The statistics on women’s businesses receiving venture capital (VC) are pretty dismal—it lurks at about 2.2% of all VC funds—but few women entrepreneurs let that stop them. In lieu of being able to count on investors, several women told us how they funded their businesses, determined to see success no matter what.
Kisha Mays, CEO of the international business development firm, Just Fearless, started her company in 2009 because she was ready to work for herself after years of working in PR. “I was never good at taking orders. I knew I had to start a business,” she says.
Parlaying skills she learned in PR, she did everything she could to get her company started. “I drew from my work income, my savings, maxed out credit cards and asked friends and family to essentially bootstrap it,” she says.
Asking for money was not always easy. “My friends believed in me, but not all of my family.” It was her friends “who would come through for me time and time again,” she says. One of her friends worked for a big music company, with access to big name contacts and was able to help Mays get celebrities to headline Mays’ events.
She didn’t even consider seeking venture capital funds because she’d read the slim statistics on her chances, and she didn’t want to give up equity in her company. “Understand that [if you don’t get VC] it’s sweat equity. Social media is your friend. If you are going to seek funding, look for angel funds over VC firms. You don’t want to become an employee of the company you started.”
Success didn’t come overnight; in fact, it came after what she describes as falling flat on her face two years in. “I went too big too fast,” she said. She planned a huge three-day conference with big name stars to whom she had to pay out massive contracts. The big sponsor who was making much of it financially possible pulled out at the last minute and ticket sales couldn’t make up the difference. She almost filed for bankruptcy.
However, she was able to rebuild and shift from events toward business development and marketing and now her company does business in cities ranging from Las Vegas and Miami to Dubai and Hong Kong.
“The biggest lesson I’ve learned is that fundraising should be to make more sales and revenue so you don’t have to fundraise in the future. Be smart about it. Get that foundation set.”
USING RETIREMENT FUNDS
A common theme among women is to draw from either existing savings or their retirement funds, with the hope that the business will be successful enough to replenish those funds later. Trina Spear took such a risk when she and her co-founder Heather Hasson started FIGS in 2013, a medical uniform company that has been named 21st on Inc 500’s fastest growing company in the U.S.
“Apparel is cash intensive. We knew we needed to raise money to get it off the ground,” Spear says. “I dipped into my 401K and Heather put money in.”
With a product-based company, they had to raise funds at the same time as they built their business, which was a challenge, but one they were willing to undertake. After investing their own funds to get started and build a website, they spent another year fundraising from angel investors, friends and family.
Spear says that every day she worried they might not make it. “We got a lot of no’s, and people were really confused about medical apparel. Typical VC or Silicon Valley investors were focused on tech. It took time to educate investors on the industry and what we were doing.”
She and Hasson have since built their company of two into one that employs hundreds.
In the years since, she’s seen the difference between women’s experiences with funding and men’s. She describes sitting on a panel of women founders where the women described always hearing no. Then, her experience with a bunch of male founders “was the exact reverse. They were talking about how you’re going to get all these yes’s and you just have to put your foot down and say ‘I can’t take your money.’”
Since then, she’s made up her mind not to think in terms of a gender binary in relationship to her business. “I’m not asking or begging for money, I’m providing an opportunity and there’s only a few people I’m going to allow to partner with me,” she says.
She finds that when she approaches people, be they potential investors or customers, with confidence, she’s met with confidence. “Don’t think about being a woman; you’ll set yourself up for disaster. You create the world you want to live in.”
Candance Barr, Owner of Strategic Resume Specialists left an executive recruiting job to write resumes for executive level clients full time. She had some clients immediately through connections in her old job, which enabled her to show some income right away. Because of that, she was able to apply for several loans through Paypal Working Capital, ranging from $3000 to $18,000.
With this loan format, you pay an upfront fee based on the percentage you allow Paypal to take from every transaction that you do with them, ranging from 10 to 20%.
This way, every time she took a client’s income, she was also paying back her loan at the same time. “I found it to be all very competitive and lower than other small business financing options, lower than a credit card.”
She feels it’s a good option for people who can demonstrate an income but who need more capital to grow.
She also makes the point that starting a business doesn’t have to be a gargantuan enterprise where massive funds are necessary. “In our current gig economy lends itself to people dipping their toes into small business waters without leaving their jobs,” she points out.
“Test the waters around your current job. Make sure it’s a viable business idea and see what you can generate. It doesn’t have to be all or nothing.”