Despite continuing to face an uphill battle against the gender gap in venture capital, female entrepreneurs made great strides in 2019. One of the most impressive gains for female founders came in the growth of unicorn companies. In 2019, 21 female-founded unicorns were born versus 15 female-founded unicorns in 2018!
In 2020, as more females strive to raise venture capital money and realize their dreams in building great companies, there’s a lot of reason for optimism. Here are three words of wisdom from successful female founders that can serve as a guiding light for all aspiring entrepreneurs when building a business.
1. Choose investors wisely.
Lucy Lui is the co-founder and president of Airwallex, an Australia-based payment platform that enables companies to manage cross-border revenue and financing. Early last year, Airwallex entered the elite unicorn club.
One of the many drivers behind Airwallex’s success is its strong relationship with its investors. To be sure, selecting investment partners is difficult. It’s no longer about the size of the check. Case in point: according to a study by Wharton management professor David Hsu, less than half of startups accept the best financial offer when raising capital.
How should you go about choosing investors? Liu explains, “You’ll have a much more engaged audience if you’ve done your research and are talking with potential investors about how their expertise or network would benefit your business goals, as opposed to just their money.” Most important, Liu advises, “Choose investors who know your industry.”
While a lot can be gleaned from scouring investors’ websites to uncover their industry expertise, this is a time-consuming process and can be misleading. Using Affinity, you can drill down to the nitty-gritty and accurately assess potential investors’ networks. In doing so, you’ll get a much more comprehensive and accurate picture of investors’ expertise and will be in a better position to supercharge your fundraising efforts.
2. Don't take social media connections at face value.
Research by Babson College’s Rob Cross has found that women exhibit greater stickiness in their relationships over time as compared to men. That is, women are more likely to maintain relationships with co-workers from previous experiences and jobs as compared to their male counterparts. The most successful women leverage these strong external connections as boundary-spanning opportunities.
In order to successfully leverage your network, you need to have an accurate assessment of it. Heidi Roizen is Roizen is adamant that you shouldn’t equate social media connections with true intimacy. She says,
“Just because someone connects with you on LinkedIn doesn't mean they're your friend. Social media creates a false sense of intimacy, particularly when people choose to expose a lot about themselves. Social media has allowed us to have broader relationships, but at the end of the day, human relationships haven't changed — we haven't increased a human being's capacity to have close associations with a lot more people.”
Social networking platforms such as LinkedIn and Twitter are grounded in vanity metrics such as the number of connections or your number of followers. These superficial metrics make it very difficult to assess your true relationship strength with various connections. Using Affinity, you’ll be able to accurately appraise your network and, in turn, be able to successfully exploit it to help you realize new opportunities.
3. Embrace an open network.
Sam Horn is a world-renowned author and has coached the world's top entrepreneurs and executives. One of her mantras is, "People can't jump on your bandwagon if it's parked in the garage."
Building a business is tough. It’s tempting to keep your ideas close to your chest. But the most successful entrepreneurs embrace an open network. And it pays off. Renowned psychology research, Philip Tetlock, has found that people who embrace open networks are better forecasters than their counterparts who have closed networks. When you build an open network, you have access to a more diverse group of people to share business ideas, get feedback, and iterate. You’re also less likely to fall victim to bias and, in doing so, are better able to forecast key trends and be one step ahead of the next big opportunities.
2020 offers a new year of opportunity. By choosing investors carefully, accurately keeping tabs on your connections, and embracing an open network, you’ll be in a position to make a big impact in 2020.