A three-step approach to overcoming bias in fundraising
Founders who were able to answer critical questions with growth-focused answers, like those taught in the “Reclaim, Inform, Promote” technique, raised $7 million more on average, than those who did not.
A 2017 study by Harvard Business School professor Laura Huang uncovered a troubling trend in venture capital fundraising. Huang's 2-year study, which followed 189 founders and 140 venture capital funds, found that the majority of questions asked by investors depended on the founder's gender.
Specifically, Huang's research revealed that 66% of male founders received "promotion-oriented" questions about their hopes, achievements and growth potential. In contrast, 67% of women founders were asked "prevention-oriented" questions focused on safety, risk and mitigation.
This gender bias had real consequences - male startups in Huang's study raised 5 times more funding than women-led ones.
In September, Amazon's "Sellers in Your Community" program hosted an interactive workshop aimed at empowering business owners, like you, to raise capital more effectively. The session, titled "Pitching Better: A Workshop for Sellers to Overcome Bias in Fundraising," was led by Rich Green, who works on initiatives for Amazon Web Services' Startups, Underrepresented Founders and Investor Business Development team. The workshop addressed the gender bias trend uncovered by Harvard Business School, but the insights and suggestions are applicable to all founders looking to fundraise, as bias can come in many forms.
"While you may think that [venture capitalists] will ask only about your product, market and business viability, in reality they draw heavily from their perceptions of the founding team," explained Rich Green.
Promotion questions allow founders to enthusiastically discuss their vision and ambitions. Prevention questions, on the other hand, "put you back on your heels" and force founders into a defensive posture.
However, Green shared a tactic called "Reclaim, Inform, Promote" that enables founders to reframe prevention questions in a way that highlights their company's strengths and promotes their business. First, founders identify the essence of the prevention-oriented question. Then they provide a concise, data-driven response. Finally, they transition into a more promotional framing that sells their vision.
According to Huang's research, founders who were able to answer prevention-oriented questions with promotion-oriented questions raised $7.35 million more on average than those who did not, regardless of gender.
The "Pitching Better" workshop is now available on-demand, providing Amazon sellers with the tools to level up their fundraising strategies and secure the capital they need to accelerate growth. As Rich Green emphasized, "This is about democratizing access to the resources and expertise that can help all founders, regardless of their background, achieve their ambitions."
If you’re looking to level-up your pitching strategy, answer investor questions in the most impactful way, and raise more capital, click here to register and watch the recording.
.jpg)
-min.jpg)
