How to Raise Money Like A #BAUS
So you're launching a startup, eh? That's dope. I recently launched one myself - an upscale beauty brand for women of color called Mented Cosmetics. Since launching in January with my co-founder Amanda E. Johnson, we've closed on one pre-seed round of funding and are in the midst of closing another, because - surprise! - starting a company takes money.
The dirty little secret of startup funding is that only 2.7% of it goes to women, and only .2% goes to women of color. This is a huge problem, and one that's far more indicative of the bias that runs rampant in the venture capital community than of our inability to pitch/raise successfully. That said, CEOs like Jessica Matthews of Uncharted Play, Morgan DeBaun of Blavity, and Delali Kpodzo of Onyxbox are paving the way for more successful WOC-led startups to raise venture capital, and now's the time to capitalize on the trend. Raising money is difficult no matter who you are, but I've picked up some tips and tricks along the way that I hope will be useful to you.
1) Mine your network
If LinkedIn isn't already your best friend, it should be. Your best bet for getting in front of venture capitalists (VCs) and angel investors is via a warm intro - so let your social network do the work for you. I'd start by compiling a list of the angels and VCs you want to connect with (and be smart about this list - try to make sure these are people who invest in your industry and who are looking for startups at your stage), and then plug the names of these people into LinkedIn to see who can make that initial introduction. If your alma mater keeps an online database of alumni, this is also a great place to connect with investors, because your school can play the role of "warming" the intro. The key here is that people are far more likely to take a meeting with someone who feels familiar - use every outlet you can to start making those connections.
2) Pitch to your friends
Pitching to a complete stranger can be scary at first - so ease the burden by practicing with friends. You'll need to create a pitch deck (there are lots of great articles out there about crafting a good one), and then call up a friend and ask if they wouldn't mind hearing your pitch. The truth is that in real life, many of your investor conversations won't be very formal - they'll have much more of a Q&A feel to them. But that doesn't mean you shouldn't be prepared to lay out all of your points in a succinct, well-thought-out manner, and to do this you have to practice.
3) Step up your email game
Ideally, the majority of your emails to investors will come by way of an introduction (see #1). But we secured our second-largest investor with a cold email, so trust me when I say it's not impossible. The thing is, investors get dozens of emails a day from people looking to pitch them. Believe me when I say yours isn't going to make it to the top of pile with a subject line like "New startup idea." You have to be creative! Below are some of the subject lines I've used in pitch emails, and why I think they worked. Generally speaking, investors like ideas they can quickly understand, and being a bit provocative/braggadocious never hurt anyone.
"Harvard's next big beauty startup." - A number of great, women-led startups in the fashion/beauty space have come out of Harvard in recent years, and this subject line was meant to tell the reader "here's another one you won't want to miss." The point here is to give people an immediate reference point.
"Glossier for women of color." - I don't use this one very often anymore, because I think we're different from Glossier in a number of ways. But when we were raising our first round, Glossier was the hottest beauty startup on the investor block, and I wanted some of that cool to rub off on us.
"Beauty for us, by us." - I sometimes used this one when reaching out to WOC angels. The goal here is to get the investor feeling invested by making it clear this is a product for our community.
I could talk about email forever, but I think you get the point. Get those creative juices flowing!
4) Always be selling
This might be the most important piece of advice of all. As difficult as it may be at first, you need to constantly be pitching your business. The good news is, when you're with friends or people you know well, it won't really feel like a pitch - it'll just feel like a catch-up session. But you want as many people as possible to know that you're raising, because you never know who may be in a position to invest, or whose uncle/cousin/sister just came into a lot of money and fancies herself an angel investor. Case in point - at brunch one day I mentioned to a friend I hadn't seen in a while that I was raising capital for Mented. I told her about how well the business was doing and about some of the investors we already had, and while I was talking she interrupted and said "why haven't you asked me to invest?" Two weeks later, after hearing my more formal pitch, she came on board. And had I never mentioned that we were raising, I would have missed out on that opportunity.
So there you have it - my tips for raising money like a #BAUS. Believe me when I say that over time, you'll discover what works best for you — and then you can share your tips and tricks with me ;-)
P.S. - Use code BAUS for 20% off our MENTED products.