Raising venture capital for a fashion or retail business isn't easy -- especially if your product is for women, as no shortage of entrepreneurs can attest. That's because most venture capitalists are men, they say; naturally, it can be more difficult for an investor to understand a product's potential if he isn't the target consumer.
When Katrina Lake was raising an early round of capital for her online styling service, Stitch Fix, venture capitalists alternatively told her they didn't think anyone would want her product, or that they could only be on so many company boards and a business involving dresses simply wasn't something they could get excited about.
She -- alongside Yael Aflalo of sustainable fashion brand Reformation, Patrick Coyne of tuxedo rental startup the Black Tux, and Alexandra Spunt of Everlane -- shared their tips for getting the attention of the right investors on stage at Fashionista's "How to Make It in Fashion" conference in L.A. on Friday. Read on for their best advice.
1. Learn to speak their language. VCs speak in acronyms and buzzwords, says Aflalo. "Know the words. Splice them into what you're saying when you talk to them. And make sure they know you're really passionate about [your business]."
2. Don't court VCs who haven't already invested in fashion and e-commerce startups. "All [VCs] want to take meetings, because that's what their job is, to present ideas," says Aflalo. "You have to isolate the ones that understand fashion. If they don't have fashion stuff in their portfolio, it's almost a waste of time to talk to them. They don't understand your business, so they're probably not going to get a deal done."
3. Don't talk to associates. "Talk to partners only," says Coyne. "If associates email you, don't respond," Aflalo agrees.
4. Play hard to get. "Treat this exactly like dating in high school," says Aflalo. "Don't respond right away [when they call or email you], don't respond to people who are beneath you, like associates. You're not available ... you're busy talking to so many other people. You think this is stupid, that they are smart people who control the wealth in this country? No, they are teenage boys that all say the same things, and as soon as one thinks a thing is 'hot' they all think it's 'hot.'" A don't-care attitude should extend to your dress, too. "The first meeting with an investor, I didn't dress professionally, I seemed very uninterested, I remember because I was out late the night before," Aflalo recalls. "It was the best one."
5. Don't accept money from someone whose vision doesn't align with yours. "At some times, any money seems better than no money," says Lake, recalling a time when Stitch Fix was "weeks away" from not being able to pay its employees. "The control that becomes involved … In tough scenarios, [investors] have control that could negatively affect you. They will always have a share in your company; it's hard to get them out."
6. Get someone with a business background to make your pitch deck. "They're going to understand how to create the charts [potential investors] need to see," says Aflalo. Someone with an MBA is a good start.
7. Keep your pitch short. 10 to 14 slides max, Aflalo and Coyne say.
8. Emphasize your strengths -- whether that's your sales figures or your ability to hire great talent. "Really early on, we recruited the COO of Walmart.com," says Lake. "[That] was the thing I knew I'd done really well."