Tanya Rolfe has been on both sides of the funding table. As one of the women behind the now-defunct venture capital fund Her Capital, she says she was struck by how there were very few female limited partners in the industry. This inspired her to start two ventures – Sophia, a women-focused financial literacy platform, and Harriet, which assists female entrepreneurs with their fundraising journey.
“…the traditional fundraising journey can be particularly challenging for female founders, as it is often a very gender-biased process. Studies have shown that women are often subjected to unconscious biases from investors, who may have different expectations or standards for female founders compared to male founders,” Rolfe said in an interview for DealStreetAsia – DATA VANTAGE’s latest report on the gender funding gap in Southeast Asia.
According to the report, about 12.6% of all private funding raised in 2022 went to startups with female founders or co-founders. That number dipped to 5.6% for all-women founding teams.
Rolfe is critical of the venture capital industry, especially in its current state. “…I have concerns about the effectiveness of venture capital as a system. It seems to work only for a particular type of founder, which limits opportunities for others,” she added.
The former VC says entrepreneurs should explore alternative funding options.
Edited excerpts of an interview:
What led you to become an entrepreneur? How would you describe your entrepreneurship journey so far?
After relocating from London to Singapore, I developed a keen interest in startup investing and was quickly struck by the lack of female founders in the country. Curious about the reasons behind this disparity, I conducted research and had a breakthrough moment when I realised the enormous potential in investing in women-led companies. That’s when I started the Ladies Investment Club, which eventually evolved into Her Capital, a seed fund investing in female-founded, scalable businesses. However, I soon discovered that all the investors (LPs) I was pitching to were men, and this led me to explore why there were so few female investors. As a result of this research, I decided to shift my focus to helping women engage more in financial services and mobilise capital. This led me to launch my two companies: Sophia, a financial education platform for women, and Harriet, a platform to help women entrepreneurs secure funding for their businesses.
My journey thus far has been a steep learning curve, with its fair share of hard work, fun, and empowerment. I have had to wear many hats, from fixing printers and writing proposals to engaging with founders, investors, and corporate clients, managing assistants, overseeing PR and marketing, and everything in between. It has been a high-speed roller coaster ride of variety, but one that I relish.
What are some of the biggest challenges you’ve faced as a female founder? How did you overcome them?
As a female founder, I have faced numerous challenges that have been well-documented by me but are also similar to many other founders. However, the most difficult obstacle to overcome has been gaining acceptance and understanding of our business. When reaching out to conferences and similar events, we are often met with comments like “what a great initiative” or “amazing project” after describing Sophia or Harriet and our credibility is questioned, and assumptions are made that we are a social enterprise or not-for-profit organisation.
To combat this perception, we have found that redirecting the conversation towards our successes, big clients, or overall strategy can help change their thinking and reinforce our legitimacy as a business. This sadly doesn’t make it any less frustrating.
From your experience at Harriet, what challenges do female founders encounter while fundraising and how are these different from those faced by male founders?
Based on our experience at Harriet, we’ve found that female founders often face unique challenges when fundraising that differ from those faced by male founders. One of the biggest challenges is the gender bias that still exists in the startup ecosystem, which can make it difficult for female founders to secure funding.
For example, during calls with investors and founders, we have observed instances of “mansplaining,” where investors provide feedback on the founder’s marketing strategy despite not having read the deck, leading to generic and irrelevant feedback. Even when corrected, some investors persist in their assumptions.
Research indicates that women founders are often asked questions that focus on risk mitigation, such as “What will you do if you don’t make the revenue you predict?” while male founders are asked promotion questions, such as “When you hit your projected revenue, where will you take the business next?” These types of questions force female founders to speak about potential negative outcomes, while male founders can focus on positive milestones and opportunities. Furthermore, many female founders build businesses that cater to women’s needs, which can be off-putting to some investors.
Do you think that investors tend to have different expectations or standards for female founders versus male founders?
Yes, unfortunately, we have found that the traditional fundraising journey can be particularly challenging for female founders, as it is often a very gender-biased process. Studies have shown that women are often subjected to unconscious biases from investors, who may have different expectations or standards for female founders compared to male founders. For example, female founders are expected to have an entire team of expert co-founders or senior team members to cover all bases. In contrast, male founders are often perceived as individually capable of handling all aspects of running a business, even with limited experience.
It’s disheartening to note how many female founders have approached me, having already achieved multiple successes and exits from previous startups, yet still struggling to secure funding. It’s clear that there is a significant gender bias in the startup ecosystem, which results in female founders being held to higher standards and struggling to overcome barriers that their male counterparts do not experience.
What are some of the potential reasons for the gender gap in venture funding, and how do you think these can be addressed?
In my opinion, the lack of diversity among investors significantly contributes to the lack of diversity among founders. Increasing gender equality among investors would likely help address this issue. However, I have concerns about the effectiveness of venture capital as a system. It seems to work only for a particular type of founder, which limits opportunities for others.
While I cannot solve the problems with venture capital, I believe that exploring alternative funding options would be beneficial. Educating founders about these options is one approach. Additionally, it is worth questioning whether funding is even necessary for all businesses. There are alternative methods to achieve growth, such as generating adequate revenue to reach milestones, and founders should explore these alternative options.
In the current environment, when funding will be more difficult to secure for most startups, could female founders find it tougher to raise capital?
At Harriet, we recognise that the fundraising environment is always challenging for female founders, and the current climate only adds to the difficulties. Unfortunately, female founders may face additional hurdles due to systemic bias and lack of diversity among investors. However, we firmly believe that female-led startups have enormous potential and are capable of achieving significant success. While the road may be tough, we remain confident that female founders have what it takes to thrive and succeed.
What advice would you give other female entrepreneurs?
Establishing a network of people around you, even if you currently have no immediate needs, is crucial. Nurturing relationships and building trust takes time, but the value of a solid network cannot be overstated.
It’s also essential to find a mentor you trust implicitly.
As the founder, you should have a firm grasp on all aspects of your business, including the business numbers and other key areas. While you can bring in talented executives such as a CMO, CFO, or CTO, having a comprehensive understanding of all areas of the business is essential.
How can we work to change the culture and mindset within the venture capital industry to be more inclusive and supportive of female founders?
At Harriet, we believe that change starts with education and awareness. By providing resources and support for female founders, we hope to empower them in their growth journey. However, changing the culture and mindset within the venture capital industry is a much larger task that requires a collective effort from all stakeholders.
To begin with, venture capital firms should prioritise increasing diversity and representation among their investors. Involving more women and individuals from varied backgrounds as decision-makers could lead to a better understanding of the unique challenges faced by female founders and help to shift the culture towards greater inclusivity.
Investors should also encourage more open dialogue and transparency in the fundraising process. This includes being upfront about expectations and providing constructive feedback to founders. Investors could also consider more flexible funding models that are tailored to the needs of individual startups rather than relying on a one-size-fits-all approach.