Overcoming Challenges: Securing Funding for Diverse Entrepreneurs
Diverse entrepreneurs face a number of challenges when it comes to securing funding, including lack of representation in the startup community, limited access to networks, cultural barriers, and bias in decision-making.
Despite these challenges, it is possible for to secure funding for their businesses.
To increase their chances of success, they should focus on several key areas:
“investors say that multicultural and female entrepreneurs receive the right amount or more, capital than their business model deserve….” …The key point is about the business model and deserve — Focus on a clear business model (what problem you are solving, how do you make money, how large is the market and is the problem a top of mind problem or a nice to resolve problem ) ..Think about the impact on investable dollars — “ the median investment by equity investors is nearly $1M .. yet for female or multicultural business is between $213K and $185 respectively” ..Having clarity on your business model is a must — find ways to clarify, simplify and prove your model…
“investors are much less likely to be exposed to multicultural and female entrepreneurs “ . identify the networks that are important around your product and solution, identify the investors that work with entrepreneurs in that space and crates drip campaign to make then aware of your organization ( focus on awareness nor on the ask) — provide value by introducing the company, the problem, the business model, the challenges and the successes .. build a rapport so they gain awareness of your organization ( this takes time and is an investment of time and resources — plan for it and create regularity on the communications ) — opening the door is not a one time event, but a laborious activity that can provide access to networks, customers and capital.
“Investors expect multicultural organizations to check additional boxes beyond those like a quality management team and a sound business strategy..”..focus on strengthening your team with the right group of advisor to complement your team, prepare for your pitch and focus on confidence ( fyi — confidence is achieve when you have clarity on the product, understand the value that you provide and have proof points to back you up ) .. focus on gathering all of the information, practice the presentation, the message and have a concise and clear description of your business and opportunity.
“..reluctant to invest in a product or service that serves a consumer they do not understand” Humanize your customer and market segment, make it real, allow them to relate to them ( turn it into a day to day interaction with that consumer segment) tackle the problem head on and describe how the customer is currently solving this problem and why your approach is better ..
“this requires a shift in the investors mindset from valuing entrepreneurs based on their pedigree ….to the hard skills they bring to the table …ability to understand the unique market, anticipate demand, and serve the customer properly” …focus on the customer journey — map the customer journey and value proposition — show that you know the market and more importantly the customer that is purchasing your product & how they are consuming — keep it simple and with clarity ..
“Most investors not only rely on, but sometimes require, referrals from their networks…” build your campaign of awareness with time, overcome the lack of a network by focusing on drip campaign of awareness and follow up -treat them as prospects and customers — focus on value and knowledge of the market.. highlight the wins, share the losses and your learning from them, share the progress and do not diminish the challenges …
“For entrepreneurs, communicating their vision and value proposition is challenging enough. This becomes even more difficult for entrepreneurs whose product solves a problem or addresses a gap in the marketplace that isn’t familiar to the investors that they are pitching”.. clarity about your business and value proposition is imperative, but it has to be a simple message — do not make them try to learn about your market and product — keep it simple so they can understand it .. give them to tools (prove points ) to validate the market and the problem ( guide them on their learning and make it simple for them to learn and understand ..)
“If you are a woman or a multicultural entrepreneur you have to de-risk your business before you get investments” — how do you de-risk your business , show them that you have a competent team (people that have done it before) , share the wins and customer proof points , share with clarity your business model and how the organization makes money, make them understand the market potential and the problem that they are facing ( share with them what happens if your customer does not buy your solution — and highlight your value ) be factual about the state of the business and be wishful on the vision ..be prepared and be confident and have clarity on what you need from them, describe the why ? And what do you expect to return to them and by when — de-risk the project to a point that you can share it with anyone .. remove any friction points and embrace the journey…