[Cent #11]: women are capable of raising money & building their dreams

hi lil bees! HAPPY ALMOST HALLOWEEN!!

what’s going on in sneh’s world

• Half marathon training: T-2 weeks!! Honestly, running this week was tough and slightly discouraging because of my self-talk this week, but I know there are good runs and there are bad. Even just acknowledging it and knowing that “slow and steady” wins the race keeps me going.

• Reading: I recently bought Kyla Scanlon’s In This Economy from a friend’s recommendation :-) Some of my thoughts…

  • I’m loving this read as someone who has a very elementary understanding of economics. It’s a digestible guide to the U.S. economy with lots of graphics, very little financial jargon, and an acknowledgement of how money is not purely rational. Because humans are not purely rational!

  • Even as someone who considers themselves financially independent, I’m learning so much. Giving me lots of ideas for thought pieces I want to write… 👀 

• Meeting new friends: I got the chance to meet and coffee chat Kyla Bolden this past week. She’s the founder of Wiz Kid Learning, an ed-tech startup working to unlock the potential of children and young adults focused on the STEM space. Honestly such a gem of a human to connect with, and a reminder that there is a plethora of kind folks who are building the change they want to see in the world.

• Celebrating best friends: 26th birthdays were celebrated this weekend in the most wholesome way possible. Runs along waterfronts. Pumpkin painting in central park. Chomping on cookies and cream cake. Good times :)

Last week, I touched on the tales of women in Corporate America, around being glue, feeling like imposters, and climbing broken rungs. As someone who is also pursuing an entrepreneurial venture by running between the buzz, I wanted to dedicate one of my cents to women founders who are building the change they want to see in the world. I got the chance to interview a badass woman founder who I also have the honor of calling my roommate and one of my best friends: Mitalee Bharadwaj, the co-founder of Transcendence Coffee. So let’s get into Cent #11 of 25 cents of womanhood and money: women founders can raise money to build their dreams.

background

Before I share our conversation, I wanted to share a statistic you may already be familiar with.

Women founders receive 2% of VC (Venture Capital) funding. Think of VC funding as an institution providing $X to Y company for Z% ownership of the company.

I first heard this stat a few years ago and was shocked. Yes, as any piece of data, this stat comes with its caveats (i.e. women founders paired with a male co-founder receive 16.5% of VC funding), but why are we seeing women-founded teams receiving such a small piece of the VC pie?

I wanted to get Mit’s take on this. As a woman-of-color founder in the consumer food & beverage space. Who has fundraised. Who has chatted with VC funds, small and big. Who is paving the path for other women founders who are constantly told of the difficulties but not the opportunities entrepreneurship holds.

I recorded a voice memo of our conversation at Jajaja and used Otter AI to transcribe and summarize it. Here is my cleaned up overview (unfiltered versions to drop on socials this week 😉).

Introducing Mitalee Bharadwaj, the co-founder and CEO of Transcendence Coffee. She’s always been an avid coffee lover (for real, she can’t go on the subway without a morning espresso). But three years ago, she and her co-founder, Lisa Yala, decided to make it their missions to disrupt the syrup industry.

Premier coffee shops put deep thought into sourcing the beans and buying high-quality equipment, but ended up topping their drinks off with syrups that taste like cough medicine, ruining the whole masterpiece. Derived from Yala’s and Bharadwaj’s love of specialty lattes and their frustration with artificial syrups dominating the flavored coffee industry, they decided to brew something better. They began crafting their own coffee brand that combined diverse, global syrup flavors with specialty techniques and all-natural ingredients.

Today, they aim to do more than just sell syrups - they hope to transcend the limitations of a stale industry by connecting people to flavors from cultures around the world. And what better way to start than with the founders' cultural roots: India and Algeria.

On numbers: she has raised $430,000 in a pre-seed round (aka funding from friends, family, angel investors, and other founders). Honestly, for those not familiar with the food & beverage consumer space, this is an impressive runway for a company operating for three years now.

But let’s talk about the hard stuff people don’t talk about. Women & their money. In this convo, Mit:

• Highlights the challenges of fundraising as a minority woman, noting that she had to prove her business model extensively before attracting institutional investors.

• Reflects on the emotional and financial stress of fundraising and the need for patience and excellence in her pursuit.

• Emphasizes the importance of building long-term relationships and being creative in fundraising, including involving suppliers and partners.

her first-go at fundraising

Mit’s mom was a financial advisor in her previous career and her dad has also worked in finance for a very long time. They didn’t know much about running a consumer brand, but they did encourage her to raise some capital. More importantly, to not look at this money as donations. People are investing in your company. So luckily, Mit never felt the imposters syndrome of: “I'm not worthy of raising capital.”

However, she did become aware of one question she needed to answer: how do I position this so that people see this as a worthwhile investment in the same way I do? Even then, she started off with a very limited knowledge base around the process of fundraising. There was institutional funding, angel investing, friends & family, seed rounds, priced rounds, etc.

It took a little bit of wiggle room, but she recognized the first people she wanted to invest was friends and family, specifically people who believed: anything that Mit builds is a worthwhile investment.

So, she decided to raise a pre-seed round of $400,000.

why she went the route of non-institutional funding and the importance of financial education in the founder space

There are many ways to receive funding in the startup world, including VC funding, angel investors, and loans, all of which impact a founder’s autonomy. It’s similar to personal finance, where you want to make sure the company is aligning to the founder’s growth expectations.

Especially in the consumer space, there is a need for, what she calls the “patient capital”. You’re striking this fine balance of not growing too slowly that you burn out all your cash, but not growing too fast where supply cannot meet demand. There is an impact on company autonomy when you take on outside funding, and each dollar has a different impact. So it’s important to understand all your options before you begin to accept funding.

Which by the way, there is no guidebook on this. Yes, a basic knowledge of different rounds of fundraising can be learned. But what really matters is understanding that at each stage of a company, there’s different growth expectations. Mit, too, has strong growth expectations for her company, but when first starting out, she wanted to have room for creativity and freedom as founders. VCs expect hypergrowth.

Thus, she believes that only once you have good foundations and traction, only then does it make sense to go after VC funding. Even then, each stage looks different for each company, depending on the industry, the founders, and frankly timing.

challenges of fundraising as a minority woman

When she first began fundraising to friends and family, she was receiving questions around ROI (return on investment). Numbers that honestly cannot be provided that early stage of a company, she shared. It was a lot of guess-timating and more about telling a compelling story. At this point, you’re investing more in the founders than some numbers that are just projections. So they worked with the first raise of $140,000. After taking an 8-9 month break and building traction, she fundraised the remaining $240k within six months with the powerful effect of #FOMO (fear of missing out). Because of course, you want to invest in the next big thing 😉 

there is a deep emotional and financial stress of fundraising

Asking for money and receiving multiple noes before a yes is deeply difficult and there’s no denying it. There is this expectation to have a proven track record before fundraising more money. Which as we’ve seen from 30 years of social science research, we tend to judge men and invest money on what they could be vs. women based on what they’ve already accomplished. You could imagine for a first-time founder who has never worked in the startup space, this introduces the chicken and egg problem. Nevertheless, she persisted…

you can always get creative when fundraising

I still remember this random day when Mit was about to head to the fulfillment center. She tells me she has to leave 30 minutes early, and I expected it must be because of crazy New York traffic. Nope, she decided to stop by L'appartement 4f (phenomenal croissants btw) to get her entire fulfillment team a batch of croissants. Just to say thank you for their hard work. No transactional thought, just a deep sense of gratitude towards the labor this team has been putting in, especially as a founder who spent a year fulfilling her company’s orders.

Mit believes in building relationships, not for the purpose of transaction but for connection. She highlights the importance of being creative and thinking about people as partners rather than just investors with big checks.

These are real humans who are apart of your supply chain, who not only want to see you succeed but also have incentive to see you succeed. Because success is not a zero sum game 🙂 

mit’s words of wisdom around money & self-conviction

1. Similar to the concept of “patient capital”, chase excellence and money comes with dedication to the idea. There is no sugar-coating it, running a company is a long-term commitment. It’s financially and emotionally stressful, but slow and steady wins the race. Know that trust and momentum build over time.

2. It’s crucial to have unwavering self-belief and determination. There are going to be moments of doubt, moments you want to give up and just quit, moments others discourage you from continuing. But you just keep going in despite all of the noise.

TL;DR: stay so committed to your ideas that people look at you like you’re delulu, seek out patient capital, and strategic investors who can provide long-term support.

closing thoughts

• 💭 have you had ideas you want to pursue that require raising capital?

• 💭 do you feel like you have a support system of even 1-2 people who believe in you no matter what?

• 💭 what emotions emerge when you think about raising capital and having conversations with loved ones around money / investing?

• and generally,

  • 💭 what do you like most about the between the buzz newsletter? have you been enjoying the women & money series?

  • 💭 what are topics you want to hear more about from me?

For my newsletter subscribers, reply to this email to chat. Otherwise, send a personal response to [email protected], or add a comment 👇️ 

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until the next 🐝 , and with 💛 ,

Sneha