she is a woman or an impact entrepreneur, investors should support her. “You can use these stories to sell or market your products, but when it comes to someone putting money in your business, that money has to become bigger. If you are not making it bigger, then look back at your business model and try to refine that. Talking in numbers in terms of the people you can reach and the projection you can do is the best parameter of evaluating how your business is doing,” she adds.
Neha Bagaria, founded JobsForHer, an online platform to connect women with companies, community and skilling, to start, restart and rise in their careers, on International Women’s Day, in 2015. Bagaria has kept her venture bootstrapped so far, and she has a reason for it.
Neha Bagaria, founder, JobsForHer.
Bagaria says there are stark differences on how you can run your business when a business is bootstrapped, compared to when it is externally funded. “I don’t think there is a gender lens to that, but in our case the stark difference was the fact that we are running a venture that has a double bottom line. For us, financial profitability is as important as our social impact and one would really be incomplete without the other. When it comes to certain investors they need to see a particular growth matrix, profitability matrix and increase in evaluation so that they can get an exit. Their incentives and motivations differ greatly from what that of ours at JobsForHer which is why we decided that if we really have to drive a double bottom line, it is important to stay bootstrapped at least until we reach a stage where we see that we haven’t been able to crack the double bottom line,” she explains.
The venture and the impact that a woman entrepreneur wants to make is also an important criterion that she needs to keep in mind while choosing to keep her venture bootstrapped or raise funds.
“There are enough businesses that fail when the vision of the investor is not aligned with that of the entrepreneur. It is extremely important that the investor and entrepreneur are aligned in their vision on what they want their business to be in future, and this has to be more than just high evaluation,” says Bagaria.
Eliminating gender bias
Punita Kumar Sinha, Chairperson of InCred AMC, who brings over 30 years of experience in investment management and financial markets, says one of challenges that the women entrepreneurs face while raising funds is the lack of networks to tap into for funding.
Punita Kumar Sinha, Chairperson, InCred AMC.
“Also, it takes longer for a woman to build trust in the ecosystem and get recognized. There are unconscious biases since people invest with or partner with people like themselves so unless there is a large ecosystem of woman entrepreneurs and investors, these challenges will continue, although things are getting a lot easier for women. One solution is for fund allocators, including the government, to set aside an allocation of funds that would support women owned ventures,” she suggests.
Bagaria cannot agree more. She opines that the fact that there are a tiny percentage of women in the investor community makes a big difference. The people who you are pitching to and are evaluating your proposal are all men, and it is very much possible that the bias does creep in. “A lot of women entrepreneurs are coming up with products, services and solutions that cater to women because they understand there are so many needs of women that are unfulfilled. However, when the investor community is predominantly male, it is difficult for them to realize the need of the solution itself because they don’t relate to it. It is a must that the VC community has more women investors as a part of their team, ensure that there is a woman on the table whenever any pitch is considered and there is a woman on every deal seal who makes sure that they have a diverse perspective,” she says.