Pitch perfect for women involved in start-ups

Less than one per cent of all startups raise venture capital so what's the best way for female entrepreneurs to pitch for investment?

Joy Ajlouny, co-founder of Dubai-based delivery app Fetchr, previously started up and sold a US footwear firm, Bonfaire. Reem Mohammed / The National

For cash-strapped start-ups there are three Fs, so the saying goes - friends, family and fools. So how does a woman go about finding a good fool?
It's not a pretty picture. Less than 1 per cent of start-ups raise venture capital, according to the Kauffman Foundation, while American university Babson College - whose Diana Project researches women-led groups - says that only 2.7 per cent of venture capital-funding companies have women at the top.
Joy Ajlouny, co-founder of Dubai-based delivery app Fetchr, says she's proud to be in the 2.7 per cent.
The Palestinian-American previously started up and sold a US footwear firm, Bonfaire. So when Fetchr was looking for Series A funding, it was an obvious move to look to the US for investment. Last year it raised US$11 million.
In Silicon Valley, "Fomo" - the fear of missing out - means everyone wants to talk to you, Ms Ajlouny says.
"When the region has seen more exits, it will become more fertile for investors," she said, speaking at the Global Women In Leadership Economic Forum in Dubai in October. "More successful exits will create the Fomo factor, when investors can see the return on investment."
Now Fetchr is closing its second round of investment, it is looking for an investor from Silicon Valley to "lead the charge".
"They have the know-how, credibility and understanding of how to set the terms and it makes it easier for other investors in the Middle East to come on board," Ms Ajlouny says.
Amruda Nair, joint managing director and chief executive of Aiana Hotels & Resorts, says that women need to ask for advice from investors, rather than formally pitching for investment.
"Women wait for an appointment in a boardroom with a venture capitalist and set themselves up for a no," she told the conference. "Men are constantly pitching - in an elevator, at a cocktail party.
"Usually investors are more open to conversation, not a pitch; asking for feedback on an idea is an easier conversation. When you go pitching, it's a very different environment - they're attuned to just shutting you down."
Ms Nair comes from an Indian hotel dynasty; her grandfather started the Leela chain 30 years ago. She herself took advantage of the "male" tactic of the elevator pitch when Qatari entrepreneur Sheikh Faisal bin Qassim Al Thani was staying at one of her family's hotels.
On the way down in the lift, she says she pitched him the idea of an upscale hotel group with an Indian service ethos. Two years ago they partnered to launch Aiana, with serviced apartments being built in Doha and resorts in Agra and Munnar in India.
But the ecosystem in the UAE is still new and educating itself, says Ms Ajlouny. "The biggest mistake I've seen in this region is not using convertible notes, which can be converted to equity at a later date based on an actual valuation.
"Lots of entrepreneurs here are raising funds, but how do you put value on an idea? You need to make sure you don't give equity away. Investors themselves don't know what a convertible note is - seasoned ones do, but venture capitalists here are still learning as well."
Ms Ajlouny also says the introduction of a new bankruptcy law in the UAE - the final draft of which was approved in September - will make a big difference.
"Ninety per cent of start-ups fail, but now they won't be prosecuted for going bankrupt," she says. "Imagine starting a business and failing and then being thrown in jail - it goes against the whole start-up environment. Now you can try, and not live in fear."
But she points to banking as another ecosystem that needs to change. Despite having $11m in the bank, she could not get a company credit card until the business had been operational for two years. "If I want to buy something for the company, I have to fork out using my credit card then get reimbursement," she says. "Banks are set up for large, established corporations."
Fatima Qasim, head of business management for corporate and institutional banking at National Bank of Fujairah, told the conference her bank takes a "relationship-based approach". It has created a business unit, Elham, staffed by female bankers and aimed specifically at Emirati businesswomen, a group it says is "particularly under-served".
Any company looking to get financing from a bank in the UAE needs a "track record" of at least three years, she says, and "acceptable cash flows". Companies looking to raise capital will need to look to the "broader ecosystem", she says, as commercial banks are "generally more able to support businesses in the second phase of their development".
So there is definitely room for more good investors in the region, especially to invest in women-led start-ups. After all, there is no fool like a good fool.
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