As a first-time founder, saying “no” to an influential investor may seem frightening, but “there is something much more damaging than having no investor relationships, and it is having bad investor relationships.”
When I was fundraising for my first company, I was invited to pitch at a first-tier VC fund. At the end of the meeting, I recall the pride I felt presenting my work in my first big pitch setting. The partner volunteered to see me out and we boarded the elevator together. After the elevator doors closed, the partner reached out, touched my chest and commented that I had not been wearing a bra. He told me that if I slept with him he could ensure that my company was funded.
I froze, feeling the shame wash over me like warm water. Is it my professional responsibility to dress myself a certain way and to wear a traditional bra—which are constricting, uncomfortable, and according to several studies, may not be healthy for breasts? Had I somehow given the wrong signals by not wearing a bra for the last five years? Would this be the only type of offer I would receive for financing? Was it either this, or nothing at all? Had this elevator been a well-disguised wormhole entrance to 1920? Was my dignity the price of admission? Is this what other women had to do to get funded? Is this what I had to do to get funded?
I remember looking up at the ceiling of the elevator, looking to see if this was on camera, wondering if a security guard somewhere was watching, if anyone would say something to me, or if this was business as usual. I don’t think I said a word for the remainder of the ride down. When the doors opened, I fumbled, quietly thanked him, and half-ran out the front door.
How did you respond?
I feared this man, who was powerful, but also felt bad for him. I knew that he was on the outs with his wife and heard that he had made advances on two of my friends. He seemed so lonely and sad, despite being so successful. I called on my compassion and reminded myself that anger only poisons the person who holds onto it. I reminded myself that all the money in the world had not made this man happy.
For about half a year, I did not speak to this person and wrote off his firm (who may have not been aware of this behavior). When I felt ready and able to speak to him directly about it, I reached out and asked this person to get dinner together. At dinner, I brought up the topic and spoke to this person about my experience of what had occurred. In a compassionate manner I discussed why I felt it was not appropriate, the emotional reaction I’d had to it, and the potentially harmful psychological effects it could have on other young female entrepreneurs.
What were your takeaways in hindsight?
The person apologized. While that alone is not enough by any account, he has since been respectful, and from what I have seen, he has repaired his relationship with his wife and family. I am genuinely happy for this man, and believe this is the best possible outcome. I am proud of the way I handled this. While these situations are not desirable, I respected his personal strength in resetting his direction and hope to see him continue along that much happier and brighter path.
This was a small fix, not an overhaul—true repair would take a lot of effort from us both—but since I don’t work closely with him I’m not actively trying to fully repair our relationship
I can offer assurance to others that may find themselves in a similar situation that I did not require his support, patronage or endorsement to be successful. I learned more about trusting my intuition regarding someone’s motivations, and that if someone is trying to push my boundaries in a work environment then I should address it as soon as possible. Even had this not been so blatant, it is unlikely that he and I could have or would have established a healthy working environment if he had invested. I am less afraid to say “no” to a potential investor for much smaller things now that I’ve been at it a while.
I have since raised millions of dollars from respectful investors in multiple over-subscribed rounds on merit and can confirm that, no, it is not the price of admission. Focus on making your business successful, find good and respectful people who share your vision, and the money will follow. Had for some reason, I concluded differently and taken this man up on his offer, at best, I would have sacrificed my dignity and self-image and at worst I would have had to answer to him as an investor for 7-10 years. There is something much more damaging than having no investor relationships, and it is having bad investor relationships.