The frustrating challenge of starting or growing a business is how does one grow or start a business without investment dollars when the requirement for obtaining investment dollars is to show you have a growing business. Classic “Catch 22.”
Unfortunately, this familiar dilemma is faced daily by the ever growing number of women-owned businesses. Women are starting businesses in record numbers and yet they can’t seem to find investors. That’s a travesty. Recent reports note that 80% of net women-owned businesses launched in the past decade was started by a minority female.
Encouraging trend. But unfortunately, those numbers don’t tell the entire story. In spite of these striking numbers, women-owned businesses only received 4.4% of total small business loan dollars. One would presume bankers and investors would be clamoring to help this untapped billion dollar market! Herein lies another tragedy.
Where the real investment money is in Venture Capitalists (VC’s), an industry most women don’t have access to. So, not only is it an ironic twist to capture start-up funding dollars, it’s also an improbability to garner these VC funds. What do we call that, a double whammy? Or what my dad likes to say in jest when he’s frustrated beyond words “Nombre, chaddup.”
“Hello, statistic, pleasure to meet you.” I’m one of those statistics as Founder of a woman-owned business looking for start-up capital.
Last year, I armed myself with a solid Business Plan, pitch deck ready, research from focus groups analyzed, survey completed, and elevator speech memorized. By all measures, I was ready for funding. Excited to be presenting to a room full of VC’s, I met up with other hopeful entrepreneurs, eager to collaborate with business colleagues, possibly engage a new ‘partner-in-crime’ or at the very least, connect with a potential mentor while finding that all elusive match of a solid investor.
After brief introductions, the facilitator explained that the entrepreneurs would line up when the bell rang, ten at a time we would walk to a table and have five minutes to ‘pitch’ our business idea in hopes of grabbing investment seed money for our new business idea. This should be interesting, I thought, and a great experience. “Batter, batter, sa-wing, batter, batter…”
The first VC who heard the pitch was an elderly gentleman who liked the idea, was complimentary about the uniqueness and innovation the company offered, and offered his feedback. In a nutshell, he said, “Great idea. Best advice I can give you is to start with a family member to invest, you know - like a rich uncle, and then after your business has grown in a couple of years, come back and we’ll see where you’re at.” Strike One. Disappointed, I stood up, respectfully thanked him for his time and recommendation and turned to the sound of the familiar bell for the second round. Basically, this round was a repeat of the first: elderly gentleman, complimentary, suggested asking a rich uncle, yadda-yadda. Strike Two.
Again, I stood up, and politely thanked him for his time and recommendation. Although by this time, a recurring sense of please don’t have another tell me to reach out to my rich uncle simmered. (What are they talking about?) After the fifth or maybe the sixth VC I spoke with, I ran into a former business colleague of mine, now a retired investor. He actually loved the business idea, said the business has merit, but then offered this: “You’re not going to like my advice, but I’ll tell you anyway. First, quit your day job and live out of your ‘VW bug,’ and….. “I stopped him mid-sentence. “Excuse me, but if you’re going to tell me to seek out a rich uncle, I might as well turn around and walk out of here.” He laughed, ‘Why, is that what the others are telling you?” I shared with him my frustrations and he said, “Your start-up idea is a good one, best of luck, and come see me in a few years when you have grown the business.”
Rich uncle? Really? In my family? Being the first generation female to obtain a college education, raised by a single mom, experiencing sacrifices and challenges daily, and coming from a background without privilege or wealth, there is no rich millionaire uncle. My heart sank, and driving home, the realization of the major disconnect between VC’s and the struggling reality of women entrepreneurs hit me. A revelation that these gentlemen, at no fault of their own, could not connect with us on any level. They do not see themselves or their sons, nephews, sons-in-law, etc. in us. I did not reflect what they know, what they’ve experienced, and what they can perceive as potential for success.
How do we as women entrepreneurs, attract investors who don’t look anything at all like us, cannot relate to us, and don’t understand us?
We need our community to band together as a forceful and vocal group and start investing in one another. Those who can step up, step up! If not us helping one another, then who? Women owned businesses, especially Latina owned businesses, are the fastest growing in our nation, with the National Women’s Business Council reporting Hispanic women-owned firms across the country having total receipts of $56 Billion. Imagine the impact on our communities once we provide access to capital for our Latina business owners.
It’s as simple as approving those bank loans, pooling resources to find investment dollars, offering mentoring guidance, and connecting us with the appropriate individuals who can invest in women owned businesses. We need your help now by doing something about it.
Seriously, if there’s one more article about a Silicon Valley young male entrepreneur with a germ of an idea who received a million dollar check from an investor, it’s enough for anyone to just shake your head and say, “Nombre, chaddup.”
Casilda (Casi) Clarich is the Founder/CEO of Your Smart Closet, Inc.