How do you court a venture capitalist in two minutes or less?
That topic and more were covered in a panel discussion called "Venture Capital and Private Equity: Getting It and Giving It," held during the Women Enriching Business conference.
On the giving side — with a message to their mainly young audience that was generally upbeat, flecked with tips and advice — were four high-ranking executives at venture capital funds. They included: Wendy Phillips (MBA '95), a specialist in early stage investments in high tech at Advent; Alexa Willson of AIG Capital Partners, a consultant on emerging markets private-equity funds; Paula Chauncey, a managing partner at Redwood Group; and Martha Crowninshield, longtime partner in Boston Ventures and a new angel investor. HBS Professor Myra Hart moderated the discussion.
As one of the first women in Boston to work in venture capital, Crowninshield was asked to reflect on what it has been like for women in the venture capital community. Her path, she said, looked clear and orderly only in hindsight.
"The logic of your life is applied retrospectively," she said, before relating that her first job as a young woman had been in the US State Department. She had lasted for three weeks.
"I was told I could become a terrific Gal Friday," she recalled. "I told my boss, 'But I aspire to be Secretary of State.'"
Crowninshield's first job in business was as editor of an in-house company newspaper in New York. "No man wanted that job," she said. It turned out to be an ideal introduction to business concepts and business people, and she was encouraged to pursue an MBA.
"How women articulate in the business world is critical if you are looking for venture capital," she told the audience. "One of the things that has to be learned is how to present. I see women talking from a very linear approach only from market data, or talking very vaguely. They can't articulate what an investor needs to see, which is how to exit."
Added Phillips, "In every way I've benefited from people like Crowninshield's trailblazing. I'm also fortunate that I'm involved in technology. In technology you could be purple and a third gender that's yet to be invented....
"In this industry you see more women in higher positions. I have not felt a great deal of bias or discrimination of any kind, even though I'm often the only woman on a board of the companies I invest in."
Willson pointed out, however, that getting discussed in the media as a woman investor can have its drawbacks. In one of her ventures, for example, she and a female partner were treated in the press as a "women's fund," and that wasn't helpful. "You want your track record cited," she cautioned, "as opposed to 'the girls are doing it.'
"That was an important lesson for me, to have too much of the wrong exposure," Willson said.
Chauncey offered some tips to women in the audience for the future presentations to venture capitalists. "Speak the language of finance: that language is terse," she advised. "When you go in, it's like selling any other product. That's how you open their ears.
"Women are weaker in preparation," she noted. "Men are by and large acculturated to speaking off the cuff. You don't want to have a scattershot approach... At the end of the day it is about engaging their emotions with your business. Listen to that person talk, understand what they're looking for and where you can add value to them. In getting stronger in language skills, you have to communicate with that male space."
As for finding angels and venture capital, Chauncey suggested starting with local small-business development centers and attorneys who work in securities. "Look at people who are successful in their industry," she suggested. "I'd knock on their door, ask if they do private investing. Where you find one, there is a gaggle of people behind them."
Crowninshield added that one of her colleagues used an egg-timer: "You had two minutes to present the crux of your situation," she said. "Remember Ben Franklin: 'If I had time I would have written a shorter letter.'
"Think of the egg-timer. Don't go on and on, or you confirm all their stereotypes."
The questions you should know about a prospective investor, Crowninshield said, are these: How quickly do they monetize their investments? Where are they in their current fund, what's their experience, what's their m.o.? Are they available for you? Who are the people they have access to?
"I would want to talk to the presidents of companies who have been invested in by that firm," she said. "Those people are your best source of objective information."
Phillips continued that VC seekers should investigate not only the firm, but also and especially the individual they would be dealing with. "Ask for specific instances of value added, in addition to strategic ideas," she advised. "Did they set up a key relationship?"
Crowninshield said, "VC firms will respect you for asking those kinds of questions, and will suspect you if you don't."
Added Chauncey, "The negotiating aspect is one of the most difficult for women. As you prepare to go out for capital, remember it's not just the business plan [that counts].
"A 'no' is not always a 'no,' and a 'yes' is not always the 'yes' that you're looking for."