Conversation is, classically speaking, a two-way thing. At finnCap we’re particularly good at striking up a dialogue between two key people – the one seeking investment, and the one with the means to invest. Like any good conversation, for that chat to go anywhere meaningful those two parties have to be engaged with each other in a meaningful way. This, we’ve discovered, is at the heart of what’s holding back companies that are trying to scale; it’s an issue that resonates especially with female founders.
Last week we held our latest event from the Ambition Nation: Female Leaders Series, bringing together female founders from across a spectrum of company sizes, to find out the barriers to growth and to hear the stories and experiences of how other female leaders have accessed capital and managed scaling their businesses.
For some time the business of getting advice on and accessing growth capital has been steeped in such jargon and mystery that it presents a language barrier to all but those with specialist knowledge. Add to that a historically very male-dominated investment landscape and one finds that that conversation tends only to be conducted between certain types of investor and founder.
finnCap CEO Sam Smith kicked off the Ambition Nation session by saying, “We want to create a jargon-free background from which to inspire and grow amazing female-led businesses.”
Hear the stories and experiences of how other female leaders have accessed capital and managed scaling
The new way of thinking
One of our speakers was Dame Helena Morrissey, founder of the 30% Club, a group dedicated to increasing the proportion of women in FTSE100 boardrooms. She followed Sam Smith by explaining that we have only recently reached something of a nadir in terms of new ways of thinking for female founders, just as we did with female presence in boardrooms in the wake of the financial crash.
The best outcomes come from inclusive cultures
“The financial crisis showed that having one type of person around the board table was not working,” explained Helena Morrissey. “It was a moment to seize a new way of thinking on diversity. The success of the 30% Club showed that change is possible, achieved by women and men working together to influence. Men were instrumental in driving change in their own boardrooms.
“We have another opportunity to seize here, now. Diversity means diversity of thought, too, and the new digital age requires new ways of thinking. We are at a point where men and women should be working together in a completely new dynamic – we have a very different dynamic in business now and it’s no less ambitious than the past. We know the best outcomes come from inclusive cultures.”
Demystifying the investment landscape
An inclusive investor-founder culture begins by demystifying that world. The cloaking effect of investment lingo is not just a barrier to female founders, but to everybody looking to scale up that has little experience of the environment. Indeed, as panellist Irene Graham, CEO of The ScaleUp Institute, pointed out, it is an inherent factor into why successful start-up entrepreneurs in the UK – who may have until now funded their operations through credit cards or loans from their next of kin – find themselves at a loss for a path to follow when it comes to private equity fundraising to get to the next stage of growth.
“We're a superb nation for start-up businesses, but not very adept at focusing on UK scale-up,” said Irene Graham. “The ScaleUp Institute’s Female Founders report shows this is a group that has raised £600m in capital, but that's only 4% of the scale-up index.”
Adding to Irene Graham’s point, Shelley Hoppe, CEO of Southerly, explained how this problem is wrapped in the fact that entrepreneurs have limited time to learn the ways of the investment world, saying, “Entrepreneurs can have a tendency to hold themselves back during scale-up. We're good at running a business; accessing capital is another skill. But there's only so far you can go organically, without external investment, you can plateau. There is a fear of giving up control that must be assuaged.”
A part of the issue is one of inspiring confidence. While you can’t necessarily give entrepreneurs the confidence to pitch, you can give them a platform from which to confidently start the conversation, a premise that Ambition Nation is built around. Joanna Santinon, Partner Lead at EY UK, pointed out that part of the reason the UK has few angel investors that are women, or that work specifically with women, is that we don’t have enough advice and support networks to help with that confidence boosting, that enable those conversations.
We're good at running a business; accessing capital is another skill
“We must shine the light on rising stars and give them as many opportunities to network, which often busy female leaders find hard to find time to do,” said Joanna Santinon. “Yet this is where you find ideas, partners, friends and mentors.”
Find your partner
With that in mind, a key piece of advice to emerge was that founders must go into that investment conversation firm in the knowledge that the language they use to pitch is being reciprocated and not hidden amongst jargon in return.
Claire Madden, a founding partner of Connection Capital and a senior member of its Investment Committee, said, “Don't take external equity unless you see it as a partnership.”
Finding that cultural fit is paramount to that partnership; you don’t want an investor that’s detached, you want someone who engages with your business story – someone who gives back.
Claire Madden went on to point out that that giving back is also a street that must be two-way. Good companies, bright founders and great ideas have some talking to do, too.
“Bring us your projects,” said Claire Madden. “We can’t invest in something if we can’t see it, and there is a need to package oneself properly in order to access the growth capital and the investor that is right for you.”
Don't take external equity unless you see it as a partnership
These are conversations that must align. From investor to founder, and from men to women – an inclusive investment culture is a two-way conversation that requires meaningful, forthright and mutually beneficial input from both sides, bolstered by the support, access, expertise and advice from networks like Ambition Nation. The reason the culture is changing is because the mindset – the new way of thinking – has fundamentally changed.
As Sahar Hashemi, founder of Coffee Republic and co-Chair of the ScaleUp Taskforce put it, “Companies need to be more entrepreneurial – have empathy and emotion, be collaborative and agile. Now is a good time to be a female leader because the mindset is a female one.”
Empathy and collaboration mean employing a language that enables, not restricts. The people on both sides of these conversations – the ones that will work to lift the UK’s scale-up successes – are beginning to demand this more and more.
Read more from Ambition Nation's return to Manchester to discuss growth and private equity fundraising in the North West.