The hurdles women-founded startups face in venture capital — and advice to overcome them

Don’t be scared to pitch big.

That’s the advice Graham & Walker Founder and Managing Director Leslie Feinzaig said she would give to women looking to navigate the world of venture capital.

“We tend to want to under promise and over deliver,” she said, speaking at the Female Founders Showcase hosted last week at the Amazon headquarters in Seattle’s South Lake Union. “Venture capital is not the place to do that.”

Just 2.1% of total capital invested in U.S. venture-backed startups in 2022 went to companies founded solely by women, according to a report by PitchBook. That’s down from the 2.4% invested in all-women founding teams in 2021.

Women often face dismissal and have to jump through hoops to get the attention of investors, said Charlotte Newman, head of global business development, underrepresented founders and investors, Amazon Web Services.

Venture capitalists tend to ask more risk-based questions rather than express enthusiasm while getting a pitch from a woman, she said.

As women founders look to navigate the venture capital world, Feinzaig said she would give women founders three pieces of advice:

• Build your network in advance and remember not to approach it transactionally.
• Once you establish a network, showcase your execution skills every chance you get to attract investors. Regular investor updates, as well as sharing successes like viral product launches and positive press coverage, can demonstrate your abilities and build interest in your team before fundraising.
• Run a tight fundraising process, similar to managing concurrent sales conversations.

Feinzaig, who raised $10 million to invest in early-stage women-led companies across the U.S., said the challenges of securing capital pushes women-led companies to be more resilient and have stronger fundamentals.

About 15% of general partners at VC firms nationwide are women, up from 12% in 2019, according to a PitchBook report from November. Evidence suggests that the lack of female leaders in venture capital ranks makes firms less likely to invest in female-led startups.

However, women-led startups that raised capital from women check writers faced difficulty raising subsequent rounds of financing, a recent study by Harvard Business Review found. Women who received their initial funding solely from female venture capitalists were twice as likely to have difficulty securing a second round of financing, the authors found.

“When people see that a female founder received funding from a male investor, they assume it’s because she is competent and her startup is strong,” HBR reported. “But if the same founder only has female investors, then people are more likely to assume that her success is due to her gender, rather than her competence.”

Helen Wang, CEO and founder of Seattle-based after-school activities platform 6Crickets, said she has struggled to raise venture capital for her startup despite her experience and technical abilities.

Prior to founding the company in 2015, Wang worked as a principal researcher and manager at Microsoft for almost 15 years. She also has a PhD in computer science from the University of California, Berkeley.

Investors bet on people, not just their immediate ideas, Wang said. Evaluating founders can be subjective and influenced by subconscious biases, she said.

6Crickets has been able to raise $2.5 million from angel investors and friends and family.

Wang, who has not been taking a salary since the pandemic, said she aims to secure funding to increase employee compensation and bring onboard the knowledge and connections that venture capitalists can offer.

6Crickets is now cash flow positive and slowly growing, despite raising a limited amount of funding, Wang said.

“A lot of things are not fair,” she said. “But we just have to be resilient.”