Podcast Summary: Your Next Move – Female Founders—The Funding Question

Release Date: March 18, 2025
Host: Sarah Lynch, Inc. Magazine in partnership with Capital One Business

Introduction

In the episode titled “Your Next Move: Female Founders—The Funding Question”, hosted by Sarah Lynch and produced by Inc. Magazine in partnership with Capital One Business, the discussion centers around the unique challenges female entrepreneurs face in securing funding. The panel features Stephanie Mehta, CEO and Chief Content Officer of Mansueto Ventures, Rebecca Minkoff, Founder and Chief Creative Officer of Rebecca Minkoff, and Ali Wyatt, Co-Founder and CEO of Female Founder Collective and The North. The conversation takes place at the South by Southwest Inc. Founder's House, delving into the state of funding for female-founded startups.

Challenges in Raising Venture Capital for Female Founders

Rebecca Minkoff opens the dialogue by addressing why it's difficult for women to raise venture capital. She emphasizes that many women-owned businesses are consumer-based and may not align with what traditional venture capitalists seek.

“There are a lot of women-owned businesses that are starting consumer-based businesses that are not even right for venture to begin with.”
— Rebecca Minkoff [01:00]

Rebecca highlights the misconception that venture capital is the only path to business success, advocating for awareness of alternative funding sources. She also points out the importance of targeting the right investors and viewing fundraising as a numbers game.

Ali Wyatt builds on this by discussing the misalignment between female founders and the investors they approach. She stresses the necessity of networking well before seeking funds and cultivating relationships with investors early on.

“Network in real time, which it needs to happen long before you're going out to start to raise funds.”
— Ali Wyatt [02:22]

Additionally, Ali notes that female founders often lack confidence during pitches compared to their male counterparts. She encourages women to build confidence and view investors as partners in their business journey.

Investor Perspectives and Criteria

Rebecca Minkoff shares her approach as an investor, focusing on the resilience and adaptability of founders. She looks for entrepreneurs who can handle challenges and pivot when necessary.

“I need to know that that person's going to get back up and is going to be innovative or pivot.”
— Rebecca Minkoff [04:32]

Rebecca also mentions her commitment to supporting the businesses she invests in beyond just capital, offering advice and leveraging her network to amplify their reach.

Shifting Funding Strategies: From Growth to Profitability

Ali Wyatt discusses the recent cooling of interest in consumer startups and the shift towards building profitable businesses. She emphasizes the return to fundamentals, such as forecasting and budgeting, ensuring that the business economics are sound before scaling.

“Going back to the basics of building a profitable business.”
— Ali Wyatt [05:58]

Rebecca Minkoff concurs, sharing her experience with Rebecca Minkoff as a brand that initially followed the “grow at all costs” mantra but later had to pivot towards profitability to attract investors.

“There's nothing wrong with a profitable, sustainably growing company that provides a great lifestyle for you and your employees.”
— Rebecca Minkoff [06:49]

Navigating Venture Capital Relationships

When discussing relationships with venture capitalists, Rebecca Minkoff advises founders to retain control and carefully review investment agreements to prevent investors from imposing unfavorable conditions.

“Before you sign the agreement, you make sure that the rights you have are able to veto some of that advice.”
— Rebecca Minkoff [08:24]

Ali Wyatt adds that understanding the metrics of success expected by investors is crucial. She warns against investors who may steer the business in directions misaligned with the founder’s vision, potentially jeopardizing the company’s future.

“If the direction that they're pushing you into is actually going to put you out of business if it is.”
— Ali Wyatt [10:04]

The Bootstrapping Journey: Rebecca Minkoff’s Experience

Rebecca Minkoff shares her seven-year journey of bootstrapping her business before securing private equity partners. She discusses the sacrifices made, such as using personal credit and foregoing salaries, to sustain and grow her brand.

“Every decision around hiring someone, can we afford it? My brother didn't take a salary for the first five years.”
— Rebecca Minkoff [10:32]

Rebecca emphasizes the importance of choosing the right partners and thoroughly vetting investors to ensure alignment with the company's long-term vision.

Friends and Family as Funding Sources

Ali Wyatt explores the role of friends and family in early-stage funding. She recommends structuring such investments through Special Purpose Vehicles (SPVs) or syndicates to manage smaller investments efficiently and maintain personal relationships.

“You can have somebody lead that, that is passionate about your business.”
— Ali Wyatt [13:50]

This approach allows founders to raise capital without overwhelming individual investors while ensuring that the lead investor is someone trustworthy and aligned with the business’s goals.

Impact of Small Check Investors on the Cap Table

Rebecca Minkoff views small check investors positively, as they often represent a community and customer base that believes in the business. She appreciates the validation and support these investors provide.

“If I'm looking at a company and there's a couple SPVs or syndicates with 10, 15, 20 women, I'm like, those are your first customers.”
— Rebecca Minkoff [15:55]

Addressing Gender Bias in Fundraising

Despite progress, Ali Wyatt acknowledges that gender bias persists in the fundraising landscape. She advises female founders to master the language of investors, present solid data, and demonstrate clear growth potential to bridge communication gaps.

“Make sure you are coming in knowing your data and the growth potential behind your business in a really rock solid way.”
— Ali Wyatt [17:42]

Rebecca Minkoff adds that female founders should involve other women stakeholders who understand the product and can provide valuable insights during pitches, enhancing credibility and relatability.

“Bring someone that understands this if it's all going to be men, or bring other stakeholders or other, you know, managing partners that are women into the room.”
— Rebecca Minkoff [20:26]

Encouraging Women to Invest in Women

Ali Wyatt discusses strategies to increase the presence of women investors in female-founded startups. Through initiatives like Female Founder Collective, she aims to create a cycle where successful female entrepreneurs reinvest in emerging women-led businesses. Additionally, she highlights the rise of educational groups that empower women to invest wisely.

“We are already seeing that happen a lot already, which is super exciting.”
— Ali Wyatt [21:56]

Conclusion

The episode concludes with actionable insights for female founders navigating the complex funding landscape. Key takeaways include the importance of understanding alternative funding sources, building strong networks early, maintaining confidence in pitching, and ensuring alignment with investors’ visions. Additionally, fostering a community where women support women through investment is highlighted as a crucial step towards greater equity in entrepreneurship.

Notable Quotes:

• Rebecca Minkoff: “There are alternative forms of capital. It's not talked about enough.”
  [01:00]

• Ali Wyatt: “It is very difficult to lift your head out of your business.”
  [02:22]

• Rebecca Minkoff: “I'm still rooting for you because you're pivoting to what's going to eventually work.”
  [04:32]

• Ali Wyatt: “Your investors want you to continue to grow and not go out of business.”
  [10:04]

• Rebecca Minkoff: “There's nothing wrong with a profitable, sustainably growing company.”
  [06:49]

This comprehensive discussion underscores the multifaceted challenges and opportunities for female founders in the venture capital ecosystem, providing valuable strategies and perspectives for aspiring women entrepreneurs.