How Female Founders Are Courting Investors in a Tough Climate

When Julie Bornstein set out in 2017 to raise funds for her women’s fashion retail app, The Yes, she knew exactly which investor she wanted to pitch. Hint: It wasn’t a man.

“I reached out to [Forerunner Ventures founder] Kirsten Green … because she’s a woman who’s invested in a lot of consumer tech businesses,” Bornstein said. (Green ending up co-leading an $11 million seed funding round for The Yes, contributing to a $30M total round at launch.) “I felt like she would understand the product I was building, intuitively, as opposed to needing to go ask her wife if it was a good idea.”

Bornstein was seeking capital at the height of the post-#MeToo “girl boss” era, when investment in female-led start-ups was surging, including many beauty and fashion brands that would have been ignored by VC firms just a few years earlier. Another wave of interest followed after George Floyd’s murder in 2020, as investors prioritised diversity, sustainability and values-driven decision-making. (Forerunner also notably invested in Glossier and Warby Parker.)

Last year, Bornstein raised $50 million for her new venture, Daydream, which she’s dubbed “the ChatGPT of shopping,” in a round co-led by Forerunner Ventures and Index Ventures. This time, it was her track record that sealed the deal.

“Once you get one person committed, it’s much easier to get additional people,” she said. “There’s no doubt that now maybe if … someone was a man, they wouldn’t need all the experience that I had.”

It’s a tough time to be a founder no matter what your background. High interest rates, the post-pandemic crash in consumer brand valuations and a gloomy economic outlook have made fundraising difficult.

Women and minority entrepreneurs have an extra layer of challenge, as they’re already underrepresented — female-led start-ups received just shy of 20 percent of overall investment in 2024, according to Pitchbook. They’re now seeing many of the initiatives designed to give them a seat at the table rolled back amid legal threats by the Trump administration and conservative activists. Fearless Fund — an investor in Black beauty brands like The Lip Bar, Bread Beauty and Brown Girl Jane — was forced to end its grant programme for Black women in business last year after being sued by Edward Blum’s American Alliance for Equal Rights.

A Gen-Z -version of Julie Bornstein, in other words, doesn’t have the experience and connections to carry the day with VC firms, and leaning on the shared experience of being a woman or part of a historically disadvantaged group is a riskier pitch than it was in 2018.

“It’s much harder … to get funding than it was five years ago — if you already were marginalised, you’re going to feel that impact even more,” said Alisa Carmichael, a partner at investment firm VMG Partners, which has backed beauty brands Danessa Myricks and Briogeo, among others.

The picture isn’t entirely bleak. Women founders raised $38.8 billion last year, a 27 percent increase from 2023, despite their overall share of the funding pie shrinking, according to Pitchbook. But, as investors become more selective, many women founders are questioning whether their businesses are even fit for VC expectations and pressures. And if they are, women entrepreneurs are being strategic about who they pitch, targeting investors with a track record of backing similar businesses or a demonstrated understanding of their category. Just as crucial is building a strong network of fellow founders, allies and mentors — and the resilience to navigate the long game.

It’s true that diligence is key for any founder, but women and those from underrepresented groups have to push even harder on all fronts with the playing field stacked against them, experts say.

“The landscape will be the landscape,” Carmichael said. “You have to [think about] … ‘how can I become one of the winners?‘”

Preparing to Pitch

How a founder pitches depends on where they are in their brand journey. In the first official (or seed) round, it’s about selling the founder and vision; in later rounds, the focus shifts to business metrics and a clear path to consistent revenue growth and profitability, experts say.

For women founders, the bar is often set higher. Women-led businesses, especially in saturated and slower-growth sectors like apparel or beauty, are frequently seen as higher-risk — a view that may be compounded by gender biases. So founders must be well prepared to frame their pitch around opportunity, scalability and return on investment, experts say.

They also can’t assume investors inherently understand the consumer pain point they’re addressing. Clearly articulating the problem, the product and “the dream” is critical, Carmichael said.

Shai Eisenman, founder of Gen-Z-beloved skincare brand Bubble, interviewed more than 10,000 consumers before launching in 2020 to ensure her brand was meeting a real demand — an approach that not only strengthened her pitch but also helped counter scepticism from investors.

“The best way to explain [your vision] is to conduct market research, focus groups and do quantitative research,” Eisenman said. “[That’s how you] show investors that you really studied it … that the market that you’re trying to conquer really has legs and consumers are interested in it.”

Amira Rasool, founder and CEO of The Folklore — a platform that launched in 2022 selling fashion from African brands before pivoting to helping emerging brands enter retail — credits her first successful raise to insights she gleaned from Techstars Seattle, a now-defunct investment and incubator program. The Folklore raised $3.4 million in seed funding in February 2024.

“That’s the experience that completely changed the trajectory of this company; it specifically taught me how to raise and it gave me the network to be able to get those introductions that, unfortunately, are still needed today,” she said.

TechStars also taught Rasool the importance of targeting the right kinds of investors for her business — typically with a track record of investing in similar categories. Investors who signal early on that they can exercise patience and provide support during economic downturns are particularly valuable, Eisenman said.

“In the beginning it’s really tough to say ‘no’ because you’re taking whatever [you can get], but I’m a very big believer that choosing the right investors is extremely important,” she said.

Setting the Stage for Round Two

In later funding rounds, founders must be prepared to “pitch the facts” and clearly outline “their [company’s] historical performance, how they’re outperforming the category and their future plans to continue to outperform,” Carmichael said.

In more challenging categories like fashion and beauty — compared with high-growth, B2B-driven sectors like tech and AI — women founders need to be especially thorough in proving their businesses are gaining traction and have a solid financial foundation. This includes showcasing tangible wins like high customer retention rates, strong revenues and evidence of consumer demand in new markets or categories.

While many founders are cautioned against raising too much too soon to avoid diluting equity and voting power, Bornstein takes a different approach — advocating for securing as much funding as possible early on to build a strong foundation and create a clear path to the next round.

“You need to start thinking about the next round as soon as you’ve closed one before … and start gut checking that with as many investors as you can,” she added.

When it comes to pitching, “timing is everything,” said Emily Gittins, resale platform Archive’s co-founder and chief executive officer.

Chasing unicorn valuations or blockbuster headlines shouldn’t drive a funding round. Instead, founders should raise with a clear objective — whether it’s expanding into wholesale, launching a new product category or scaling manufacturing — directly tied to long-term growth.

“It should feel obvious that we need to inject more capital into this business, because it’s very clear what we would invest in and what that would do for the trajectory of the business,” Gittins said.

When VC Funding Isn’t the Right Fit

Not every start-up is built for VC funding. Investors typically seek companies with high growth potential — think hundreds of millions, if not billions, in revenue — market disruptors that can scale quickly and businesses capable of delivering big returns within five to 10 years.

These days, that largely means start-ups with a strong tech or AI focus, which has been a boon for Bornstein’s Daydream and digital-first companies like Archive, which raised $30 million in Series B funding in February.

“Archive has a business model which still very much makes sense to be venture backed, because we are a software-only business with a massive potential market that has huge economies of scale,” Gittins said. “That is definitely not true for every company.”

Historically, fashion brands — with long production timelines and tight margins — haven’t been ideal candidates for VC funding. The 2020 DTC boom and post-George Floyd DEI commitments briefly changed that but the wave has since slowed, and in some cases, that may not be a bad thing.

“In 2021, a lot of companies raised venture funding when traditionally they would have raised debt or been bootstrapped,” Gittins said.

For many start-ups, alternative funding options — like small business loans, grants, angel investors, retailer-backed incubator programs (like H&M and Estée Lauder) and crowdfunding platforms like WeFunder — may be a better fit, experts say. (Bubble’s Eisenman, for instance, said she’s deliberately steered clear of outside investment after an initial “small” raise).

Looking Ahead

Companies that allocate funds for women and marginalised communities will likely remain under pressure. But experts say the most forward-thinking VCs are focussed on the business case and will find ways to keep investing.

“The thesis that we’re investing in Black-owned or women-owned businesses [because they’re] compelling brands and opportunities … hasn’t changed,” Carmichael said. “When you care about something you still figure out how to impact that community.”

For women founders and those from marginalised communities, building a network of like-minded entrepreneurs and allies who can share resources and strategies will be key in the months ahead, experts say. Folklore’s Rasool said she intentionally sought out four white men as early fundraising mentors to learn from their playbook and develop “the audacity” needed to succeed.

Conviction in a product’s viability — and resilience in the face of rejection — is crucial, said Eisenman, who heard “no” roughly times when pitching a previous business venture to investors.

“Resilience is critical because you’re going to get a lot of no’s — and we, as women, tend to take it to heart,” she said. “It’s important to remember that rejection doesn’t define you. A ‘no’ doesn’t mean anything for your journey — it just means that person said ‘no.‘”

Editor’s Note: This story was amended on March 27 to clarify that Shai Eisenman’s previous business venture was rejected by investors 300 times.