By Diana Murakhovskaya & Irene Ryabaya, Co-Founders Monarq
Our mission at Monarq is to help women start, fund and grow new businesses by connecting them to their fellow founders and the funding and resources they need to succeed. Every month we host an intimate #MonarqMoguls breakfast and dinner for twenty Women Founders in all stages of entrepreneurship and feature an investor passionate about funding and promoting women led startups. Our March 2016 #MonarqMoguls dinner featured Cathie Black, a member of Golden Seeds who built her successful career in media, becoming the chairman of Hearst magazine. She’s never shied away from taking risks, especially calculated ones that brought her much success in all of her many endeavors.
“So many things can be fixed by intelligent people having frank open conversions” – Cathie Black
Cathie shared with the women gathered around the table her fascinating story as well as her advice around the four major fundraising mistakes she often sees founders make. Below we share them with you.
Be Fearless About Metrics
“Be addicted to your metrics. Most startups fail because they run out money” – Cathie Black
At every #MonarqMoguls dinner we hear the same mantra repeated – know your numbers. Women founders especially are guilty of pitching investors without understanding the metrics that are key drivers of their businesses. Do you have a list off the 5 metrics that are crucial to the growth and sustainability of your business? If the answer is anything but a resounding “YES!” you need make it a priority to analyze your business and identify the leading drivers of your success.
Once you’ve identified the key performance indicators (KPI’s), review them constantly and live with them. You have to be disciplined and fearless in reviewing your metrics and evaluating how your company is doing daily and weekly.
Need help reviewing your numbers? We’d love to put our finance hats back on for women entrepreneurs so tell us what you need help with at [email protected]
Pivot Before Flaming Out
“Fail fast and pivot even quicker” – Cathie Black
“Fail fast” is now a famous catchphrase for entrepreneurs but it’s easier said than done. Most businesses fail because they burn through cash too quickly and run out of money, not because they didn’t have a great idea. In today’s questionable investment environment your traction needs to look like a hockey stick when you are pitching investors and your current funds need to last you through the often lengthy fundraising process.
Even if it feels like your business is your baby, if you’re not validating your idea, learning ways to iterate on it and burning more cash while not growing fast enough, it’s time to move on and pivot. Avoid getting trapped in something that’s not working and running out of money before working on the next big thing. Be thoughtful enough to let the driver of your pivot be your strategic decision and without letting the core of your business be driven by everyone else’s ideas of what your business should be.
Focus On the Probable
“Anything is possible, ask me if it’s probable” – Cathie Black
The current investment industry reality can be frustrating for women and especially for business that target women as customers because the, often male, investors across the table don’t directly understand the problem you are trying to solve. Even for founders who aren’t facing gender or race bias, closing a round can be extremely difficult because investors only fund about 1-2% of the startups that pitch them.
Since fundraising is a huge drain on your time, money and resources make sure you don’t let the wrong kind of investors drag the process out. Instead do your research and focus on those investors that are most likely to fund you by knowing their investment strategy and track record. During a pitch to a given angel or VC use your intuition to figure out the nuances of what they are and aren’t telling you directly after the pitch. Identify the people who have the power to make funding decisions, get them to commit to an answer even if it’s a “no” to save yourself precious time often wasted on ‘maybes’.
Be Frank About Passion
“Is your lifestyle idea a passion or just about making something big or a big pile of money.“ – Cathie Black
It can be very difficult to critique something that you are passionate about but Cathie reminded us that you have to ask yourself “Do I have a business here?” If it’s a passion idea or project for you, there is a very good chance it will become a “lifestyle business.” You need to be frank about what kind of company it has the potential to become before you spend time and money looking for outside funding.
While lifestyle businesses often bring a great deal of satisfaction to the founders and can be very successful, they are not the focus of angel and VC investors. You need to ask yourself if you sincerely want a BIG businesses – the kind that can generate the 10x return investors are looking for. Your startup needs to be worth your time,effort and loss of wages while not earning a salary for a few years, even investors aside. If the opportunity is small, even the most ardent passion will only carry you so far.
Ready to jumpstart your fundraising journey? Join us at our next #MonarqMoguls dinner!
Check out more from our #MonarqMoguls Advice series for helpful tips from top investors on funding your female-founded startup.