This Female Founder Raised $25 Million - Here's How
This article first appeared as part of Northwestern Mutual's Women & Careers Series on September 5, 2018.
Lee Mayer was 30 in 2013, when she left behind her job as the vice president and general manager at an Internet company to co-found Havenly, a virtual interior design and e-commerce company. It was a giant leap of faith. While Mayer had business chops — she holds an MBA from Harvard Business School — she had zero experience in the world of interior design. But she was determined to give ordinary people access to the normally pricey services offered by interior designers. “It was exciting and felt like a big opportunity,” she says.
Mayer invested some of her own money, and $150,000 of her family’s, to get the project up and running with a basic version of the site that she coded herself. But she knew she needed the help of outside investors to give Havenly its best shot at success.
It was fundraising time — a startup step that many female founders in the male-dominated entrepreneurial world find particularly daunting. (In 2017, 38 percent of small U.S. businesses were owned by women, yet women only received 2 percent of all venture financing.) “It was nearly impossible at first,” Mayer recalls. But over the past five years, Havenly has raised over $25 million, injecting the company with enough fuel to grow by more than 14 times.
Here are Mayer’s hard-earned fundraising tips, especially for female entrepreneurs seeking to grow their big dreams into big business.
1. GET OVER YOUR FEARS At first, I would make any excuse to avoid fundraising. Like, I can’t send this email out to this investor until I wash my hair! I was so petrified of failure that I didn’t tell many friends who could have helped me that I was fundraising. I was almost embarrassed about it. I would say, “It’s a little consumer business, I’m not building flying cars.” My lack of confidence probably contributed to the fact that we got 140 “no”s before we got our first “yes.”
2. KNOW YOUR BUSINESS COLD Investors want to know that you’ve anticipated all their questions and reservations. One of the challenges in the home space is that people aren’t buying sofas once a month. That was something that kept me up at night, so I prepared a thoughtful answer about why this was actually a strength.
It’s a must to have your key metrics down. One investor of ours gave me some great advice: Know what the tipping point is. How many customers will you need for this to work as a business?
3. MINE YOUR NETWORK Look for investors that have funded similar categories in the past. I did my homework and made a long list of all the angel and institutional investors that had invested in seed stage companies in the consumer or e-home space. Then I went to LinkedIn and looked at who was connected to me and each potential investor. I took my friends out to lunch and asked them to introduce me, and a lot of them did.
4. SEEK A REPUTABLE LEAD INVESTOR First, you get a lead investor, and if they’re reputable and well known, a lot of people want to follow along. It took five months of rejections, but the second I got that first investor, everyone else said yes — we were so over-subscribed that we had to shut the round down!
5. DON’T SELL JUST YOUR COMPANY — SELL YOURSELF My philosophy is that in the seed (startup capital) rounds, you’re selling yourself more than anything. Because you don’t yet have much of a product or revenue, investors have to kind of fall in love with you. That’s really hard for them to do over the phone, so always ask for a face-to-face meeting.
If you have a co-founding team, you should pick one person to pitch, and make that consistent. You learn so much in every pitch, like how to read body language and answer questions; if you’re splitting up the pitching, you’ll only learn half as fast.
6. KNOW WHEN NOT TO PITCH Don’t pitch to anyone who’s likely to say no. If an investor has never written a check to a company in your sector, they’re unlikely to start now. Avoid asking for money at big pitch events; ask for advice instead. There’s an old adage: When you need money, ask for advice. When you need advice, ask for money. I once met with an investor who clearly didn’t want to get pitched for an investment. So I asked her to be a mentor. Eventually, she offered to become an investor.
7. STAY POSITIVE Fundraising is intimidating. And there is definitely a gender bias in favor of male entrepreneurs. Here’s what works for me: Before any pitch meeting, I get out of my business head and read a book, go out to lunch, or talk to someone supportive to psych myself up. When I enter the meeting, I might focus on one person who seems nice. I’ll try to find some common ground. I love to ski and a lot of male venture capitalists do too, so I might say, “I just came back from Vail and the skiing was great.” It breaks apart the room, so now I just have to get comfortable with one person, not 10.
I like to tell women: Go in there and get as much money, advice and respect as you can, so you can start to change the unfortunate gender ratio in the business world. There’s something about coming into a meeting with an “I can do this for women” attitude that is really empowering. We’re together on this.