The Fundraising Network Effect:
Local to Global
The gender investing gap is a global challenge. Over 80 percent of venture funding around the world goes to male-only teams. Through Launch With GS, Goldman Sachs has had the opportunity to host events across entrepreneurial hotspots, focused on helping women scale their companies by building community, cultivating meaningful relationships and driving business outcomes.
We were most recently in London and Paris, where we brought together local entrepreneurs, investors and thought leaders to hear from Maria Raga, CEO of Depop, the fast-growing fashion marketplace for Generation Z, Nathalie Gaveau, serial entrepreneur, Victoire de Margerie, Founder and Vice Chairman of the World Materials Forum, and Charles Letourneur, Managing Partner of venture capital firm Alven.
Events like these are critical to advancing Launch With GS’ goal of getting more capital into the hands of women founders with game-changing ideas. Bringing together entrepreneurs and investors, both women and men, builds a stronger path to the next stage of growth.
Here’s what we heard during the course of the week:
1. Seeking funding soon? Network.
According to a recent study by DiversityVC, investment opportunities sourced from warm introductions are 13 times more likely to be funded than cold introductions. That certainly makes sense – investors receive a significant number of inbounds, and are more likely to prioritize a referral from a friend or colleague. However, women founding teams are 15% less likely to receive warm introductions than all male teams. The fact that women are underrepresented on the investor side doesn’t help – 87% of UK investment teams are all men, and just 11% of all senior positions at private equity firms in France are held by women, according to Preqin.
This is one of the reasons why we convene entrepreneurs and investors at our Launch With GS Forums. Connecting with people from different areas of the investing ecosystem is critical to narrowing the gender investing gap.
2. Fundraising is a product of trust.
“Fundraising is one of the hardest things about being a CEO,” said Maria, who has raised over $100 million for Depop, including most recently, a $62 million Series C round. Maria knows what she’s talking about when she says if you’re looking to raise, get started early. Entrepreneurs can benefit from introductory meetings with investors at least 12-18 months in advance of an anticipated funding round. Investors need to trust and believe in you – and that relationship is built over time, she says.
Nathalie put it another way: One of the most important parts of a pitch is the relationship you create with investors. Even if an investor passes on an early round, she or he is likely still watching to see if you meet your deadlines and deliver on the promises you made during your pitch. Just because it’s a no today doesn’t mean it will be a no tomorrow.
From the venture capital investor’s perspective, Charles said that what distinguishes the best proposals from the rest is preparation. Bring your full presentation, keep an eye on time during your pitch, and use substantive (and realistic) numbers to back up your story.
3. Investors, meet returns.
While women currently receive far less venture capital funding than men do, research continues to emerge that reiterates why backing women-led management teams leads to outperformance. In a study by Women Equity which tracked 40,000 companies in France over the past 10 years, women-led businesses have consistently outperformed on an EBITDA/sales basis.
That data is important in proving the investment thesis. But there’s also a qualitative side to this.
As Victoire highlighted, “diversity is essential to creating value: events such as those hosted by Launch With GS are a good way to connect entrepreneurs and investors of all backgrounds, including diversity of gender, ethnicity, age, nationality and experience.”
At Goldman Sachs, we believe diverse teams build better businesses and make better decisions. Part of our goal through Launch With GS events is to provide a forum for these stories to be heard and celebrated. The 100+ entrepreneurs, investors, executives and thought leaders across sectors who gathered with us serve as evidence of that success – founders who have raised millions, sold multiple companies, built marketplaces, developed globally recognized brands, and scaled companies across different stages – and the investors whose portfolios reflect the diversity in the world around us.
Be on the lookout for more from Launch With GS.