KAT SCHNEIDER WAS four months pregnant when she took a hard look at her pre-natal vitamins and didn’t like what she found: unnecessary ingredients and questionable sourcing. She saw a hole in the $36 billion vitamins and supplements market and her entrepreneurial spirit kicked in. Schneider raised $1.3 million on the strength of her idea for Ritual—a high-quality, sourcing-transparent, subscription-based vitamin service for women. She had worked in venture capital (VC), which made her fundraising effort easier, but it’s a process more business-minded women should understand. Venture capital—money given to a young company by investors in exchange for part ownership—helps make our modern world go ’round. It’s how start-ups can become Google or Amazon—and women are missing out. According to Fortune magazine, of the $85 billion in venture capital invested in 2017, only 2.2 percent went to female-founded companies. Here, Schneider sheds light on the process, and gives pro tips for claiming your piece of the pie.
Know what you want. First, decide if venture capital is right for you. “It depends on where you see the business in the long term,” says Schneider. What she calls a “lifestyle business”—profitable but not high-growth—won’t interest big investors, but a vision (and plan) for a fast-growing, multi-million-dollar company that needs funds to accelerate that trajectory, will.
Get prepped. Knowing your market size is crucial, she says. “How big is the industry you’re going after, and how much of that do you think you can own?” So is being a “really compelling storyteller. If you can’t tell someone why you’re starting this company or the vision for it, then you’re not going to be able to inspire a team, or get press.” Also, figure out how much money you want and exactly how you’re going to use it, along with profit projections. Even though they might change, “it’s the thinking that investors are looking for.”
Choose the right investor. “When I was pregnant, I walked into a VC’s office pitching Ritual, and he said, ‘You can start a company, or you can have a family, but [not] both,’” says Schneider. “Obviously, we didn’t get much further.” Find a VC that supports your values and your goals. “Say you’re happy growing to be a $20 million company, but your investors want a billion dollar company,” she says. It’s important to have “an alignment of vision for what the company could be.”
Seek it out. Schneider doesn’t recommend cold-calling a venture capital partner. “Look at a fund’s sites, find the founders they’ve backed, see if you have anyone in common, and get an introduction that way,” she says. She also recommends going local. “The easiest thing you can do is Google ‘investment funds’ or ‘venture capital funds in [your city].’”
Believe in yourself. “Women always ask me about needing a co-founder. I don’t get that as much with men,” Schneider says. “You can build the business you want, and hire people for the roles you can’t fill. More female entrepreneurs should have the confidence to know they don’t need someone else.”
By Lisa Butterworth
Illustrated by Ramona Ring
This article originally appeared in the March/April 2019 print edition of BUST Magazine. Subscribe today!
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