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Get Pitch Ready: Angel Investor Schools Black Female Founders (VIDEOS)

BFF Formation event

BFF Formation event

“I was tired of women thinking too small”

“This is your chance to dream big.”

“Know your numbers.”

These were some of the standout quotes uttered by Angel Investor Melissa Bradley  (@bradleyml) who is currently also the managing director of VentureDC, a venture capital firm that aims to invest in and empower emerging entrepreneurs who are addressing and solving some of DC’s most pressing challenges related to health care, education, housing, economic security and access to financial services.

The American University Kogod School of Business and Georgetown University McDonough School of Business professor took time out of her busy schedule to sit on a panel with other esteemed women in tech and drop some candid, honest and no-nonsense pearls of wisdom to a group of women who are also from the demographic to get the least venture capital backing of all demographics: Black  women.

A new Project Diane study found that there are only 88 black female-led startup in America which amounts to  less than .01% of all funding.

There are several reasons for this statistic and some of it may have to do with an awareness or information gap.

A lot of Black Women who are entrepreneurs and small business owners building their apps, services, products and little empires simply may not know how to structure their respective ventures to be appealing to Angel Investors and VCs.

A new group called #BFF Black Female Founders held a launch event at Google’s DC offices on Thursday, April 21 with a goal, among other things, to help bridge that awareness gap.

#BFF also works to do something about the deplorable stats by convening, supporting and connect women-led ventures throughout the Black diaspora.

During the event, which also included a networking mixer and start up demos, the panel of super star black women in tech schooled the audience.

“Everybody has the potential to be an entrepreneur but not everybody has the skills,” Bradley earnestly said to the attendees of the #BFF event.

“And I run into a lot of women who have great ideas but they don’t have the skills.”

Not just the skills…most people don’t know their numbers, Bradley stated.

“I always tell my students watch Shark Tank and if you can’t answer what they answer you aint getting money,”  Bradley retorted, keeping it real with the audience.

“And that’s not like just what your valuation is. You have to know what’s your cash flow, what’s your burn rate, when are you going to run out of money, when are you going to be profitable. What is your exist strategy. What does it mean when you start to pay people? What does it mean if you scale up? What does it mean if you scale down?”

Believe me when I say that was awesome and informative session.

To help you get some of that experience, I’ve transcribed the video clips I captured of the event while LIVE Facebooking it as a favor of my friend and #BFF  co-founder Erin Horne McKinney.
Here are the clips, with the transcription  below for ease of cutting and pasting it if you need to borrow the brilliance and share the wisdom.

Melissa one from JJ Ghatt on Vimeo.

On being a reluctant tech entrepreneur despite not meeting the “pattern matching test.”

I don’t consider myself a tech entrepreneur. I was a finance major in Georgetown. I worked in corporate America for a year and I realized it was not for me and I left and I started a financial services company.

I went to the SBA and they told me no because I was young, black, I was 22 and a woman and there was no one like me who was successful in financial services.

On discovering the importance of using technology to scale a business

So I quickly realized that while I was running the business and doing okay, the only way I was going to scale was going to be through technology because I couldn’t cut and paste myself.

So for me technology became an enabler as opposed to the end.

And so we basically transformed the financial services company to become a platform not only for what we did but for other financial advisors. This was before eTrade and all those… and I’m really dating myself because we used bulletin boards to post information. It was great for us to create our own products.

We created mutual funds. We created community stock options and we then we went on to sell the company.

For me at that time it wasn’t about how I’m going to use tech but how is tech going to enable me to be better, faster, cheaper and get to a point of scale that was going to get up to a point of scale that was ultimately going to be appealing to whoever the investors were.

I stayed in the tech industry only because I realized that people of color, but particularly women, it is the only way we can scale because often times we don’t get the same amount of seed funding as everybody else does to hire people so we are working five jobs.

On Looking for Companies that Use Tech to Grow Not Just in it to be in It

So when I started my VC fund, we went out and looked for entrepreneurs who were not so in tech just for the sake of tech but who recognized that technology was a means to grow and scale their business effectively and efficiently while also focusing on other aspects.

I will give the disclaimer that I wasn’t a huge tech fan. I had Atari. I had a typewriter and I try to still hold on to those things, but I do believe the value is more about what you can do with it.

It does not supplant financial acumen, social capital and an ability to manage the books.

Melissa 2 from ‘

JJ Ghatt on Vimeo
Everybody needs a mirror.

Everybody has the potential to be an entrepreneur but not everybody has the skills. And I run into a lot of women who have great ideas but they don’t have the skills.

And this isn’t about crushing your dreams; it is about helping to accelerate them so the doors don’t close prematurely.

We can get the meetings but we only get one meeting. I hope I don’t offend anyone. White boys get 5 and one of them is over drinks and the other on the golf course.

But we get 1.  But I find is that when we get in there, we don’t know what to say or we don’t say the right things because we love our family but no one has done the stress test on financials, no one has done the stress test on monetizing the opportunity, no one has done the stress test on competition or competitive advantages.

And just be clear.

I just need you to be honest. I don’t want you to crush me. I don’t need to be questioned, I don’t need to be wooed, but I do need you to help me and I think that being a professor, we spend a lot of time trying to enable people and make them feel better. You’re not gonna feel good if you feel like someone set you up. And that can happen to anybody.

l have to say have people that build up your spirit, in addition to yourself but have people who are going to say “you know what you’re just a little off the mark.”

What happens is I think we are very fragile as a community and are very vulnerable and I want people to get over that but the only way you can do it is if you have someone who can safely and respectfully say to you, “you’re not ready” or “you need to do this to be ready.”

I get a lot of people and I go, “I love to help you but you’re not ready.”

Or they’ve made mistakes and they’re off the cap table… after round two. If they had someone had been honest with them and told them, “don’t just take anybody’s money, take smart money, structure it correctly,” they wouldn’t be where they are, so find someone who is going to be straight up honest with you.

Melissa 6 from JJ Ghatt on Vimeo.

On Learning from Mistakes and Learning About Self Before Moving Forward and Not going Too Fast

There are times when my passion got in my way and I didn’t stop and have my own self-introspection. I didn’t stop and wasn’t grateful. I probably took the wrong people and did asset management as opposed to relationship building, because particularly, once I started I was like ‘let’s go’, let’s race.  So my mistake was probably moving too fast and not being mindful of the time and care it takes to maintain relationships because now, there is such a thing as talent management, organizational culture. I didn’t have any of that. I just knew what I didn’t want to do and I’m really big now that it’s not about running or reacting, it’s about really being thoughtful about the future.

On being careful who you partner with

I think the biggest mistake and I see it in other folks and that’s being careful who your partner with. People promise that they can do something for you but they may not be always be able to. And enabling and I say that from a family perspective of enabling and a professional perspective.

I think particularly as women, we are nurturing and often times we look past things, sometimes way too long and that can range from our own self care to somebody else’s ability to step up and be held accountable. I made a lot of mistakes and the lesson now is when I do something, it’s all about at least spending six to nine months with somebody so now I can say I have a team of people I can call when I want to start something else.

On being a trailblazer

I’m much more mindful and am able to articulate a bigger goal than just having money. That’s what I needed at the time, and I’m much more thoughtful around what am I doing and what’s going to be the impact on somebody coming behind me because I know there are many doors where I was the only black person who got into them to raise money and luckily they think highly of me because I was able to make money for them but I also know we had knock down, drag out fights at the Cap table and they really got scared…I think being mindful that I have to own that wherever I go I am not just representing myself, particularly from a finance person, I am repping every other black person, brown person that comes through that door because we are the archetype and really about being mindful about what how we behave but what is the message we want to leave behind that allows that next person to come in and not have to deal with the same bs that maybe you had to deal with.

Melissa 4 from JJ Ghatt on Vimeo.
 

On Moving forward and Best Resources

There are certain aspects of this that don’t matter, that aren’t correlated by race, gender or class.

Best resource is each other. Check each other.

Whatever you may read, whomever you may talk to, wherever you may go that makes you feel whole and confident, that is your best resource.

The investment part is key because most of us don’t have even enough [money to pool into] an investment and family round.

Having come from a family without resources

Even to get a loan prior to a VC , we often times need help.

I  was the only black person in the building. You walk in there and there are all white women who are secretaries in cubicles and all white men in offices.

Someone asked me where I want to sit and I said “I think I’m gonna sit at home and work at home because this hurts my spirit”…it sounds hokey but it’s real and it comes across when people come in there and they don’t believe in themselves…but at the end of the day, you have to believe in yourself because people will tell you, oh that’s the dumbest thing I ever heard and you will have to go inside to find that strength again.

Melissa 3 from JJ Ghatt on Vimeo.
 

On Follow Up because the VC community is so small

Keep in touch, right, because there are only about 100 of us. We all talk.

People call me about white boys, about white girls, about black girls, about black boys. ‘Do you know so and so?’ ‘And I’d be like, I met them’ ‘What’da did you think?’ ‘Eh’ ‘Ok, I thought they were great’ ‘Well why didn’t you invest?’ ‘Okay, I thought they were great.’ ‘Why didn’t you invest?’ ‘Well, I thought if they had gotten to this point, then.” ‘Oh they got to that point.” ‘Oh, then I think you should invest.”

We have the same network, closed quite that everybody else does. So you can be mad us all you want because we didn’t make an investment only don’t curse us out because we’ll remember.

But more importantly, don’t just say thank you. Keep it coming. Send us a newsletter, an FYI, Just wanted you to know. We do pay attention to that stuff. We may not always connect. Even though they may have said no, they have the power to make someone else say yes.

On Whether You need a Complete Team or a Co-Founder

I think it is less about staff. I’ve seen too many businesses when they have co-founders and then six months later, they’re getting a divorce. You don’t want to do anything, let me be clear, in a reactive mode. When we are all in despair. I grew up in a single parent household. We shopped at Wal-Mart. That is what I wore to school. So we are so used to operating in a place of scarcity, when we get something we run for it. And we’re so busy reacting thinking we’re going to get the next thing. I would say what’s less important is what their title is, is that you have access to them.

Because we check your Linked In Profiles and see who you know. So we’ll be like if she knows that person, why doesn’t she call them. So it’s less about are they paid or not. It’s do you have access to get there and then have a plan of when you will retain that inside.

It’s less about can you fill an org chart really quickly. Can you articulate what are the skills you need, when you’re going to get them and do you have people who can either fill those roles when you get money or do you have people are doing well and are filling those roles right now.

And so if the way to get you started is accessing some graduate students, some finance graduate students, great and then say based on this my plan is with this first round of funding to hire a CFO, and somebody else. It is really to articulate what is the human capital you need.

Melissa 5 from JJ Ghatt on Vimeo.
Best Practices

First, you have to be cognizant that not every investor is the same.

You have to understand what kind of money they have, how much they have, what they’re looking for, what’s their risk tolerance, it makes a difference.

I am an angel investor and I look for one set of things. I run a venture capital firm, I look for something else. I run a USB fund, I look for something else.

Just be clear who you are talking to and do your homework. It’s mostly public information.

I think the key thing is when you’re going in, be honest. I think if you don’t know, say you don’t know. They’re going to trick you and are going to find out anyway. And you don’t want to ever give them anything they are going to use against you. I’d say be honest

I’d say, be personal to a point. I used to work with Springboard and I think they kicked me off.

Why you

I was tired; again don’t get offended, of women thinking too small. How many people have your name on your business? That’s fabulous if you think it’s going to be a family business but it signals to an investor that it’s just you. We have those conversations. That’s great. That’s cute. That’s wonderful but is that what you’re going to fight for in the end.

It’s not good or bad but it signals, this is a small business, it’s not a growing business.

The second is be really clear of what your goals are because it comes out in what your present and what your name is.

I say this over and over again. Know. Your. Numbers. I always tell my students watch Shark Tank. If you can’t answer what they answer you aint getting money.

And that’s not like just what your valuation is. You have to know what’s your cash flow, what’s your burn rate, when are you going to run out of money, when are you going to be profitable. What is your exist strategy. What does it mean when you start to pay people? What does it mean if you scale up? What does it mean if you scale down.

The reality is we cannot afford to outsource but there are certain things you should know.

What to Tell an Angel Investor

The final thing is know the market opportunity. If you’re an angel investor, you’re willing to have a higher level of risk tolerance, you’re willing to ride along so I would say to them, talk about what the potential is but really hone in on where you are now and what you need to get there. They’ll give you their money but more importantly they’ll give you time to get there.

What to tell a VC or Institutional investor

If you’re talking to a VC or an institutional investor, know your market and say how you’re already on that pathway.

And be very clear what your customer acquisition costs are, how long it is going to take you to get there, what if something goes wrong, and when I get there, then what?

And when you get to the point of institutional investor, then you’re basically going from thousands, to millions, to double digit, triple digit millions and you really need to be able to own and scale up on your goals and strategy.

I find what happens is that because historically we’ve been marginalized so much, we just think I’m just trying to get to the next thing.

This is your chance to dream big.

You should be prepared to go to an investor meeting and say,  in order for my business to be profitable, I will need a total raise of $7 and a half million, but right now I’m asking you for $250k  and $250k will enable me to go from here and here, and by then, I’ll have a set of metrics and then I can ask the venture capitalist and then I can take on mergers and acquisitions.

We invested $21M in women and minority businesses in financial services and technology, media and some consumer products, and the companies that we invested in we gave up to $3M.

The companies came in with confidence, they came with clarity and they came in capital, and that’s not financial capital, that’s social capital because they had already identified where their gaps were and they had gone out and gotten them.

They don’t have to be paid. They didn’t have to be staff. They could be advisors. They could be Board of Directors. They had to have skin in the game.

I was tired of women thinking too small

When someone asks what you’ve given. Do no be afraid to say what you’ve given. I’ve seen women of all hues say, ‘well I gave some time.’ Money is not all it takes to run a business, but count your numbers if you are making a salary right now, figure out what you’re making on an hourly basis and for every hour you put into your business, that’s an hour of investment you’ve made.

Discount probably about 30% because you’re working harder than most but that’s what your investors get . Write it down as deferred compensation and put it down on the financial statements so you actually may see it one day, but it’s value.

Budgets, cash flow statements are reflections of your value. If you say you’re only looking for a $1 million, I’m going t value you at a million. If you say you’re a $20M business

People we haven’t invested in don’t know their numbers. Aren’t honest. Say, I think. Don’t know. They have not validated their market, have not done their customer research.

I get that people are capital strapped. Call universities, I teach at Georgetown. I run a center at AU. We got students out the wazoo who are finance majors, who are MBA students and I look for projects to bring to class for them to do it.

We just did a financial analysis and business plan for a non-profit. And basically, we were able to calculate their social return on investment was 4x of every dollar they made.

They’ve now gone on to scale nationally and are over $20M. Numbers mean everything, but don’t panic, just get help!

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