By Megan O’Brien, finance and business editor
⏱ 6-minute read
Lacking the “typical” startup founder and structure has been shown to work against companies seeking venture capital funding. Sarah Tuneberg, co-founder of a software company, experienced this firsthand.
Tuneberg’s eventual success in securing VC funding provides tips for entrepreneurs of all genders and backgrounds.
Many of Tuneberg’s tips involve making and keeping human connections, as well as being bold in your company and personal values.
This past year, U.S. venture capital investment in female founders hit an all-time high. According to PitchBook(opens in new tab), 2.8% of capital invested across the entire U.S. startup scene went to companies with all-female founding teams. And 12% went to companies with a mix of male and female co-founders.
That’s right. Those are the highs -- and they’re not very high, even when you account for the fact that there are overall fewer women entrepreneurs(opens in new tab) than men.
As a female co-founder of climate risk software company Geospiza(opens in new tab), Sarah Tuneberg felt the pressure when seeking venture capital funding(opens in new tab) for her startup this past year.
“Fundraising is hard, period. But fundraising as a woman is harder,” she said.
Eventually, she made it and got $1 million(opens in new tab) in seed funding(opens in new tab) for Geospiza last May. But the path was arduous, as it can be for founders of all demographics and backgrounds.
Tuneberg’s journey yielded some valuable tips for any founder seeking to score funding. Find her advice below.
1. Be prepared for tough questions.
When Tuneberg compared notes with other startups within her Techstars(opens in new tab) accelerator class(opens in new tab), she realized that the questions investors asked her were significantly harder than those they asked her male counterparts (a phenomenon corroborated by a Harvard Business Review study(opens in new tab)).
She found that she had to be prepared for in-depth questions about the financials, business structure and potential pitfalls of Geospiza -- as opposed to the more surface-level questions being fielded by her colleagues.
Of course, tough questions can arise in the VC pitch process(opens in new tab) for founders from any background. For the best shot at scoring funding, prepare to explain your business model in detail to a critical audience.
2. Articulate clear values.
Today, Tuneberg is unequivocally steady in her company’s position on climate change. In her 2019 TEDx talk(opens in new tab), she starts by forcibly stating, “Just like climate change is 100% real and caused by humans, so are what we call natural disasters.”
Initially though, that was not the case. Tuneberg admits to avoiding taking a strong stance on climate change out of fear of pushback on her fledgling company.
In Geospiza’s earlier days, “We were using a lot of euphemism, and that was unclear,” she said. “It made it hard to cut through the noise. [Then], we decided to embrace it.”
In her TEDx talk, Tuneberg takes a strong stance on climate change. At her startup, that wasn't always the case.
According to Tuneberg, a clearly and passionately articulated mission -- even if potentially controversial -- proved key to setting Geospiza apart during presentations to everyone from TEDx attendees to venture capitalists.
“Being more aggressive about it has helped us cut through the crowded content space,” she said. “… To differentiate ourselves, we have a really deep mission. It is who I am. It is what I am here to do, and I think that comes out onstage. I am excited about solving climate change.”
“Being more aggressive about [our stance on climate change] has helped us cut through the crowded content space."
3. Practice your pitch and public speaking.
After a “terrible” first pitch competition(opens in new tab), Tuneberg knew she had work to do.
“I invested in a lot of prep. Practice, practice, practice,” she said. “There are hilarious videos from Techstars where I pitched a billion times. I’m pitching all the other founders in my class, and we’re all talking at the same time just to get it. And so I got very good at public speaking and won a lot of Geospiza’s startup money from competitions.”
Tuneberg credits Techstars for providing valuable development programs and opportunities to hone her public speaking and pitching skills.
4. Be coachable.
It is in investors’ best interests to see you and your company succeed. If they choose to fund your company, they will act as not only as sources of capital but also purveyors of valuable expertise and insights(opens in new tab). For them to invest in you, they need to see that you are willing(opens in new tab) to incorporate constructive criticism and take advice.
Indeed, a 2017 study of VC deals(opens in new tab) showed that investors reacted more positively to pitches in which the founder was open to hearing new ideas from them. Founders that ranked highly in coachability moved on to the next phase of the evaluation process most often.
Accordingly, Tuneberg credits the growth of Geospiza(opens in new tab) to what she calls a “yes, and” attitude(opens in new tab). When presented with a challenge, she doesn’t resist it but instead welcomes the opportunity to learn more, vs. having a “yes, but” or “yes, or” attitude, she said.
5. Know your audience and how to connect with them.
Standing out as a startup is hard. Resonating with people enough for them to give you money is even harder.
Tuneberg credits Geospiza’s ability to connect with investors to the “incredible amounts of preparation” that went into researching each individual venture capitalist and crafting the pitch(opens in new tab) they’d most likely want to hear. By incorporating her findings with a visceral and emotional approach, she was able to create the context for investors to recognize the value of her product.
As an example, when one company’s facility had just flooded, Tuneberg showed the executive a graphic on the Geospiza platform that illustrated rising sea levels and data on how often those types of floods happen.
6. Make and keep connections.
In the founding story of Geospiza(opens in new tab), Tuneberg mentions several instances of making connections.
She reached out to a tech guru for coffee, who advised her to join Techstars. The accelerator program ended up investing in Geospiza, and Tuneberg still serves as a mentor there today. She then connected with a judge from her first pitch competition, an investment manager for Motorola, who saw the value in her idea and helped her develop it into maturity.
Buddies from business accelerator Techstars were key in Geospiza's success, per Tuneberg (center).
7. Accept that you’ll never know all the answers -- and practice responding anyway.
As much as you might prepare for tough questions from a VC, you will never know all the answers. If, in a pitch competition or an investor meeting, an investor raises a question that you do not know the answer to or points out an issue that hasn’t been solved, have a response prepared.
Tuneberg suggests a response along the lines of, “That’s a really good question. I don’t know, but it’s something that I would look to your experience and expertise to help me solve. Do you have someone in your network that can help me?”
It’s okay to acknowledge your company’s gaps in a constructive way, she added.
“Be honest about your limitations, and ask for help,” she said. “It’s impossible to be perfect. You’re not being defensive or a know-it-all [that way]. You’re acting like a real person. People like that. It taps into a human connection.”
“Be honest about your limitations, and ask for help. ... People like that. It taps into a human connection.”
However, that doesn’t mean you should list all of your company’s vulnerabilities in your pitch deck, she added.
“Every company has huge gaps. Don’t introduce it onstage,” she said. “Get the [pitch competition] judges excited about your idea. Don’t put that out there if there’s something you need to work on. You can explore that later.”
In a pitch, Tuneberg advises providing only information that is going to tell the story of your company, not introduce plot twists.
8. Remove yourself from the responsibility of what people do to you.
When Tuneberg was trying to finance Geospiza, she hit several obstacles that tested her conviction and resolve. At best, it was potential investors immediately deferring to her male co-founder(opens in new tab) and viewing him with more credibility. At worst, it was blatant sexual harassment.
She often found herself feeling guilty for not coming up with a snappy comeback to bolster herself in the male-dominated space. But then, she resolved to respond differently.
“[I finally realized] it’s not my responsibility to come up with something witty or something smart. It’s totally okay for me to be taken aback,” she said. “You have to remove yourself from the responsibility of what people do to you.”
Not every founder will experience the same obstacles on their journey to VC funding. However, Tuneberg’s resilience is something all of us would do well to imitate.