January 28, 2021 13 min read
The first few times I went to pitch a venture capitalist, it was like traveling to a different country where I didn’t speak the language or know the cultural norms. I’d never done anything like it before and didn’t know anybody who had. When I cofounded my first startup, I was a sixth-grade teacher in my 20s. I’d soon discover that people like me — Black, female — are the least likely to get funding from an investor. But eventually, I’d learn something equally as important: People like me are often pitching all wrong, or at least very differently than the founders VCs say yes to.
There’s a lot to learn from those founders who are successfully raising capital, no matter who you are.
In my case, I came from humble beginnings. My dad is Black, and he grew up with 11 siblings in a two-bedroom apartment in the projects of Spanish Harlem. My mom is white, and she grew up in rural Iowa, helping her mother, a young widow and a product of the Great Depression, raise four boys. My parents met each other in law school in Los Angeles, where they both became civil rights attorneys and later went on to raise three daughters in Pittsburgh. They named me Mandela after Nelson Mandela — you can imagine the conversations in that household.
As a child, I remember my father running for mayor. He didn’t win, but I saw the courage of a Black man who came from where he comes from, showing in the 1990s that he had the right, just like anyone else, to have a say in what happens to the community. I appreciate that now, but back then I was sometimes uncomfortable. From a young age, people would ask me, “Are you Black? Are you white? Are you Latina?” And, honestly, like many kids, I just wanted to fit in. I wanted to be accepted. So I lived with a certain tension: How could I work to make the system more equitable but at the same time not feel ostracized by it? In hindsight, I can say that tension led me to my current path.
With that first startup almost a decade ago, I did manage to raise some money. What I didn’t know was how to use that money — and the powerful connections it came with — to scale a business, and eventually that caught up with me. After a few years, we shut it down.
But as they say, everything happens for a reason. One of my investors, Kapor Capital, hired me as their portfolio services director. It’s a very diverse firm in terms of founder representation. So for two years, I got to be a fly on the wall and observe the differences between how white and Asian men pitch their companies and leverage investors versus how Latinx, Black, first-generation, and female founders navigate the same investor relationships. I kept thinking, How are those white and Asian men raising money? What are they saying (and not saying)? And then after they get the money, what are they doing with it? As I watched, a pattern emerged. And I realized: There’s a whole other way you could be doing this! There are different keys to use and new doors to open I didn’t even know existed.
That’s when I left to start Founder Gym.
Since January 2018, my team and I have been training underrepresented entrepreneurs to raise venture capital. Through our online six-week course, we bring in elite players from VC firms like Sequoia, Kleiner Perkins, First Round Capital, and Y Combinator, and at this point we’ve had nearly 500 students go on to raise $78 million. Our graduates are historically the least likely to get funding — 70 percent are Black, and 58 percent are women — but I’ll tell you, the principles we teach apply to anyone with a great idea.
Image Credit: Jeremy Young
Here are six ways to get investors to help you scale your business.
1. Talk About Your “Distance Traveled”
Especially in the early stage of your business, when there isn’t much data on users and revenue, investors have to make decisions based on whether they believe in you, and whether they think you are the right leader to build this company. If you are not someone who looks like them, or you didn’t go to the same schools or have the warm intro, then being able to tell a compelling story and sell a vision is going to be that much more important.
At Founder Gym, we have founders write down everything they had to overcome just to get to where they are now, whether it was growing up in the projects, surviving an accident, or raising three kids as a single mom. Those things count. That’s grit; that’s perseverance. We call it your “distance traveled,” and it’s a concept I learned from Freada Kapor Klein, my boss at Kapor Capital and a leader in diversity, equity, and inclusion. Showcasing your distance traveled means going beyond your résumé and pedigree, and if you can make it part of the story you present to an investor, it can show you have the ability to weather “impossible” storms.
One of the first founders we worked with was Amy Nelson. She was building a company of women-focused workspaces and an online platform called The Riveter. At the time, she was afraid to tell investors she was pregnant with her third daughter. We helped her reshape her story around how she’d handled being a mother and a wife while working as a lawyer and starting a company. Instead of hiding her pregnancy, she could pitch that being a “mom CEO” was an advantage for The Riveter, because women would be attracted to that identity; news stories would pick up on it. So that’s exactly what Amy did. She raised $30 million. I mean, she just owned it.
2. Learn to Speak VC
What if you’ve got a hair-care line for Black women and you’re pitching to an all-white male team? Or you’ve developed agricultural technology and the VCs have barely been out of the city? I don’t have to tell you that investors are not philanthropists. They’re in the business of taking capital from limited partners and using it to buy equity in companies like yours — and then helping to make those companies as valuable as possible, as quickly as possible, so there’s an exit to turn those shares into cash. Whatever you’re pitching, you have to help them see the money.
You may have to do some extra education about your market, and you’ll want to bring to life the pain points you’ve experienced. But you’ve got to also talk numbers — as in “Black women spend X amount more on hair-care products than any other demographic, and there’s a gap in the market for products we’re developing. Here’s the financial upside for you.”
3. Do Some Snooping
VCs can seem unapproachable, especially if you’re new to the game. That’s why I always get to know the person before I ever set foot in their office (or meet on Zoom). I watch their YouTube talks, listen to their podcasts, read their tweets and blogs, find them on Instagram and look at photos with their family, scan their LinkedIn—basically gathering anything I can find to help me understand who they are. Because aside from the job they hold, they’re just a person. That makes the power dynamic a lot less intimidating.
I also look for something we have in common. Maybe I didn’t go to Stanford like they did…but maybe they’re really interested in capoeira, the Brazilian martial art I got into when I moved to Oakland as a way to make friends. I can bring that up in the meeting to break the ice. And if I can’t find a way to slip it in naturally, I’ll just say, “I did some research on you and saw that you’re really into capoeira. That’s so cool, because…”
These investors, especially at that early stage, are making a bet on you. I can’t emphasize that enough. If they don’t feel that you’re a person they’d want to work with for the next five to 10 years, they’re not going to invest.
4. Ask For Help
This is one of the least-talked-about reasons for the continuing disparity in who gets funded, and I learned it the hard way.
To appreciate that, here’s the longer story of my first startup. I was teaching and 25 years old when my then boyfriend told me he was entering a hackathon. It turned out to be focused on education, so I came up with an idea for the contest. We won first place. After that, we decided to turn my idea into a real company — it was kind of like a LinkedIn for teachers. I quickly fell head over heels in love with entrepreneurship, and I never looked back.
But…as I said, I had no experience. I maxed out my credit card and went into severe personal debt. His car was repossessed. One day, I kid you not, we went down to our garage on the way to a pitch meeting and the car was gone. Neither of us had a safety net of family or friends we could ask for money from. But we hid all that from our investors. We just said, “Everything’s awesome!” And so they replied, “Wonderful, Mandela. Keep kicking ass!”
It was a sense of pride, but also, if I’m honest, a fear of being seen for what I didn’t know. In an environment where I might already be discounted, I didn’t want to give anybody a reason to doubt my intelligence or abilities. There was also a pressure that many underrepresented founders feel — a sense of This is your chance to make a good impression not only for yourself and your company but also for your race, your gender, your community, where you come from. That’s a crushing burden.
Then the startup failed. I felt like I failed. But fortunately, I was hired by Startup Weekend, the company that had held the hackathon, and then got that job at Kapor. While I was there, I noticed that so many of the white and Asian guys — the tech founders who most often get money — brought an authenticity and honesty to their meetings that others didn’t. These guys would let you know exactly what their numbers are and take you behind the curtain to show you how the sausage is made. They had no problem essentially saying, “Let me tell you what I know, investor, but let me also tell you what I don’t know. Let me ask you for help.”
Because I was in “Everything’s great” mode with my investors, I never benefited from their advice or networks. They couldn’t help me get my business back on track when I needed them and push it to the next level. They didn’t know there was a problem until it was too late.
5. Play Like it’s a Team Sport
A founder does not succeed because they’re smarter, more capable, or harder-working than their competitors. They succeed because they are really strategic about building and utilizing a team. Once you have investors, they’re on that team.
I strongly recommend sending monthly reports to your investors. (You can also send them to your advisers and people you want to become investors.) The report should include your key metrics of success, like revenue, engagement, and churn. It should also have updates on your team — “Hey, we hired two new engineers!” — requests for help, as well as a postmortem on the previous month, meaning what you did and where you dropped the ball, and goals to reach by the next report. One strategy I’ve seen work really well in these monthly reports is when founders thank certain VCs for their help. It’s a way to get the investors who didn’t get a shout-out to notice — believe me, they will — and realize they need to step up their game to help you.
Even if your numbers start trending down, send the report. Again, your investors are on your team. Their money is tied up in your business. They want you to win.
6. Know Your “Why”
If information alone were the answer, we’d all be millionaires with six-packs, right? There’s obviously so much more to being an entrepreneur. The most important thing, hands down, is to truly know: Why are you doing this?
I know my “why” is to create this space that I wish I’d had when I started out — where all entrepreneurs feel empowered, like they belong but, at the same time, are held to extremely high standards. That space also involves helping VCs open their minds to the genius of people who don’t look or act like them, and to better understand the differences in resources and safety nets, so more great businesses can get out into the world.
Whatever your business, building a successful enterprise is hard. But if the “why” is strong enough, no matter what the obstacles are, no matter if you raise venture capital or fund your company another way, no matter if everyone tells you “no,” you will figure it out.